Credit Crunch

Naming the Guilty Men

Top bankers kept silent instead of blowing the whistle.

What caused the financial crisis? And who is to blame? Michael Lewis and David Einhorn get close to the answers in a searching piece in The New York Times. The two dismiss the notion it was merely greed. “‘Greed’ doesn’t cut it as a satisfying explanation,” they write, as “we are as likely to eliminate greed from our national character as we are lust and envy. The fixable problem isn’t the greed of the few but the misaligned interests of the many.” Lewis and Einhorn blame poor oversight, inadequate credit ratings, but most of all those overpaid men at the top of the banking pile: former Lehman CEO Dick Fuld, former Merrill Lynch CEO Stan O’Neal, and former Citigroup CEO Chuck Prince. “If any one of them had set himself up as a whistleblower—had stood up and said ‘this business is irresponsible and we are not going to participate in it’—he would probably have been fired,” Lewis and Einhorn write. “Eventually he’d be replaced by someone willing to make money from the credit bubble…Our financial catastrophe, like Bernard Madoff’s pyramid scheme, required all sorts of important, plugged-in people to sacrifice our collective long-term interests for short-term gain.”