Andrew Ross Sorkin Quotes
Debt, we've learned, is the match that lights the fire of every crisis. Every crisis has its own set of villains - pick your favorite: bankers, regulators, central bankers, politicians, overzealous consumers, credit rating agencies - but all require one similar ingredient to create a true crisis: too much leverage.
Sorkin, Andrew Ross. The New York Times, The New York Times Company, 2018.
Born thought that her agency was responsible for regulating the new esoteric financial products—derivatives including credit default swaps—for otherwise there would be no regulation at all of financial products that could dwarf the stock and bond market. Summers persuaded her to back off. When the Meltdown of 2008 hit, the huge derivative exposure of the large banks and some insurance companies was so great that it was one of the major causes for the meltdown of the entire banking system. Summers, normally a great economist not only called this one wrong, but later, along with most other government and private economists ignored a very explicit warning—See {637168}, {637986}, and {620038}.
[Most Americans do not realize that not wall bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC). That insurance covers only a basic amount ($250,000 at the time of the quotation was written, but nothing over the basic amount. There is no federal insurance for all the stock brokerage accounts. There is private insurance that will generally protect against the failure of a particular brokerage company failure, but that would not help in an industry wide failure]
There was a financial crisis in the country and the world when highly risky home mortgage loans defaulted leaving investors and speculators in mortgage-backed securities in a poor position. The investors had been reaping very high interest rates for their risky investments, but this was the first time that this form of risky investment had failed. The investors, of course were looking for a bailout from government. When the Bush administration failed to bail out investment bank, Lehman, there was a panic and the banking system of the country and much of the world froze up. Bush and his Secretary reversed their bailout of speculators policy and provided various assistants and bailouts to the very bankers and other investors who had caused the economic meltdown. The policy was continued by the Obama administration although the bailouts were just as distasteful to Obama as they were to Bush, but most economists agree that the two presidents very distasteful and unpopular bailout actions probably saved the nation from a massive depression. After being bailed out by the taxpayers, the Bankers then paid themselves exorbitant bonuses while the results of their management put 10 percent of the country out of work.
Volker was trying to reform the excesses of the banking industry in the aftermath of the Great Recession where the banks had to be bailed out by the American taxpayers.
Andrew Ross Sorkin is an American journalist and author. He is a financial columnist for The New York Times and a co-anchor of CNBC's Squawk Box. He is also the founder and editor of DealBook, a financial news service published by The New York Times. He wrote the bestselling book Too Big to Fail and co-produced a movie adaptation of the book for HBO Films. He is also the co-creator for the Showtime series Billions.
