Some might not like the tone or source of this article, but I think it’s appropriate given the blood-boiling assessment it makes:
Deregulation of the banks had been key to the 2000s boom. During preceding years, especially under Democratic President Bill Clinton, the federal government’s rules for financial institutions and operations were rewritten to meet Wall Street’s thirst for bigger gambles. For instance, parts of the Glass-Steagall Act of 1933, instituted to put firewalls between commercial banks, insurance companies, securities firms and investment banks in order to stop another 1930s-style market panic, were gutted.
As a result, financial institutions were free to invest in more exotic and riskier financial products–with bigger payoffs all around. The people at the head of firms like Lehman Brothers were raking it in–making the “greed is good” bloodsuckers of Wall Street during the 1980s look “fiscally responsible.”
Take Richard Fuld, who ran Lehman from 1994 until 2008. For his “hard work” at the high-finance equivalent of playing the ponies, the “Gorilla of Wall Street,” as Fuld was known, made the list of America’s 25 highest-paid executives for eight years in a row–until the very year the bank collapsed. He raked in nearly $500 million in compensation during his time as CEO, and he still owns three “homes”–mansions in Greenwich, Conn., and Jupiter Island, Fla., and a ranch in Sun Valley, Idaho.
From the first days of the financial crisis, the “experts” heaped blame for Wall Street’s meltdown on ordinary people–workers who “caused” the housing crash because they “bought homes they couldn’t afford,” for example.
But the real culprits were parasites like Richard Fuld. No one could possibly claim that Fuld or his fellow banksters contributed anything to the good of society as a whole. On the contrary, they sucked billions and billions of dollars into their Wall Street casino for the sole aim of making a tiny group of people rich beyond the wildest dreams of most people.
Furthermore, these profitable institutions and their wealthy bosses are doing better than ever, even while the overwhelming majority of Americans continues to suffer:
In March, the Dow Jones stock market indicator returned to the high point of the 2000s boom almost five years before, erasing a more than 50 percent loss during the crisis–and it’s continued climbing since. The profitability of the banks and corporations had surpassed pre-recession levels long before. Since the crisis times of late 2008, corporate profits have increased at a rate of more than 20 percent every single year, according to the New York Times.
For the elite at the very top of society, things have never been better. According to IRS figures, virtually all the gains from the economic recovery since 2009–95 percent–have gone to the top 1 percent. More than 60 percent of the gains went to the top 0.1 percent–that is, people with annual incomes of more than $1.9 million.
As anyone reading this article almost certainly knows, the working-class majority in the U.S. is living in a very different world.
Some 11.3 million Americans are unemployed, according to the Bureau of Labor Statistics, and tens of millions more have dropped out of the workforce or struggle to make ends meet with part-time jobs. Worker productivity is up, having gained nearly 25 percent from 2000 to 2012, according to an August report from the Economic Policy Institute, while “wages were flat or declined for the entire bottom 60 percent” of the workforce.
The foreclosure crisis that followed the Wall Street crash has largely left the news, but it’s not over. Home prices have begun to rebound generally, but many working-class families still aren’t out from under extreme mortgage debt. Almost 25 percent of homeowners with a mortgage were “underwater”–meaning they owe more on their loans than their homes are worth–as of the second quarter of 2013, according to the Zillow real estate database.
To add more insult to injury, we the people, who have already disproportionately suffered from Wall Street’s malfeasance, has also played an unwitting role in helping it to prosper:
Working with the support of congressional Democrats, including presidential candidate Barack Obama, the Bush administration–despite its claimed reverence for the free market–put together the $700 billion Troubled Asset Relief Program (TARP), giving the Treasury Department the authority to take over bad debts and pump cash into major financial institutions. In addition to this, the government eventually committed trillions of dollars to various programs to help the banks.
When it took over, the Obama administration–its Treasury Department staffed by the same Federal Reserve officials who presided over the crisis, alongside plenty of former executives from Goldman Sachs and other banks–adopted the Bush proposal almost without alteration.
When anyone questioned why the government was pouring taxpayer dollars into institutions that had gambled their way into crisis, the answer from the establishment was that a financial industry strengthened by the TARP and reined in by new financial “reforms” would be able to lend money to finance new investments.
The exact opposite happened–banks and other institutions tightened up on every form of credit. For example, in the first three months of 2012, JPMorgan Chase, Wells Fargo, Bank of America and Citigroup cut their lending by a collective $24 billion, nearly wiping out the $34 billion increase in lending from the whole of the previous year.
With all the federal funds sloshing around uselessly in the financial system, the banksters instead started banking guaranteed, risk-free profits–by taking money from the Federal Reserve lent to financial institutions at an effective interest rate of 0 percent, and lending it back to the government through the purchase of Treasury bills at 3 percent interest.
There is little question that this system is broken, plutocratic, and increasingly less representative of the people, much less interested in the general welfare. I think there is still hope for reform, both political and economic, but it will take a long time and a lot of hard work and unity on the part of the public. How much longer until this systemic injustice becomes unbearable?