There’s no such thing as financial crime, according to Rep. Tom McClintock (R-CA).
At a town hall meeting in El Dorado Hills, California on Tuesday, a constituent asked McClintock for his “stance on Wall Street criminal practices.” The congressman responded, “Well first of all, for a criminal practice there has to be a gun. It’s pretty simple.”
After detailing his opposition to reforms that would curb bank risk-taking and simplify the financial system, McClintock added that bad financial decisions are the responsibility of the individual who makes them and that’s “the price we pay for the freedom to make all of the good decisions in our lives.”
The price America paid for the financial crisis measures in the trillions – probably in the tens of trillions – of dollars. That crisis was brought on by sweeping fraud involving faked signatures and lies about loan terms, and was exacerbated by short-term compensation incentives that encouraged financial executives to manipulate stock prices with disastrous long-term effects. A recent survey found an alarmingly high willingness to commit such gun-free acts of thievery among Wall Street employees, provided they would get away with it.
More importantly, McClintock’s resistance to increasing the government’s role in checking financial industry excesses is surprising given the endless trickle of evidence that the industry is subverting competition to extract profits from the economy rather than provide useful resources. The specific idea his constituent raised, of reinstating a Depression-era law known as Glass-Steagall, is only one of several proposals for how the government could protect the real economy from the financial system. Others include taxes on high-frequency trading schemes, strengthening regulation of derivatives and the “shadow banking” system that caused the financial crisis, and banning banks from the physical commodities markets.