Our Apathetic Investor Class
I think the reaction to the Lehman scandal (not particularly strong generally) is very telling. The investor class should, much more than me, care that a major company was engaged in accounting fraud and should worry, much more than me, that other companies are doing the same. That they aren't says a lot about how the game really works.
It's true. When it comes to the general public, the lack of interest is pretty understandable: Lehman's collapse is old news, the whole "Repo 105" scam is hard to explain, and everyone already assumes that Wall Street bankers are a bunch of crooks anyway.
But the investor class is a different story. They understand Lehman's accounting trick perfectly well, and even the ones that never invested with Lehman know that this same kind of thing can bite them in the ass if someone else does it.
So why don't they care more? It's obvious why banks don't want more banking regulation — who wants to be regulated, after all? — but there are lots of wealthy investors out there who ought to be screaming for it. But they don't seem to be. Part of this might be a result of the rentier class solidarity I mentioned earlier today, but it's hard not to think that all the government bailouts and Fed programs are part of it too. Basically, rich investors just didn't lose enough. When the banks got bailed out, a lot of them did too. So they aren't really all that angry about what happened. And anyway, they might want to use a similar scam themselves someday. Memories are short and Congress is powerless, after all. It's every mogul for himself.