The Crisis: Holding the Professionals to Account
by Michael Pomerleano
21 Apr 09 | FT
My education (Harvard Business School and economics department) and professional experience prime me to advocate finance’s role in the growth of economies. Politically, I am moderate and not a flaming liberal. However, the conduct of professionals in the financial crisis leads me to reassess these beliefs. I am not alone.
My Harvard classmates, all of Larry Summers‘ Harvard vintage, are sharing their outrage and bewilderment at the genesis of the crisis and its resolution. Larry Kotlikoff, of Boston University, writes: “The financial market has melted down and with it trust in a system that routinely borrows short and lend longs, guaranteeing repayment, yet investing at risk. It’s a system virtually designed for hucksters, with limited liability, fractional reserves, off-balance sheet bookkeeping, insider-rating, kick-back accounting, sales-driven bonuses, non-disclosure, director sweetheart deals, pension benefit guarantees.”
Jeffrey Sachs, a professor at Columbia, says the toxic assets plan is a “thinly veiled attempt to transfer up to hundreds of billions of dollars of US taxpayer funds to the commercial banks by buying toxic assets from the banks at far above their market value”. >>>