Felix Salmon did a tremendous job yesterday detailing the latest accounting skullduggery at BofA, summarizing a shift in derivative assets from subsid Merrill Lynch to the balance sheet of the BoA retail bank. The end effects, although admittedly unquantifiable, are that a combination of the FIDC/taxpayer and unwitting BofA depositors are now fully insuring the counterparties to a multi-bazillion dollar portfolio of dodgy derivative positions. This is, of course, outrageous on two fronts, both increasing the taxpayer liability for bad investment bank decisions at a time when previous support is generating angry protests, and also because the move highlights the complicity of government institutions who have an actual legal obligation to the state, not the industry. To the extent that it improves Merrill’s balance sheet, it is also likely to facilitate further aggressive lending with the implicit guarantee that, if the loans go bad, the accounting swap can just happen again. I’m won’t re-hash the details – read Felix’s “BofA puts taxpayers on the hook for Merrill’s derivatives” HERE.
For the majority of Americans, this story is eye-wateringly mundane. Accounting changes do not make for highly-rated CNN exposes. And here, for me, is the central problem for OWS – corruption is boring. Like most things truly tragic in the human sphere (obesity and substance abuse come immediately to mind), corruption occurs through the steady accumulation of small, seemingly meaningless decisions – cheeseburgers versus broccoli to extend an already tortured metaphor – rather than the sudden appearance of a Stalin-like villain that can be replaced.
The idea of a revolution that will end with Lloyd Blankfein’s handcuffed parade through a rotten vegetable-wielding mob is a satisfying one for adolescent minds. Much less satisfying is the prospect of strapping on a tie and beginning the excruciatingly detailed and largely anonymous process of lobbying for accounting reform or, at the very least, the enforcement of existing laws. There is little doubt that the OWS movement would be far more successful from this point forward if, instead of marching on a neighborhood where bankers don’t work anymore, it went door to door raising money for a small army of motivated accountants and lawyers to besiege congressional members. It is, admittedly, a task where recounting your day is unlikely to get you laid on campus and a “No Free Swap into Hold to Maturity” placard is decidedly not going to show up on Tumblr.
I don’t mean to be patronizing, I have no right. I am not willing to head into the bureaucratic pit and slug it out for my interpretation of accounting or regulatory justice any more than the now freezing OWS protestors are. OWS has likely proven the most successful protest movement of the millennia, entirely productive in garnering and focusing attention. But, if anything lasting is to be accomplished its time for the less boredom-prone adults to take over before the wave finally breaks and rolls back. The revolution won’t be telegenic and in the unlikely event that it ever happens, it will be won by dogged lawyers in cheap rumpled suits and over-full briefcases. The real world is just not that exciting.