Ask yourself the following:
If the de-regulation of Banks (topped by the repeal of the New Deal legislation known as the Glass Steagall Act by a coalition of Republicans and DLC Democrats) and financial institutions and the gutting of the SEC’s enforcement activities by the Bush administration had not occurred, would there have been a bailout of Wall Street?
Would Wall Street’s manipulation of speculation in the the real estate market to sell overvalued mortgage backed securities and related financial derivatives (Warren Buffet’s presciently named weapons of financial mass destruction), have occurred?
Would AIG have collapsed because it was permitted to insure the risk of these “securities” without sufficient capital reserves on hand to cover that risk?
Would politically well connected players such as Goldman Sachs made billions off exploiting the resulting economic collapse?
Finally, would over 700 banks in America (that’s one out of every eleven banks) be at risk of going insolvent this year according to the FDIC?
The Federal Deposit Insurance Corp. said that the number of banks on its so-called “problem list” climbed to 702, its highest level since June 1993. […]
… Nearly a third of the more than 8,000 lenders across the country reported a loss for the year, the FDIC reported Tuesday. […]
[FDIC Chair Sheila] Bair confirmed that the pace of bank failures would pick up this year, which would likely put a further strain on the agency’s deposit insurance fund.
1993, by the way was a recession year that came after a decade in which the US financial system muddled through the Savings and Loan crisis. another collapse of financial institutions brought about by the deliberate policy of the Reagan and Bush (Bush I) administrations to terminate with extreme prejudice most of the federal regulations governing those institutions.
By 1993, many S&L institutions had been “resolved” (i.e., liquidated) and their assets sold to commercial banks, which in part led to the rise in “at risk” banks that had absorbed liabilities of those many failed S & L institutions they acquired once the 1992 recession hit. Still, in 1993 there were roughly 12,000 banking institutions, a much higher number than exists today.
De-regulation has led to ever increased consolidation of the financial industry, so that now we have only about 8000 banks and savings institutions. That 1 in 11 banks are on the brink of insolvency is a direct result of the people responsible for our current economic crisis: Wall Street, lax enforcement of securities laws, deregulation of Wall Street and the Banks, and the essential non-regulation of the more exotic forms of financial products, the securitized debt instruments and Credit Default Swaps known as derivatives.
Yet these are the very policies, which nearly caused a second Great Depression, led to mounting economic inequality and unemployment, and to the continued decline and destruction of the American middle class, are the ones Republicans and conservatives wish to preserve. Indeed, the more radical among them want to eliminate any regulation whatsoever, including the elimination of the FDIC, the Federal Reserve and the SEC.
Can you imagine a world in which the financial markets were completely unrestrained, and institutions to use their power and influence to chase profits regardless of risk and create new scams to foist on unsophisticated purchasers? And in such a world who would qualify as sophisticated buyers other than the banksters themselves?
When even Henry Paulson and Alan Greenspan have issued mea culpas about the role deregulation played is gutting our economic prosperity, one wonders how the Republicans still manage to convince anyone but those who are ignorant of the role played by the implementation of Republican policies and radical free market ideologues in creating the economic mess we find ourselves in. Yet they do. The power of the Big Lie technique continues to hold sway.
Well, let me tell all those tea partiers and Ron Paul fanatics and Sarah Palin groupies who are buying this load of bull crap that it isn’t Marxist socialism they need to fear from Obama and the Democrats (who have shown themselves to be far too friendly to the interests of big business and Wall Street than most of us here on the progressive side of the divide ever imagined would have been possible). It’s the continued failure of our government officials to resist the lobbying efforts and the campaign contributions of the Banksters, who have gamed the system to benefit themselves and their wealthy friends at the expense of the rest of us.
Until the true nature of the devastating effects of financial deregulation are appreciated by a wider public, we will continue to see the decline of the Great American Economic engine. We will experience more financial bubbles and panics and crises, and we will continue to distribute the benefits of our economic production (which is a shrinking pie, btw) to the richest among us.
The road to serfdom and the loss of our liberties and economic security will not be paved by liberal and progressive policy solutions to the massive problems we face. No, the road to serfdom has already been paved by wealthy business interests and formerly fringe conservative ideologues who have implemented their ideas and made them our current reality. The longer we continue to walk down that path following the Pied Piper of free marketeers and globalization advocates and Wall Street insiders, the more enslaved we, and our descendants, will become.
