nancylebov (nancylebov) wrote,
nancylebov
nancylebov

About the damned banking crisis, again

I recently heard a theory from sgsguru that the current mess is the result of cocaine-- that the grandiosity and irresponsibility is typical of of the drug.

Long ago Brad Hicks proposed a similar theory about the S&L crisis.

I'm not sure how you'd tell the difference between the effects of some sort of non-chemically caused moral/institutional collapse and the effects of inappropriate use of stimulants.

As Robin Hanson would put it, drug testing isn't about safety. If it were, wouldn't CEOs be tested? Is there an underlying premise that alertness of bus drivers matters, but the mental state of top administrators doesn't? To be fair, the underlying premise is almost certainly that it's too expensive to not pretend to assume that top administrators are trustworthy.

In the old days, the scenario was an evil banker with twirled mustache who mercilessly ignored the pleas of an impoverished borrower who didn't want to be thrown out of their home. Civilization has advanced to the point where people (some of whom don't even have mortgages) are thrown out of their homes by banks which can't even be bothered to keep track of the records, but which still retain a vague memory that they're supposed to accumulate money. [1]

Better regulation and/or law enforcement would have helped, but the same moral/institutional collapse is hitting the government..... am I the only one who's put off by the failure to deal with mortgages which were sold dishonestly to borrowers and then bundled as investments which were rated dishonestly-- but action is starting to be taken because the proper paperwork wasn't filed on foreclosures? I don't think that last is bad, but where was the attention to what was being done to people?

Not a lot new here-- I'm just worried about what happens to property rights (including the ability of people to sell their houses) when the record-keeping has been this badly bunged up, and what happened to the culture when the people who "did everything right" and trusted that the system wouldn't comprehensively screw them over are this badly treated.

Details of the current situation.

I assume that keeping good records would have been very cheap compared to the amount of money being made.



[1] I suspect this is why zombie fiction has suddenly become popular.

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