Economist, lawyer and deadpan comedian Ben Stein doesn't find much humor in the way the federal government is handling the economic crisis.
“I had a conversation with three former chairmen of the [Securities and Exchange Commission], and they all said it was a great idea to let Lehman Brothers [Holdings Inc.] fail. They said it's good if you're teaching them a moral lesson,” Mr. Stein said last week during his keynote address at LIMRA International Inc.'s annual conference in New York.
“There are people to this day who say we should let banks fail,” he said. “Well, that's fine if you want another Depression.”
Despite the Federal Reserve's declaration that the
recession is officially over, Mr. Stein said the economy is “scraping the very bottom.”
“I must say that if the
recession is over, it may be apparent to everyone in Washington, but not to those of us in the rest of the country,” he said.
While the government flooded the banking system with liquidity, and the financial industry gambled on high-risk mortgage loans and credit default swaps, few of the nation's economic leaders had any idea their decisions would lead to catastrophe, Mr. Stein said.
He noted that
Federal Reserve Chairman Ben Bernanke claimed that there was no housing bubble in 2005, while former Fed Chairman Alan Greenspan once praised credit default swaps because they supposedly took risk out of the market.
“It's scary to think that people that smart can make mistakes,” Mr. Stein said.
Nevertheless, the insurance industry made it out of the crisis largely without failures along the lines of what hit the banking industry, Mr. Stein told the audience of insurance executives.
“Millions of Americans have lost their jobs and their homes, but nobody who was insured — nobody who was lucky enough to lay a risk on an insurance company — lost sleep,” he said. “You guys promise security and peace of mind; that's a lot.”
