The Wall Street Journal‘s lead editorial Monday presents a good summary of what is wrong with the government’s case against J.P. Morgan: it seeks to punish a company for helping the government; it targets one of the only financial firms that did not need a bailout; and it reinforces the false idea that Wall Street greed was solely responsible for the 2008 financial crisis. There is another, political problem that the Journal did not note.
It is this: that both Republicans and Democrats are at fault. Specifically, the Bush White House pressed J.P. Morgan to become involved in the Wall Street rescue, and later the Obama White House punished it for doing so. The civil servants involved were largely the same; the major difference is that what the Bush administration saw as a temporary, emergency intervention is regarded by the Obama administration as a permanent one.
Another point: few stood up against any of the bad interventions that led to the crisis, or to the mess that followed. Those who dared take on subprime lending were shot down; those who voted against the TARP bailouts were called irresponsible. The same charge is hurled today at those who fought against Obamacare in the recent showdown. Our nation badly needs strong political opposition, but does a very poor job of rewarding it.