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Blowing up the Economy Means Never Having to Say You're Sorry

It's been a pitiful spectacle these last few months as some of the nation's most important money men have trooped before Congress to talk about what in heaven's name - or hell's - happened to spark the Great Recession.

Their testimony has done nothing to take the sting out of the economic hurt that millions of Americans are still feeling. Nor has it done anything to restore finance to a position of respect. Rather the opposite: In 2005, according to Gallup, 41% of Americans believed bankers were basically honest and ethical; in 2009, that figure was down to a record low of 19%.

There have been excuses and explanations and justifications aplenty, but these two words have been conspicuously missing: "I'm sorry." Or these three: "I was arrogant." Or these four: "I dropped the ball."

Read the hundreds of pages of accumulated testimony from these very smart, very rich people, and you could get the impression that this was an economic crisis that just sort of, well, happened. Alan Greenspan, for example, refused to acknowledge that the Fed screwed up (it did), acknowledging only that "we never had a sufficiently strong conviction about the risks that could lie ahead."
And Fannie's CEO, Daniel Mudd, blamed Congress for giving the enterprise too many things to do: "I wish I could have maintained the delicate balance of the roles assigned to Fannie Mae, and I am sorry that I could not." That would be more compelling if anyone at Fannie had actually asked that the rules of the game be reconsidered, instead of resisting any challenges to it.
The books on this crisis are not closed - though dozens are still being written - but there is one incontestable conclusion. The financial mess that led to the nastiest downturn most Americans have ever lived through did not have to happen. Human beings who made bad decisions crafted it.

Not all of those people are on Wall Street, of course. Congress did its part by sending conflicting signals to the Fed and letting Fannie Mae go off the rails -- not that anyone on Capitol Hill has seen fit to acknowledge their role.

Main Street did its part, too. But a family that goes into debt or buys too much house eventually has to suffer the consequences, as millions are.

If you were a big swinging Dick Fuld, not so much. Sure, Fuld lost a ton of money in stock options when Lehman folded - the result, he said, of a "perfect storm of events." But he's not eating cat food: The former CEO of Lehman can get along just fine on the tens of millions he made before it all crashed.

Perhaps it's wrong to expect humility from these VIPs, a quality for which neither Wall Street nor Congress has ever been known. But I know I am not alone in wishing that more of these people might own up to the damage he has done.

  • Jamie Dimon, CEO, JPMorgan Chase, Jan. 13, 2010: Somehow, we just missed, you know, that home prices don't go up forever.
  • Murray Barnes, former managing director, Independent Risk, Citigroup, April 7, 2010: I understand, with the benefit of hindsight, why one might conclude that Citi's Independent Market Risk Management failed to set appropriate limits on the CDO business. The issues, however, are significantly more complex.
  • Chuck Prince, former chairman and CEO, Citigroup, April 8, 2010: I can only say that I am deeply sorry that our management - starting with me -was not more prescient and that we did not foresee what lay before us... Regrettably, we were not able to prevent the losses that occurred, but it was not a result of management of Board inattention or a lack of proper reporting of information.
  • Richard Fuld, former CEO, Lehman Brothers, April 20, 2010: I will tell you that the decisions that we made on the properties that we bought in commercial real estate were based on strong management teams, strong properties, strong locations but terrible timing.
  • Lloyd Blankfein,chairman and CEO, Goldman Sachs, Jan. 13, 2010: After the fact, it is easy to be convinced that the signs were visible and compelling. In hindsight, events not only look predictable, but look like they were obvious or known. But none of us know what is going to happen.
  • Christopher Cox, former chairman, SEC, April 20, 2010: During the unprecedented stress of the financial crisis, however, these borrowed approaches from commercial bank regulation had unfortunate results similar to those that were eventually experienced throughout the commercial bank sector in 2008.
  • Raymond McDaniel, Chairman and CEO, Moodys, Sept. 30, 2009: Like other market participants, however, we did not fully anticipate the magnitude and speed of the deterioration in mortgage quality or the suddenness of the transition to restrictive lending. We were far from alone in that regard.....
  • Angelo Mozilo, former chairman and CEO, Countrywide Financial, March 2008: No single entity or industry sector is responsible for the collapse in housing prices... The issue is not so much the products, but the housing market.

A few came close:

Even, here, though, real contrition would have taken the form of more than words. Rubin, for example, could have rallied Wall Street, and raided his own wallet, to start a charity to help hard-pressed homeowners. Moynihan's B of A has been a slow mover on the subject.

Apologizing is not a sign of weakness, but of self-awareness. And it's not ridiculous to imagine that it could even take away some of the bitterness the public feels towards the financial sector.

In the medical profession, for example, there is intriguing research that health systems that encourage doctors to apologize report fewer malpractice suits and settle more cases. That's because malpractice litigation is often an outlet for anger. A genuine apology does much to salve hurt feelings.

Thirty-five states have adopted laws that make doctors' apologies inadmissible in court. That is a protection that our financial whizzes do not have, and fear of litigation must play a role in their reluctance to 'fess up. But I have to think that their finely-trained minds, backed up by lawyers, speechwriters and various consultants, could get the idea across if they tried. In fact, I'd be happy to help.

No apology, however sincere, is going to solve the foreclosure crisis or restore real estate values to Las Vegas. What it might do, though, is leach some of the toxins out of the discourse. It might have even been in Wall Street's self interest; it would be in a better position to fight financial reforms it hates if it had a better reputation. And there is the non-trivial fact that saying sorry would be the right thing to do.

"Apologizing doesn't always work; sometimes the anger is too great," Dr. Lucian Leape, a public health physician who is considered a leader in the field of patient safety, told the Harvard Public Health Review in 2007. "But healing can't begin without it."


Flickr: Mikemurrowphotography