William Black has written the piece Bhide: Pick a “Boring” Fed Chair because Supervision is the Key and it requires “Dullness”.  There is a lot in the article that is obviously based on his own experiences as a regulator.

Bhide has just witnessed the greatest spree of elite looting in history, but somehow missed it entirely.  Had Greenspan and Bernanke understood that deregulation was “bound to produce looting” and given the “regulators in the field” their full support there would have been no financial crisis.  Greenspan did not muster even “lukewarm support” for the Fed’s supervisors – he attacked them savagely for daring to criticize the banks that were large control frauds.  Bernanke appointed two economists as his top (anti) supervisor to ensure he would not suffer their practice of speaking truth to power.  A Fed Chair who made it her mission to restore effective supervision would not choose “boring”, “dull,” or “bureaucratic” people.  She would be putting a giant bull’s-eye on her back and would ensure that she never have another boring day.

I wonder how  hard the American people need to be hit upside the head with the evidence of this obvious plundering by the elite bankers of this country before they insist on reform.  There is no reason why Elizabeth Warren should be so alone in her insistence on fixing the problem.

I have also often mentioned this point brought out by Black’s article:

Control fraud begat additional control fraud and created the perverse incentives that spread “echo” epidemics of control fraud through other professions (loan brokers, appraisers, and auditors) by creating a “Gresham’s” dynamic in which bad ethics tends to drive good ethics out of the markets and professions.

I observed this at the time of the dot com bubble.  Year after year people were making money hand over fist with ridiculous investments in these enterprises which were almost certain to fail.  The mutual fund managers who only made their customers 12% per year gains by making prudent investments were drummed out of the business because they weren’t making 90% returns like their colleagues who were willing to throw caution to the winds.  I wanted to invest with the cautious mutual funds, but they were disappearing right before my eyes.  Fortunately for me there were enough cautions mutual funds left to keep me protected from the dot com  bubble.