In response to an FT article by Gillian Tett on 8th July 2016, entitled ‘Why the US thinks we’ll vote again’
"A couple of weeks ago — shortly before that momentous June 23 referendum — I attended a dinner in New York where the head of a major financial company, whom I shall call “John”, was the guest speaker.
Unsurprisingly, he was asked about the risk of Brexit — but he cheerily brushed it off, declaring that “it was very unlikely” British voters would choose to leave. And even if they defied his expectations, he added, the chances of the UK actually departing from the EU were negligibly small.
The reason? When John, like many American business leaders and officials, looks at Brexit, his perspective is heavily influenced by another piece of recent history, usually known by the shorthand of “Tarp”. Outside the confines of the financial and policymaking elite, this particular saga is not especially well known. But “Tarp” refers to the $700bn “Troubled Asset Relief Program” that the US government devised in the autumn of 2008 after Lehman Brothers collapsed.
The reason the Tarp story matters now is that it demonstrates that votes can occasionally be overturned. When the Tarp measures were initially put to Congress, lawmakers angrily rejected the bill in a democratic vote (or, at least, a vote conducted by representative democracy). But when the stock markets subsequently collapsed, this sparked intense panic and remorse among members of Congress. So Hank Paulson, the US Treasury secretary, went down on bended knee (quite literally) in front of House speaker Nancy Pelosi and asked for a second chance. Congress then voted again — and this time they voted in favour of Tarp. “It will be the same in the UK [if there is a leave vote],” John confidently told the dinner table, as his companions nodded in agreement. “Everyone will panic and there will be a second vote.”
Thanks Ms Tett. I'm surprised you put much credence on anything that escapes the mouth of 'John', who sounds remarkably like a chap I call 'Jimmy the Diamond'. Or maybe it was 'Big Louie Blankcheck'...whatever...whoever it was...it was not 'the US'.
As for TARP, it is not just people inside 'the confines of the financial and policy making elite' who have a view of what happened, or what could have happened had Congress not fallen for the emotional blackmail of 'Hanky Panky Pauly' and his bended knee routine.
The response to the financial crisis was for the banks, not for the people of the United States. If the taxpayer had been the priority, there were other alternatives, despite any 'crap' Wall Street may dish up to the contrary. E.G.:
1. They could have temporarily nationalised the banks
2. Allowed the shareholders to be wiped out, negotiated a haircut with the bondholders, protected the depositors, fired the management, and prosecuted the CEOs for any and all illegality
3. They could have cut out the poisonous 'assets' and ring-fenced them, allowing the bad stuff to die over time, using anything that proved to have some value to reimburse the tax payers.
4. They could have sold the 'cleansed' banks back into the private sector, after reinstating Glass-Steagall
Full disclosure - I voted Leave. But I cannot imagine any circumstances where I would be impressed by a lecture from 'John' or any of his fellow CEOs, who head up what are effectively criminal organisations that are so powerful they get fined rather than go to jail.
You don't need to be a member of the 'financial and policy making elite' to recognise that for what it is - a protection racket.