Howard Metzenbaum Quotes
There is little doubt that our guarantee fund system is seriously mismanaged and compromised.
After Congressional hearings showing that the insurance guarantee funds were ripe with conflict of interest and industry control:
Howard M. Metzenbaum, U. S. Senator (Democrat, OH), Quoted in The Washington Post, July 4, 1993
Sourced by: Eigen's Political and Historical Quotations
This is one of the FDR quotations, which his opponents then, and many conservatives later, characterized as “class warfare.” This type of accusation has in part protected business leaders and those who control wealth from public accountability. Similar business leader resentment was levied against President Obama when he criticized the Bankers and Wall Street leaders whose behavior, in great part, was the cause of the economic meltdown and recession of 2008.
The Meltdown of 2008 and Great Recession that it caused
Corporations were not common at the time. The corporations of the day like large corporations today had directors and managers who were not the principle owners. There was deep suspicion that these professional managers would not watch over the money of the corporation with the same degree of vigilance as would the owner manager. The same problem exists today when the economic vested interest of the managers and the shareholders do not always coincide. Various bonus schemes have been created to ameliorate the problem, but as the meltdown of 2008 and the Great Recession demonstrated, many managers would make ruinous decisions for the corporation as they could get large bonuses. “Copartnery” is an older English term for “partnership.”
Greenspan and some others assumed that the shareholders and the executives who ran the financial institutions had the same vested interests. But the executives had disconnected themselves from the fate of the shareholders, by having Golden Parachutes to protect the executives even if the business failed and they were fired. And they got their bonuses immediately so by the time the authorities and the shareholders discovered that the profits the bonuses were paid for were illusory, the bonus money was safely stored in a secret offshore bank. But if things went wrong, there was always the play of getting a government bailout which would keep the executives getting their huge bonuses and keep the shareholders from losing their money as the taxpayers covered most of the losses.
The savings and loan crises became clear shortly thereafter.
Banks often lie. The system encourages them to do so. In a crisis, if a bank honestly says that it is not sure that it has enough cash and other liquid assets, others will not lend it any more money and depositors will rush to withdraw their money, thereby almost insuring a failure. The bank that lies, might weather the storm and survive.
Howard Morton Metzenbaum was an American politician and businessman who served for almost 20 years as a Democratic member of the U.S. Senate from Ohio (1974, 1976–1995). He also served in the Ohio House of Representatives and Senate from 1943 to 1951.
