At the tail end of a long interview with Betty Liu on Bloomberg TV
today,
AIG Chairman Steve Miller was asked what he thought of Occupy
Wall Street's criticism of bailouts given to AIG and other financial
firms. (Fast forward to the 10:35 mark on the video above.) "
The
understanding of the Occupy Wall Street crowd of what makes our country
work is probably fairly limited,"
Miller says.
"It's a very simplistic view of things. No one will ever know what
would have happened to our country and our whole global financial system
if AIG had been allowed just to go down."
To give Miller his due, he does narrow his critique at one point to
the "long weekend" in which Henry Paulson and his Treasury team
scrambled to save the U.S. financial system:
Quote:
"It's lost on them," he said. "They think, 'Why are you
bailing out Wall Street and not Main Street?' You have to have a view as
to what would have happened if Wall Street had been allowed to just
implode. I think it would have been devastating for our whole economy
and that would have been far worse for Main Street than what did
happen."
Let's grant Miller that the subsequent disaster would have been far
worse for "Main Street" if there was no bailout of the banks. But in
making a more general criticism of the protesters' "understanding" of
how the economic system works, Miller seems to reveal a shallow -- shall
we say, simplistic? -- understanding of the movement's take on Wall
Street and Washington. Let's examine two common themes in OWS signage:
"Banks Got Bailed Out, We Got Sold Out"
This is one of the most frequently seen messages in the U.S. protests, showing up in the march on Park Avenuebank
headquarters, in Zuccotti Park, and elsewhere. A popular variation
makes the point that banks got bailed out and then foreclosed on
homeowners; another links bailouts to the massive buildup in student
debt.
The point may be simple, but it's not unsophisticated. Washington has
avoided a direct bailout of homeowners for three years; now a growing
number of economists, financial experts, and politicians believe that
only a permanent reduction in mortgage principal will revive the housing
market. Among them: Martin Feldstein, economist and chairman of Reagan's Council of Economic Advisers; Bill Clinton; and hedge fund luminary Greg Lippmann. My colleague Mark Gimein argues that a student loan bailout isn't far away, either.
"The Money Given Wall Street Flows to K Street"
If we expand Miller's time horizon -- say, to the 10 years leading up
to Hank Paulson's lost weekend -- it's easy to see how the Wall
Street/Washington lobbyist connection led to the relaxation of financial
regulations. That in turn allowed for the rise of "black box" financial
products that were so "unsimplistic" that even bank executives later
admitted they didn't understandthe
risks they were taking on -- for the banks and for taxpayers. If
protesters want Washington freed from Wall Street influence, they have
another great fan of simplicityon their side: Paul Volcker.
On a lighter note, no one ever argued that a protest movement needs
to spout complex arguments to be taken seriously. Effective messaging,
in fact, would argue for the opposite. But if Miller or anyone else is
looking for more sophisticated OWS signage, the example to the right
shows there has been some of that, too.
Update: I have tweaked the language above; no, B, Bill Clinton is not a financial expert.
http://www.businessweek.com/finance/occupy-wall-street/