Meet Dylan Ratigan, That Guy on MSNBC Who Can Talk a Mean Streak About the Scam Artists on Wall St.
Continued from previous page
Needless to say, attacking Wall Street bonuses and detailing regulatory malpractice were not exactly a popular activities among Ratigan's former CNBC colleagues, who launched a public defense of bailout barons when bonus outrage first boiled over in February 2009, dismissing it as populist envy. By contrast, Ratigan sees deep structural problems associated with bloated banker pay. The Glass-Steagall repeal allowed banks to score big trading profits with taxpayer perks that were previously reserved for safe, productive lending operations that just happened to be less profitable. Those profits, in turn, were converted into bonuses. Deregulation had allowed bankers to enrich themselves with taxpayer money, a phenomenon that grew more grotesque when bonuses continued to be paid after monstrous bailouts.
To Ratigan, the IPOs of large investment banks like Goldman Sachs in the 1990s were equally devastating. Investment banks used to be structured as partnerships, where all of the top managers were partners in the enterprise. If the bank lost money, so did the partners. As public companies, Goldman and its brethren have a different set of incentives. If the firm gets into trouble, shareholders and bondholders will have to pay the price—the bank's managers just pack up their bonuses and hit the Hamptons. This dynamic grew even more perverse as the investment banks exploded in size, eventually reaching a scope where the economic price of their failure would have been devastating.
A devout capitalist, Ratigan is also a realist. He believes the government had no choice but to shield big banks from losses with massive bailouts. But he emphasizes that policymakers didn't have to reward the executives who got rich driving their companies and the economy off a cliff. Shareholders should have been wiped out, executives should have been given the boot, and pay packages should have been clawed back. These are precisely the policy prescriptions presented by Nobel-prize winning liberal economists Paul Krugman and Joseph Stiglitz as the Bush era transitioned to the early months of the Obama administration. They were ignored.
Rejecting that advice came with a heavy economic price tag. Nearly two years later, unemployment remains at epic levels with no significant decline in sight. Banks aren't lending, and an anemic recovery is now dangerously close to a double-dip recession. Ratigan sees little hope for the economy in the near-term, but senses an opportunity in the social unrest created by monstrous unemployment levels.
"There are no jobs, my man! Where are the jobs? People won't stand for this forever."
Here's hoping he's right.
Zach Carter is AlterNet's economics editor. He is a fellow at Campaign for America's Future, writes a weekly blog on the economy for the Media Consortium and is a frequent contributor to The Nation magazine.