Big Industry Always Knows Better Than The Regulators

By Satyam Khanna

Via Kevin Drum, a peeved James Kwak observes the irony of Wall Street CEOs’ “I know better than the regulators” attitude towards financial reform:

Wall Street CEOs like to think they are the adults, the big men in the room, the ones who know how the world works. Well, you know what? They screwed up their own banks, the financial system, and the economy like a bunch of two-year-olds. Every single major bank would have failed in late 2008 without massive government intervention — because of wounds that were entirely self-inflicted. … The financial crisis should have put to rest for a generation the idea that the big boys on Wall Street know what they’re doing and the politicians in Washington are a bunch of amateurs. Yet somehow the bankers came out of it with the same unshakable belief in their own perfection that they had in 2005. The only plausible explanation is some kind of powerful personality disorder.

Business, naturally, will generally oppose regulation. But the sheer arrogance (Drum calls it “Big Swinging Dicks” syndrome) that Kwak points to isn’t limited to Wall Street CEOs fighting regulatory reform; it’s a characteristic of big business lobbyists’ response to reform virtually across the board.

Although the situation is a bit different since health insurance companies didn’t actually “fail” (they were quite profitable), they did fail at their job of actually insuring people. Yet they waged a no-holds barred campaign claiming that things would be better this time around if we just left them alone (isn’t that what we were doing?). Same with climate change and big polluters. Same with BP, who, aided by lax regulation, “ignored warning signs” prior to the oil spill but are already launching a lobbying blitz to preserve their old ways.

Even in the wake of systemic failures, we can count on big business to firmly believe that they were right and you are the one being out of line.