My dear friend and former AEI colleague Alex Pollock, a one-time banker and an occasional guest on this site, is a great and learned man. He lives by and teaches hard-acquired wisdoms. Like, “Debts that cannot be paid will not be paid.” Or, apropos financial busts: “It will always happen again.” As my ten-year-old inquired of Alex: “Why does a wise man like you work with my dad?”
Perhaps because we both belong to a lost age. Pollock’s laws don’t encompass the new first law of finance, famously articulated by former Morgan Stanley CEO John Mack: “Your No. 1 client is the government.” Client No. 9 is, or was, Eliot Spitzer. Clients 2-8 are also government agents, such as state Treasurers. Clients 10-100 are trial lawyers. Borrowers, depositors, and investors are not clients; they are cannon fodder.
J.P. Morgan Chase head Jamie Dimon (on all accounts, an exceptionally honest and competent man) learned Mack’s law of finance the hard way. He moped about Dodd-Frank, and so the powers-that-be went after him and his bank. They’re not remotely done.