Many Americans still believe the game is rigged, and they want more acknowledgment from the banks that it was the hardworking taxpayers that came to their rescue. People are still upset by the bailouts. I have been surprised by how many people stop me—as happened at a recent dinner—to say things like, “Make sure you ask Vikram Pandit to thank us for bailing him out.” At a recent conference, even a highly paid entertainment executive complained to me that Jamie Dimon had not shown enough humility over the mistakes his bank and others made during the boom times. Dimon was once the wonder boy of the crisis, and was still considered a winner in the upset, but he too finds himself at times on the hot seat, answering questions about JPMorgan Chase’s connection to Bernie Madoff, and why the bank squeezed competitors during their toughest times in 2008.
Part of the negative public mood stems from the fact that three years after the financial disaster, there have been very few indictments, and even fewer convictions, over events that nearly sent the nation into another Great Depression. Added to that are some 8.4 million jobs lost in the recession, many of which have yet to come back. The Financial Crisis Inquiry Commission, headed by Philip Angelides, charged with investigating what went wrong in 2008, released its report in early 2011, and it was highly critical of both the banks and the government overseers. Ominously, Angelides told me this March that without government help, thirteen out of fourteen financial institutions would have gone broke. Angelides has been among those calling for further investigations and even criminal charges, but so far there have been no serious consequences for the people involved.
It does not help the public perception of Wall Street and business to see insider trading trials, such as Raj Rajaratnam’s of Galleon Group, who was convicted of fraud in 2011, where prosecutors have pounded away at what they called a “network of greed and corruption.” Likewise, confidence is tested when a lieutenant of one of the nation’s most revered business leaders, Warren Buffett, is forced to resign for buying stock in a company Buffett’s Berkshire Hathaway was to acquire weeks later. Scenarios like these have empowered a heavier hand of government as well. For example, using FBI wiretaps in the Galleon trial, similar to mob trials, prosecutors probed Rajaratnam’s connections, which reached into some of the very highest echelons of corporate America and the financial community. These examples stoke the deeply held fears on Main Street that Wall Street can’t be trusted. They also feed the political rhetoric that makes the Street a whipping post for all of America’s troubles. For example, at Goldman, despite the best efforts of Lloyd Blankfein, the fear and loathing just won’t stop. Even Jeff Immelt, the head of GE, who was appointed to President Obama’s Jobs Council, has defended GE over its taxes in the wake of a New York Times article that questioned whether the company had skirted paying them in 2010. The familiar rhetoric of class warfare is still simmering and will undoubtedly come to a full boil before next year’s presidential election.
Ken Lewis, who for a brief moment in the financial crisis looked like a hero when his Bank of America bought Merrill Lynch, is, of course, history. The new Bank of America chief executive, Brian Moynihan, is still struggling to fix a mortgage business crippled by foreclosures. The robo signings at Countrywide and other lenders continue to stifle earnings and economic growth. Moynihan told me in March 2011 that in spite of encouraging signs in the bank’s other business, the housing crisis lingers. “Housing may go up or down, but it’s had a big fall off, and now we have to work our way through it,” he said. “We have a bubble of foreclosures and modifications that we’ve got to get through. We have consumers we’ve got to work with to restructure home ownership.” In other words, there’s a long slog ahead. The housing market has not participated in the economic recovery, and home prices are still falling. This in turn drags down other sectors of the economy and limits job growth.
But even with all of the questions, at the end of the day, America and its strong financial system survived. The last three years have been challenging and dramatic but also defining. Debt has taken on a greater negative connotation. Individuals are applying for less of it and paying down their credit more responsibly. People are also starting to save again. Nest eggs were up 9.2 percent in 2010, and total U.S. retirement assets rose to $17.5 trillion, the most since the end of 2007, when they totaled $17.9 trillion. The conversation over debt has shifted away from Wall Street and the individual to the government and its spending. As I write this, Congress is in the middle of an unprecedented discussion about raising the $14.3 trillion debt limit. This has become part of the national conversation, after a persistent debt crisis throughout Europe and austerity measures taking place throughout the world. People are asking, after what we experienced in 2008, can we keep borrowing more money than we take in?
Still, the economic story is much different, and much stronger today than it was three years ago, even as
