The financial crisis being investigated down in Washington right now, with bankers on the hot seat amidst huge media coverage, has been over for six months now — at least. That’s one reason why the KBW bank index has recovered 140 percent over the last 10 months.
It’s important to take a hard look at the numerous causes of the crisis. There’s no question that bankers made big mistakes in overleveraging and borrowing to buy and sell various mortgage-related securities and other complex derivatives. They know it. That’s why they fessed up, almost semi-groveling, at the hearing yesterday. But the big boys have paid down their TARP, and they’ve turned a tidy taxpayer profit in the process.
So, is it possible that we can put an end to this obsessive national attack on bankers? Ultimately, the bankers will play a key part in the economic-recovery solution. Al Qaeda is our enemy. Not the bankers.
Now take a look at the following chart. It looks more complicated than it really is. What it shows is job losses during all the post-WWII recessions, two years after the jobs peak.