I keep hoping Paul Krugman is wrong about the need to nationalize the big banks–the government’s proper role is to regulate banks, not make profit-and-loss decisions–but he’s certainly right about the paper-profit Ponzi game that the big bankers insist on playing–and the toxic notion that they should be rewarded with obscene salaries for their ability to conjure profits out of exotic financial instruments rather than the old-fashioned way: investing in new products and making real things.
This is going to be one of the most important battles of the Obama Administration and it is going to be fought in the trenches later this year, as Timothy Geithner’s proposed regulatory reforms meet an oily phalanx of banking industry lobbyists. Meanwhile, the Times today also profiles, endlessly, Geithner and his close relationship to the banking industry. One hopes that the Treasury Secretary has gained a clearer sense, given the magnitude of Wall Street’s greed and myopia, of which side he is on.