We're angry. We're frustrated. We feel cheated and abused. We're not going to take it anymore.
But then again, we don't have much choice, do we? Sure, we can demand that a few more heads roll on Wall Street or at the Treasury, or that a few hundred million are clawed back from financiers who never deserved it. But the reality is that no matter what we do now, tens of trillions of dollars in wealth have been lost. All that's left is simply an elaborate exercise in settling up the accounts.
At the end of the day, the thing to get outraged about is not the $440 million in bonuses at AIG or the $10 million that Citigroup is spending to redesign its shrunken executive suite. These may seem like princely sums, but they are almost insignificant compared with the real outrage: the hundreds of billion dollars of taxpayer funds that have been put at risk to keep AIG and Citi from failing and taking the whole financial system down with them. Let's keep our attention on the elephant rather than the pimples on its behind.
I realize that collective expressions of public anger can serve a useful purpose. At times like these, it feels good and is a way for a political system to let off some steam before a more dangerous explosion occurs. More important, it builds political momentum for sweeping reform of the regulatory apparatus while scaring the daylights out of people on Wall Street, who will now think long and hard the next time they get the urge to take excessive risks with other people's money.
But there's a danger in letting this outrage get to the point that it undermines the effort to contain the crisis. And with Congress now rushing to pass legislation taxing away the bonuses of every banker at every bank or financial institution that takes government money, that point seems to have been reached.
There's nothing fair about using taxpayer money to rescue a free-market financial system from its own mistakes. But the reality is that we can punish the bankers or we can save the banking system, but we can't do both at the same time.
It also isn't fair that homeowners who have paid their bills and been careful to not take on too much credit are being asked to provide relief to homeowners who have not. Sadly, the price of righteous indignation is a wave of foreclosures, a further decline in home values and billions of dollars of additional loan losses at banks that are already on government life support. Given the financial and economic hits they have already taken, that's a price that most "innocent" homeowners and taxpayers would probably prefer not to pay.
During a financial crisis, fairness is a luxury we cannot afford. During the 1930s, bankers and financiers lost everything, but the outcome — a decadelong depression — was hardly fair to the ordinary American. The key question is not whether something is fair, but whether it helps get us through this mess faster and at a lower cost.
A final point on outrage: We need to save some of it for ourselves. While it was Wall Street that got rich by peddling new ways for Americans to live beyond their means, the decision to do so was ours. It was we who ran up the credit card bills, we who drew down the equity in our homes and we who refused to tax ourselves for the government services we demanded. Wall Street bankers may have been the pushers, but it was we Americans who became addicted to the easy credit.