Finem Respice ~ Translation "Look to the End"

Finem Respice

Look to the END

Written by EP

February 19, 2009

The birth of finem respice comes at an unfortunate time. This site's motto, finem respice, seems particularly apt when the long-term consequences of ill-considered ventures threaten to be so severe. Incredible as it seems, the possibility of a default by the United States is no longer considered alarmist. In fact, after a little bit of reflection, this doesn't even seem all that incredible anymore. Whatever your view of the likelihood of an actual default- and flaccid arguments about the semantics of the term “default” notwithstanding- it is difficult to overstate the gravity of this kind of sentiment. If anyone needs a more definitive statement of the danger of a crisis of confidence for a highly leveraged institution, then they weren’t paying attention when Lehman Brothers slipped smoothly beneath the dark and frigid waters of financial ruin.

A "I Swear I am Not a Socialist" Merit Badge for the Administration
Read: "The Appearance of Nationalization Avoidance Fund"

I have no sympathy whatsoever for the Administration's public relations predicament when it comes to the "bank nationalization issue," that would appear to be forcing them to pour money into flagging financial institutions. A host of commentators have pointed out that nationalizing a bank should look like it does when the FDIC takes the handlebars and peddles the institution into an asset sale, or otherwise transfers the deposits therein into a viable institution. Most quick. Mostly clean. Why should we fear the "N-word" then? It happens all the time, technically.

This would be fine, if the Administration had stuck to this from the beginning. It did not. Quite the reverse it was used, quite nefariously, as a means to incite class warfare, implement particular pet theories of industrial policy and provide the foundation of a re-election platform. Even as I type this, banking firms that took TARP money when Paulson insisted the entire financial edifice may crumble and collapse (and anyhow if you don't we'll pull out your fingernails slowly- we have some influence with your regulators, after all, you understand) are coming to find it came attached with retroactive political license to brutalize executives (deserved or not) and subject them to the gentle mercies of e.g. Maxine Waters for hours at end. (Incidentally, only Dr. Vikram Pandit is possessed of a sufficient mastery of the dark arts of passive aggression to judo these crude attacks back onto e.g. Bank of America. Ken Lewis never knew what hit him).5

After some reflection, it should be clear that it really is worth examining Pandit's testimony carefully. This, dear reader, is the new face of the executive: obedient lapdog to an Administration that is beholden to so many interest groups that the hope of any legislation with less than a four-digit page count is long gone. The executive corps will quickly become a cadre of perfectly saccharine sycophanta, their image-conscious, public-spin expertise honed over dozens of appearances in front of legislative committees and oversight boards almost as varied as the fractional interests they owe their power to. An executive far more concerned with avoiding the ire of their varied masters than with obtaining praise- for the latter is all but impossible when the committee you must please has seventy members. The safest course is the least active. Lots of motion, little action. Light and noise is the new standard. Don't think it is limited to financial institutions either. One need only recall the spectacle that was Big Auto's hearings to realize that no one is immune.

In short, the Administration made it very clear that even small, minority stakes with no voting rights would be leveraged to the full extent of the law of mob rule to impose the populist schizophrenia of political and industrial policy on those institutions unfortunate enough to be caught up. You better be lending to who we tell you to... or else.

Given this, we are surprised that the word "nationalization" is now met with a recoiling horror? Even if Americans can not quite articulate it yet, this is the essence of fear that lurks deep in that rarely accessed and never discussed part of a common understanding of the dangers of legislative committee rule.