Financial Crisis Amnesia? Or the Perils of the Passive Voice →
Tim Geithner (aka the tax cheat Treasury Secretary) wrote an op-ed in the Wall Street Journal, defending the new financial regulations. I think he better illustrated the perils of the passive voice, however.
A large shadow banking system had developed without meaningful regulation, using trillions of dollars in short-term debt to fund inherently risky financial activity. The derivatives markets grew to more than $600 trillion, with little transparency or oversight. Household debt rose to an alarming 130% of income, with a huge portion of those loans originated with little to no supervision and poor consumer protections.
A "shadow banking system had developed"? Just like that? All by itself? I think there might be some interesting history about why various people started trading and banking outside of the normal system. What incentives did they have to do that? What was wrong with the normal system?
Why were these shadow bankers so interested in inherently risky financial activity? Did they feel constrained by existing restrictions and regulations? Did they feel driven by some kind of requirements to see out excessive risk?
Why did the derivatives market grow so large? What benefit did bankers see in trading so massively in derivatives? Was there a reason that they couldn't trade more directly?
What did households choose to grow their debt so dramatically? What factors made them feel that large levels of debt were both safe and desirable?
These are just a few of the potential questions that people might ask, if Geithner had used the active voice. It's a good thing then that he used the passive voice to defend the administration's priorities.
This entry was tagged. Fiscal Policy Regulation