Lloyd Blankfein Finally Explains the Financial Collapse in Layman's Terms: We Forgot About the Money
Four titans of the financial world—including Goldman Sachs CEO Lloyd Blankfein—are testifying before the Financial Crisis Inquiry Commission today, and boy are they sophisticated in their exegeses about how they almost killed us all.
Here, for example, is Blankfein succinctly laying out the swirling cacophony of motivations, swaps, hedges, and bets that conspired to throw the financial system into a nosedive in late 2008: "The commodity of money got less scarce, and people paid less attention to it." That's the CEO of one of the most preternaturally successful and persistent aggregators of money in the history of corporate finance telling a commission of congressionally appointed expert investigators that the reason for the collapse was that people didn't care about money enough. To be fair, Blankfein's point was that there was so much liquidity being thrown off by out-of-whack housing values that everyone figured there would always be more money coming in. That sounds a lot better than, "We cared so deeply and obsessively about money that we wanted to grab as much of it as we could, as quickly as we could, because we were terrified that it would go away as soon as everyone figured out what we knew—that it was all based on a fantasy. Sorry about that."
JPMorgan's Jamie Dimon was just about as helpful in bringing the commission inside the thinking of the financial giants as they assessed the causes of the meltdown: "Somehow we just missed that home prices don't go up forever." Somehow!