Worst part of our financial mess? We’ll do it again

April 18th, 2009 at 04:25pm Annette LaCross

Among the many object lessons to be learned from the financial crisis, one or two come through loud and clear:

If you’re going to sin, sin big. And take a lot of people down with you.

Disgraced financier Bernard Madoff, for example, didn’t do it right. Sure, he took lots of people down with him, but in the end, he was the only one standing when it was time to pay the piper.

If, on the other hand, you’re Maurice Greenberg, who for 38 years ran American International Group, you can testify to Congress — with a straight face — that you had nothing to do with AIG’s financial peccadilloes because you left in 2005. And, apparently, get away with it.

In other words, all manner of transgressions will be forgiven, or at least overlooked, in this new era as long as enough people have been damaged.

If Madoff had only managed to make the major financial institutions on Wall Street complicit in his Ponzi scheme, he’d probably be getting a bailout, not a jail sentence.

Are you too big to fail, even though you helped mire the global economy in a recession worse than any in recent memory? Get trillions of dollars in bailout money from the federal government.

Bought a house you can no longer afford? You could get a bailout of your own. And even if you don’t qualify for the Obama administration’s program, so many homeowners are either in trouble or under water that you may suddenly find yourself with a little more leverage when approaching your banker.

If your lender balks, however, and your last resort is bankruptcy or foreclosure, you probably shouldn’t lose sleep over your credit score, either. After all, a foreclosure or bankruptcy filing this year or last won’t bear the same weight as one in 2005.

Even the vaunted New York Stock Exchange is re-evaluating how to delist companies. To protect itself from a wave of delistings, NYSE Euronext approached the Securities and Exchange Commission about relaxing its requirement that companies listed on the New York Stock Exchange maintain a share price of more than $1. Nasdaq OMX already suspended its minimum-bid price and market-cap requirement.

And I’m sure there’s plenty more to come. Hopefully, this won’t be the only lesson learned from the economic comeuppance of 2008.

But recessions keep coming back to haunt us, no matter how many times we’ve been through them. It makes me wonder how long it will take us to forget this time.

Contact Business Editor Annette LaCross at alacross@rrstar.com or 815-987-1295.

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