Words Will Never Hurt Us (Or Our Cronies) If We Don’t Allow Them To Be Used

As a follow up to the post below this one, it’s even worse than I thought. Republican economists on the Financial Crisis Inquiry Commission (FCIC) voted to ban the words Wall Street, shadow banking, interconnection, and deregulation from the final report:

Keith Hennessey, Douglas Holtz-Eakin vote to remove phrases “Shadow Banking”, “Interconnectedness”, “Deregulation” from FCIC Report, by Mike Konzcal: …So the Financial Crisis Inquiry Commission (FCIC), the bipartisan panel created to study and issue a report on the financial crisis, imploded. The four Republican appointees – Peter Wallison, Keith Hennessey, Bill Thomas and Douglas Holtz-Eakin – have decided to go it alone and issue their own report Wednesday. …

This will no doubt play into a “Democrats say one thing, Republicans say another thing, who can really tell?” narrative, but what is leaking out of the Republican worldview on the financial crisis is disturbing. Shahien Nasiripour … catches this gem:

During a private commission meeting last week, all four Republicans voted in favor of banning the phrases “Wall Street” and “shadow banking” and the words “interconnection” and “deregulation” from the panel’s final report, according to a person familiar with the matter and confirmed by Brooksley E. Born, one of the six commissioners who voted against the proposal.

“I think a number of us had really pulled for” bipartisan consensus, said Born… “But this action by the Republicans indicates they have decided to go their own way.”…

…That they would vote to not even use the words says all you need to know.

For fun, Keith Hennessey, October 17th, What caused this financial mess? (my bold):

Some of these large financial institutions were so big and so interconnected with other institutions, that their failure would create a domino effect. This is what we call “too big to fail”, which should more precisely be called “too big and interconnected to fail suddenly”.

I wonder if Hennessey is going to scrub his blog of words he doesn’t think are appropriate for describing the financial crisis – like “interconnected” – in the government report he is writing.

Do you think it’s an accident that these words are key descriptors of accounts of the crisis that place the blame on banks and their behavior along with the failure of regulators to rein in risky behavior? The goal here is to promote a false account of the crisis — government support of poor people did it — and allow Republican cronies in the banking industry to pick up where they left off before the crisis so rudely interrupted their ever so profitable activities. Peter Wallison, Keith Hennessey, Bill Thomas and Douglas Holtz-Eakin ought to be ashamed of themselves for going along with this.

About Mark Thoma 243 Articles

Affiliation: University of Oregon

Mark Thoma is a member of the Economics Department at the University of Oregon. He joined the UO faculty in 1987 and served as head of the Economics Department for five years. His research examines the effects that changes in monetary policy have on inflation, output, unemployment, interest rates and other macroeconomic variables with a focus on asymmetries in the response of these variables to policy changes, and on changes in the relationship between policy and the economy over time. He has also conducted research in other areas such as the relationship between the political party in power, and macroeconomic outcomes and using macroeconomic tools to predict transportation flows. He received his doctorate from Washington State University.

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