Today the House will hear witnesses on the Lehman bankruptcy including Ben Bernanke, Dick Fuld, Mary Shapiro and others. This should be good theater. Will our Congressmen go the the heart of issues facing the American public today? Or will they just cast about looking for scapegoats for this particular watershed event? The questions they ask will illumine how well they understand what we are facing as a nation. It is already a matter of record that somehow the entire broker/dealer model became precarious because of both investment decisions and mismatches regarding their funding. The salvation of some, Bear and Merrill, if you can call it salvation, came from bringing them under the umbrella of the capital and deposit funding of our largest banks. Is this a good thing? Should our bank deposits be used to fund trading houses? Should bank capital be tied up in businesses that are inherently very high risk? Or should bank capital be used to fund the businesses in this economy that produce innovation, employment, personal income, and ultimately prosperity. It is a question of resource allocation. The latest bank earnings reports indicate shrinking credit and earnings driven by trading.
So a Congressman might take the position that Lehman should have been saved. But how? Taxpayer bailout to put it under the wings of a bank, further concentrating power in financial conglomerates, with all their lack of attention to main street? Or should the collapse be considered a fair and reasonable outcome? Can you be “for” saving Lehman and “against” financial concentration? Will a brave Congressman stand up to the culture of greed and elitism that dominated that time and still dominates our system? Have any major changes for the better in Commercial Banks happened post Lehman? I don’t see any. In fact, I don’t see any serious changes at all, or even discussion of serious changes. The same people run things in the same way.
What questions would you want to ask? If you have a great question, it is possible to get it before the committee in time for the hearing.