In politics, there seems little point in feeling you are in the right, unless there’s someone obviously in the wrong whom you can lord it over.
But, argues the FT’s Gillian Tett in her Friday column, the subprime rot may not lend itself to finger-pointing.
They’re going to give it a good go anyway, she notes. For example, it has now caught the attention of parts of the US political world that Roland Arnell, who created and ran Ameriquest, used to be a large player in the subprime world, and that Mr Arnell was a couple of years back appointed US ambassador to the Netherlands.
Whatever the ins and outs of the Ameriquest case, says Tett, there are signs that the political ramifications of the credit mess are set to turn uglier. Moreover:
what could make the mudslinging particularly ugly is that it is becoming clear to politicians, investors and bankers alike that there is no magic bullet available to quickly end the subprime woes – and certainly not before the next election.
Or, we’d add, a “silver bullet” as Hank Paulson would have it, when launching America’s new politics of intervention on Thursday.
Policy steps that could buy time or soothe fears comes with significant potential costs – and some look fiendishly difficult to implement, risking unleashing new woes. Tett writes:
Given that, many politicians are eager to find somebody – anybody – to blame. But that is not entirely easy either. After all, foreigners (say, the Chinese) cannot be blamed for the subprime woes. And while some politicians think rating agencies are convenient whipping boys, policymakers know that if that line of attack goes too far, it risks undermining investor confidence in the entire credit world.
Wall Street doesn’t provide a quick and clean scapegoat either. While the mortgage brokerage industry, in need of better regulation, operated as part of a broad, tightly entwined system of politics and finance.
Tricky, then, for the politicos to apportion blame without ending up tarnishing themselves.