The Watchmen: This American Life on The Meltdown

This American Life is a great show, and I only recently started listening to its podcasts on a regular basis.

TAL has done a number of shows during the financial meltdown, and doing a marvelous job of explaining just what's been happening.

The most recent of these is called The Watchmen, where they look for the agency or agencies whose job it was to regulate AIG. Partly because they don't expect the Congress to perform such a search, and partly because even if they do it would be in a circus atmosphere with no positive outcome.

http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1301

Since Congress hasn't held 1930's-style hearings into the causes of the financial crisis, we stage one of our own. The subject? The regulators and watchdogs who were supposed to be overseeing the banks and the finance industry—to make sure things wouldn't blow up like they have. Clearly something went wrong. Today we pound a gavel and ask: where were the watchmen?

This is very worth an hour of anyone's time to listen to. As much as the show cautions against anger towards each of the miscreants as they are revealed, it struck me that the Office of Thrift Supervision was nominally in charge. This agency had formerly been the Federal Savings and Loan Insurance Corp FSLIC (or was it the Federal Home Loan Bank Board FHLBB?) .. and was simply rebranded and, yes, de-fanged by Bush I and later Clinton.

Alas, it's not so simple, and listening to the twists and turns basically leaves one with the impressions that

• the system was structurally incapable of preventing the problem
• all reform was pretense, and the issues of the S&L crisis were simply swept under the rug

Listen, be angry, and try to think of ways to really prevent another recurrence.