Dick Fuld and the GOP/Conservative attack on free enterprise

OPM is a common Wall Street acronym meaning "Other People's Money". The theory of the free enterprise system is that people should get rewarded for taking risks that increase the common wealth. But the goal of the Republicans is a system where people get rewarded for being rich or for being connected. The former CEO of Lehman Brothers, Dick Fuld was paid ONE HALF BILLION dollars for taking risks with other people's money. He had no stake in the game. What Fuld did is something like if you were entrusted with a lot of other people's savings and spent a couple of years betting it at the casino - and taking a share out of any winnings. When the bets go sour, you walk away with what you took out. This is a radically new phenomenon - a paid professional manager, a bureaucrat adept at playing office politics, who rises to the top of a huge bureaucracy and then scoops up an enormous fortune with not only no stake in the business, but no liability for reckless or negligent work. An entrepreneur risks her time, her labor, her own money. A plumber who does a bad job can be sued for damages. But Fuld had no stakes in the game and the laws imposed no penalty. When the GOP candidates say they want to reduce regulation on Wall Street, what they mean is that they want to get rid of the new Dodd-Frank bill and its clawback provisions. The law says that if you run a financial company into the ground so badly that the government has to step in, the government can force you to return what you paid yourself. Many "liberals" attack Dodd-Frank as toothless - but there are reasons that GOP crony-capitalists hate it. And one of those is that it restores some of the risk to the risk/reward tradeoff for Wall Street OPM wizards.


Like what you read? Chip in, keep us going.