Maureen Dowd, "Dancing With Derivatives": Again Out of Her Depth

In her latest New York Times op-ed entitled "Dancing With Derivatives" (http://www.nytimes.com/2012/05/16/opinion/dowd-dancing-with-derivatives.html), Maureen Dowd demonstrates that she is out of her depth: Instead of focusing on dangerous trading activity undertaken by commercial banks, as suggested by the catchy title of her opinion piece, she focuses on grossly inflated wages paid to banking executives. Although the salaries paid to JPMorgan Chase's Dimon and other heads of financial institutions are, in my opinion, obscene, their remuneration does not jeopardize America's banking system; speculative trading by commercial banks, on the other hand, has the potential to bring down the system.

Expressing outrage at bloated executive pay deals and bonuses, Dowd writes:

"It is redolent of the classic movie 'The Solid Gold Cadillac,' with Judy Holliday as a scrappy small stockholder, challenging the board of directors about fat salaries and dubious policies."

Well, I'm also a movie fan, but my thoughts are directed to "It's a Wonderful Life" with James Stewart. Remember the plot? When cash from "Building and Loan," which provides home loans for the working poor, is waylaid by Henry F. Potter (Lionel Barrymore), a slumlord and majority shareholder, George Bailey (Stewart), who manages this financial institution, contemplates suicide. The townspeople, however, rush to rescue "Building and Loan" with donations, and Bailey is made to realize by an Angel Second Class how much of a difference he has made in their lives.

Regrettably, we live in an era in which there are no George Baileys, and there are certainly no angels, second class or otherwise. Worse still, banking has lost its halo, and the focus of the industry is no longer on providing loans to worthy customers and providing a secure place where individual and corporate clients can deposit their funds, but rather on ratcheting up profits and growing the balance sheet.

If only banks were to be ranked each year by leading financial journals by security and service, rather than by profits and total assets.

Reinstate Glass-Steagall (the Volcker Rule is not enough) and demand the reenactment of the Uptick Rule? Absolutely, but I doubt whether Obama or Romney, who have both received significant campaign funding from the employees of large financial institutions, have the gumption to turn on their benefactors (re contributions to Obama's 2008 campaign from Goldman Sachs, JPMorgan Chase, Citigroup, UBS and Morgan Stanley employees, see: http://www.opensecrets.org/pres08/contrib.php?cid=N00009638).