Pub. 3 2015 Issue 2

www.uba.org 4 T he B ottom L ine By Howard Headlee, President, Utah Bankers Association From the very beginning of the economic collapse, many politicians have tried to push responsibility for the crisis onto the banks. But you can only run from the truth for so long, and the truth is this: the financial crisis was caused by Congress’ flawed housing policies. Moving Towards the Politics of Results F or years leading up to the crisis, politicians won elections by promising homeownership for everyone, even those who could not afford it. Traditional bankers knew this simply did not make sense. Wall Street, on the other hand, saw a profitable opportunity. They facilitated Congress’ misguided policies by creating overly complex instruments designed to spread the toxic risk as thinly as possible. The politicians didn’t want to understand the details; they just wanted to keep riding the political wave driven by the housing boom. But when that bubble burst, they had to find someone to blame or the pub- lic would have (rightly) blamed them. So began the “blame the banks” move- ment. And in order to make the storyline more believable, Congress (at the time led by the Democrats) immediately set out to punish the banks. On party-line votes, they adopted hundreds of new regulations, many of which had nothing to do with the crisis. Amazingly, they avoided any discussion of their policies that were at the center of the crisis. But after years of economic stagnation, Americans are catching on to this political deception and they are mad. Just look at the rise of Donald Trump and Bernie Sanders. They are riding a new wave of anger against traditional politi- cians. Americans are realizing that much of what Congress has done since the eco- nomic crisis has hurt, not helped. Years later, more people have left the workforce than ever. Job growth continues at an anemic pace. The stock markets are vol- atile, and the Federal Reserve is finding it nearly impossible to end their emergency monetary stimulus. The biggest banks have gotten bigger, and we have lost hun- dreds of small banks and credit unions. Americans are beginning to realize that when you kick the traditional banks you are only kicking the people and the com- munities they serve. You can’t separate a bank from its community. When a com- munity suffers, the banks suffer. When the banks suffer, the community suffers. Banks are simply a reflection of the people who come together to save their money and invest in local businesses - the same businesses that employ people and provide support to families and communities. The financial crisis was caused by Con- gress. And this horrible economic recov- ery was caused by Congress’ deceptive response to the crisis, and Americans are fed up. But those who led the Congressio- nal response to the crisis refuse to admit that they screwed up because then people will know that they created the crisis. But really, how can you pass a 2,300 page bill that has resulted in economic stagnation and further concentration of risk and then refuse to make any adjustments? Even the bill’s sponsor, Barney Frank declared on the day the bill passed, that they had to come back and fix several items in the bill. But now Elizabeth Warren is leading the Democrats and she insists on punishing Americans by doubling down against any and all substantive changes to Dodd- Frank. I can only hope that the unprecedented political events we are now witnessing are a manifestation that Americans have had enough of politicians who stubbornly hold to their political convictions regardless of their blatantly obvious failure. It is time for us to move toward the politics of re- sults and abandon the politics of rhetoric. The politics of results would suggest that when we are adopting massive new programs like Dodd-Frank, or Obama Care, rather than endlessly engaging in philosophical arguments, we should agree upon the results we are trying achieve, es- tablish those goals in the law and include a resolution to sunset the new policy if those goals are not achieved. At that point, we are free to try something different. This is what we do in the real world, we try things and when they don’t work, we stop and do something else. I think Americans are getting sick of politicians who blindly defend their philosophical position regardless of the failures of their policies. And rightly so, because everyday Americans are the ones paying the price, not the politicians, not even the banks, or big businesses, or any other evil special interest group scapegoat. Americans want a good job and a stable economy and an opportunity to pursue happiness, and their elected officials are failing them miserably. We will only suc- ceed when our leaders have the courage to admit when they have failed and try something different. n