Public's Response to Financial Crisis

"Fear Factor" Trumps Anger, Outrage -- So Far

One of the biggest puzzles of the ongoing financial melt-down is, given the manifold examples of greed, recklessness, dereliction of duty, and sheer incompetence on display on Wall Street and elsewhere in recent years, where is the public outrage?

The most plausible explanation is that it's too soon.

Right now, most Americans are like parents whose kid just ran away from home. They're sick with fear and worry . . until the kid is safely home. Then, the parents' gratitude and relief quickly turn to . . . anger, and thoughts of appropriate punishment.

Right now, the economic "kid" is still missing.

Unemployment is rising, the economy is contracting, and the financial markets are in intensive care. Stocks and houses are down dramatically -- and still falling. Under the circumstances, most people are too focused on their precarious finances and job security (or lack thereof) to think about placing blame.

Fearful, absolutely. Angry? Not yet.

Three other factors also seem to be at play.

One. Lack of leadership.

By definition, a society whose leadership is strong, wise and responsible doesn't get into the horrific financial mess we're in. Obviously, it wasn't, and now we are. That same lack of leadership explains why there hasn't been an orchestrated, national response -- at least beyond the Treasury and Fed's ad hoc cash infusions and bailouts.

We're also in the middle of a political transition.

At the moment, it is too soon to tell whether the incoming administration truly represents a break with the past -- and has a coherent plan for the future. Given the hope, affection, and sheer regard people have for Barack Obama, it's fair to say that any plans to storm Wall Street's gates, Bastille-like, have been postponed, at least temporarily.

Two. Too complicated and big.

Few people have the background and business vocabulary to intelligently parse what just happened. Most members of Congress certainly don't. That's why AIG receiving $150 billion (and counting) of taxpayer money goes surprisingly unremarked by the general public. Meanwhile, that same company spending $400,000 on a corporate retreat provokes a tidal wave of protest and scorn.

Ditto for all the arcane financial instruments underlying the blow-up. Credit default swaps, mortgage-backed securities, collateralized debt obligations, derivatives, structured finance, debt tiers and tranches -- it goes on and on.

It's all Greek (or Latin) to laymen -- and apparently, to many of the pros, too (see next).

Three. Faceless villains.

Quick: name the heads, past or current, of Fannie Mae, AIG, Citigroup, Merrill Lynch, Lehman Bros. and Countrywide. Bonus question: describe how these companies (formerly) made their money (that's a trick question: the CEO's apparently couldn't answer that one, either).

Previous scandals have featured household names like Dennis Kozlowski (Tyco), Ken Lay and Jeffrey Skilling (Enron), and Bernie Ebbers (Worldcom). So far, the poster boys for the market melt-down are . . . Franklin Raines (Fannie Mae ex-CEO), Angelo Mozillo (Countrywide) and Richard Fuld?? (long-time Lehman Bros. CEO). Only former Fed Chairman Alan Greenspan is a name that resonates with most people. (Note: although a late entrant, Bernie Madoff's star is rising, er, falling rapidly.)

Given all the harm wrought, this is a pretty slight rogue's gallery.

Without a lightning rod, there's no place for the anger to go, even if it exists.

There's still time.

Eventually, the financial storm will pass, all the sordid details about Wall Street misconduct will be aired, and there will be faces to go with the misdeeds. At that point, the public's mood is likely to be very different. At least I hope so . .