A Word From the 1%

NPR’s ‘Marketplace’ featured this post from The Reformed Broker, a financial insider who is calling out the industry. Via MarketSqueeze.com…

At our darkest hour we gave these banks every single thing they asked for. We allowed investment banks to borrow money at zero percent interest rate, directly from the Fed. We gave them taxpayer cash right onto their balance sheets. We allowed them to suspend account rules and pretend that the toxic sludge they were carrying was worth 100 cents on the dollar. Anything to stave off insolvency. We left thousands of executives in place at these firms. Nobody went to jail, not a single perp walk. I can’t even think of a single example of someone being fired. People resigned with full benefits and pensions, as though it were a job well done.

The American taxpayer kicked in over a trillion dollars to help make all of this happen. But the banks didn’t hold up their end of the bargain. The banks didn’t seize this opportunity, this second chance to re-enter society as a constructive agent of commerce. Instead, they went back to business as usual. With $20 billion in bonuses paid during 2009. Another $20 billion in bonuses paid in 2010. And they did this with the profits they earned from zero percent interest rates that actually acted as a tax on the rest of the economy.

Instead of coming back and working with this economy to get back on its feet, they hired lobbyists by the dozen to fight tooth and nail against any efforts whatsoever to bring common sense regulation to the financial industry. Instead of coming back and working with the people, they hired an army of robo-signers to process millions of foreclosures. In many cases, without even having the proper paperwork to evict the homeowners. Instead, the banks announced layoffs in the tens of thousands, so that executives at the top of the pile could maintain their outrageous levels of compensation.

We bailed out Wall Street to avoid Depression, but three years later, millions of Americans are in a living hell. This is why they’re enraged, this why they’re assembling, this is why they hate you. Why for the first time in 50 years, the people are coming out in the streets and they’re saying, “Enough.”

Read the rest here.

And visit The Reformed Broker here.

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6 thoughts on “A Word From the 1%

  1. The economics of the bailout are a bit more complex than portrayed i think. The Bush adinistration at first kicked in about $500 billion towards its end. The Obama administration then kicked in another $1.5 trillion and then another $800 billion for job creation–those shovel ready projects that apparently, “were,”not quite shovel ready,” and Mr. Obama joked about the waste of the money, just as he has let the disaster of the curren solar project fiasco. Of course, the banks should have been allowed to go into bankruptcy and restructure and get rid of their sour debts. But somehow the Bush and Obama administrations would not do this. Most of the bad debts were the result of Freddie and Fannie backed bad home loans to people who could not qualify for normative loans and these were packaged into wierd deals that were sold. The social engineers of both the Bush and Obama administrations continue to repeat errors that any srudent in Accounting 101 would now is simply very bad policy. Bad is bad no matter how packaged. We will continue to reap the whirlind of simplistic social engineering efforts by politicians more concerned with populism than sybstance, Of course, Mr. Obama’s largest political donors were/are just those same bankers on Wall Street. A double whammy results from Mr. Bernanke allowing interest rated to be just about zero, so banks use money to but federal notes with zero coast money and make 2-3% at no risk. No business would loan money at risk when at no risk they can make money. If someone came to you or anyone and gave you $1,000,000,000 at no cost, and you could invest it at no risk, your prudent business decision would be to invest at no risk. The banking industry is the backbone of the American economy; it is the only real financial underpinning for small and large business and employs perhaps 2 million people. That is a million fewer than the federal government employs. Many, perhaps 500,000, work largely from commissions and bonuses. The TARP $800 billlion create jobs waste apparently ended up spending more that $200,000 fir each job created, and most of those were temporary, not permanent jobs. A billion is lareg, a thousand million. TARP seems to have wasted most of $800 thousand million dollars of taxpayers money.

  2. It is a systemic problem.
    Wall Street/K street are connected at the hip and funding the system.
    The bankers and financial moguls are still very much guilty of what’s said in the post.

  3. I think Donald is partly right in that the bank situation is nuanced by the many causes of the collapse, though I think he exaggerates the role of Freddie/Fannie and the desire to make home ownership affordabe for many – (that is indeed “social engineering” that another unintended consequence is the decades-long subsidized suburban flight from the cities leaving many cities both financially unsustainable but still necessary) and he downplays the role of corporate greed (not just the high bonuses but the repackaging and slicing of mortgages, default swaps and derivatives that could not be properly evaluated but were known by insiders to be a ponzi scheme, the granting of mortgages by hucksters who knew they couldn’t be paid back but were in it for a quick buck (think Countrywide) and more.

    I also think the right-wing, by endlessly repeating the lie that the stimulus was a failure, has indeed convinced most people that it was even though it succeeeed in stabilizing the economy that was losing 800,000 jobs/month, and both saved the jobs of numerous teachers, police and such as well as provided new jobs rebuilding infrastructure. For example I believe RIDOT has completed about 63 badly needed projects (of course it takes a little time to get such projects underway) and we have finally begun to rebuild our railroad infrastructure too which despite (or maybe because of) its inherent energy efficiency and low pollution has drawn scorn from the right-wing which as always serves the fossil fuel industries.

    • barry-on rail and electric transit I am one “right winger”who is 100% in favor of both.
      I depended on the subway/bus/trackless trolley system growing up in NYC.
      I never bothered to get a drivers’ license until I was in the military service.

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