Wednesday, April 28, 2010

The Levin Hearings

The Senate’s Governmental Affairs Subcommittee on Investigations, under the chairmanship of Carl Levin (D, MI) conducted multiple days of hearing on the financial crisis caused by careless, not to say irresponsible, lending on housing and the securitizing of that questionable debt. C-SPAN, one of the serious, adult institutions that has stoutly sprouted in our so-so times knew that it should cover these hearings—and did so even before celebrity figures like Lloyd Blankfein, the head of Goldman Sachs, appeared. Brigitte and I knew we should attend—and paid our dues. Hearings of this kind never fail to evoke analogies to “drama,” “theater,” “clash,” “blame game,” and so on. Exaggeration is a feature of our times, and every even mildly notable event is labeled “epochal.” The two of us noted wryly that on all earlier occasions press coverage had been minimal; only one or two photographers lounged on the floor out of the senators’ view but facing the witness stand. Yesterday cameras—and protesters—filled the hearing to honor Big Money and Big Celebrity. An annual bonus of $9 million, paid to one man, certainly does signal that.

We admired Sen. Levin’s dogged, workmanlike, persistent, and entirely straight-forward approach to these hearings. He genuinely represented us anyway. We also noted John McCain’s brief appearance calculated entirely to play to his hometown audience; he is engaged in a hard-fought primary in Arizona. Now that was kabuki theater. The ranking member, whose name I shall neglect, attempted to blend an artful image of severity, sophistication, morphing surfaces (now-I-chastise now-I-praise), and sub rosa attempts to influence features of the now pending (and in our view hopelessly deficient) finance bill.

A novel insight emerged from this hearing for me. In scope it goes far beyond the narrower focus of the hearings. It came from Brigitte who, after listening to a series of exchanges, pushed the mute button to make an observation. She suggested that the huge fortunes spent on purchasing initially high-yielding “synthetic,” “pure paper,” and “symbolic” instruments by Wall Street diverted investment from genuinely productive uses into a species of controlled gambling. I saw her point at once—and it is a valuable point. Money seeks the highest returns. And how can a humble manufacturer compete for money with Lords of the Universe who’re fashioning wealth by magic? I’ll develop Brigitte’s insight later on LaMarotte.

The focus of the hearings was ultimately morality, and the core might be put this way: The meltdown was caused by unethical practices in the service of greed. Those who most profited from the vast eruption of phony wealth caused both the eruption and the damage it left behind. Here the sense of a drama on a higher plane was unmistakable. Two radically different value systems confronted one the other. And neither side could fathom how the other could see things the way it did. In watching this drama, however, I saw angels arrayed behind Senator Levin; they watched attentively. And as for Brigitte and me, we want to be on the side of the angels.

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