Keep profits, bail-out losses

Investment banks who architected monopoly positions in the recent financial crisis, have been riding high again. With profits and bonuses soaring, some have been reestablishing themselves as the rulers of the universe and the keeper of the most of the world’s brain cells. Some have even paid back the “bailout” money – at least the ones that came through the front door but not the back door. The “smart” ones have been able to convince the public that the money that they received in insurance payments from the troubled insurer are theirs to keep and even to pay bonuses for its elite.

More troubling than the arrogance is the short memories of these companies. They appear to have already forgotten that the reason the US tax payers bailed their incompetence out was the possibility of the complete collapse of the financial system. They made this happen by taking excess leverage – granted to them by ignorant regulators of the past. But they seem to be set to play the movie again – hoping that the taxpayers will come to their rescue next time they lose big. I would love to have an uncle too who will let me gamble and keep the profits but bail me out when I lose.

Judging by the enormous profits taken in by the extremely smart investment banks lately, it looks like the taxpayers will be on the hook again soon. But this time, they may not have the grand father in the treasury to keep them out of trouble.