Gotta change our economic culture

I’ve been critical of Steven Pearlstein in the Washington Post before, but I thought this column was very good. I especially liked toward the end as he talked about the cultural changes we’re going to have to make:

Then there is Richard “Is This America?” Kovacevich, the chairman of Wells Fargo. Late last week, Kovacevich gave a talk at Stanford University, complaining about how unfair it is that the government forced his bank to take $25 billion in bailout money last year when it could have easily raised private capital — and then compounded that outrage by changing the terms of the deal and forcing Wells to cut its dividend. Kovacevich said it was “asinine” for the Treasury to order his and other big banks to undergo a special “stress test,” explaining that well-run banks like Wells were routinely doing their own stress tests.

Kovacevich apparently believes that because his bank is still relatively healthy, he and his shareholders shouldn’t have to assume the same costs and burdens as banks that aren’t, particularly when those costs and burdens are imposed by incompetent government officials. That’s the way it works in America.

Except, of course, when it doesn’t. The reality is that, if the government had not stepped in to take over Fannie, Freddie and AIG; had not recapitalized Citigroup and Bank of America; had not provided the guarantees to allow for the orderly sale of Merrill Lynch and Bear Stearns; had not become the buyer of last resort for commercial paper and home mortgages, then the entire financial system would have melted down by now and taken Well Fargo and its arrogant chairman with it. Rather than bellyaching about how un-American it all is, Kovacevich ought to be thanking the government and asking what more he could do to help.

Like it or not, we’re all in this together now. It’s cooperation and compromise, not the usual every-man-for-himself competition, that is going to get us out of this mess. And the sooner people on Wall Street embrace that reality, the better it will be for everyone.

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