Dear
readers, I'm going to ask you for a favor.
I
want you to go to the biggest, most opulent homes in your community
and leave $10,000.00 on each of their doorsteps.
That's
right. $10,000.00. On the doorstep.
Then
I want you to write out a check to the following: Google,
Goldman-Sachs, Exxon, British Petroleum, Apple, Microsoft and Citibank for—you guessed it—10K.
Stay
with me. Just one more step.
Could
you please petition your congressional representation (yes, you still
have some—sort of) and the president to imbue the nation's
largest and most powerful corporations with absolute power?
Thank
you.
OK.
Sounds crazy, doesn't it?
At your most-civil, you might be thinking,
well, what's he thinking? Did he have a bowl of bad chili? Forget to
take his meds? Tell me he's not experimenting with meth!
At
your most uncivil, you're speculating into which bodily
orifice I've inserted my head.
Fair
enough.
Suffice to say I'm in a bad way. Let me tell you why.
In
2008, our economy collapsed after years of abuse and neglect. It
wasn't because of ignorance, as you could rightly claim with the 1929
crash that kick-started the Great Depression.
No,
this crash was premeditated. Enacted with malice aforethought. It was
manufactured by jackals who purchased the prostitutes which
inhabit the U.S. Congress.
Seduced
with promises of unlimited campaign financing, our mealy-mouthed elected representation then repealed the very legislation meant to protect us from
the ravages of unregulated bankers and drooling Wall Street
carnivores.
Before
being neutered in 1999, the Glass-Steagall Act had protect the
American economy for sixty-six years. But
it also kept Wall Street in shackles.
Dozens of billions were made
instead of hundreds of billions. Some chief executive officers were forced to drive two-year-old Ferraris. Bonuses that rendered Major League
Baseball payrolls chump change weren't even a glimmer in Wall
Street's eye.
You
can see why something had to change.
It
shouldn't be a surprise that a Republican, Phil Gramm of Texas, introduced the bill that would play such a large part in unraveling our economy. Two more Republicans, Jim Leach of Iowa and Thomas
Bliley, Jr. of Virginia, quickly co-sponsored it.
After
tossing the public a bone which amounted to bringing the woman you've
just raped a bouquet of roses, the Senate and House passed the final
version of the Financial Services Modernization Act that November,
with President Clinton signing it into law on November 12, 1999.
Do
you remember what you did on that date? Ironic how an event
which will one day upend your life can pass by practically
unnoticed, isn't it?
It's
worth noting that the bill received very little opposition.
In the
Senate, 98.1% of voting Republicans and 84.4% of voting Democrats
favored the bill. It was much the same story in the House, with 97.6%
and 75.2% of voting Republicans and Democrats, respectively,
approving.
Only
Michigan Democrat John Dingell voiced concern, exhibiting an uncanny
prescience when he stated on C-SPAN that after creating
too-big-to-fail banks, passage of the Gramm-Leach-Bliley bill would
one day necessitate a federal bailout.
It
is remarkable that so few questioned legislation which would undo
protections enacted in the aftermath of the worst financial crisis in
American history. Protections whose effectiveness was measured
in the six-decade absence of home-wrecking financial cataclysms since
they became law.
Combined
with the Riegel-Neal Act of 1994 (also signed into law by President
Clinton—who says Democrats aren't business-friendly?), the
environment in which banks and financial services entities operated
in was changing rapidly.
Everyone was going to get bigger and richer
and less-regulated. Yay!
Banks
and investment houses no longer had to adhere to bothersome
restrictions dictating how and with whom they did business. They
could co-mingle in any way they pleased. At its essence, the Financial
Services Modernization Act meant that banks and investments firms
didn't have to bother with condoms any more.
By
the ninth anniversary of its passage, the U.S. economy was in a
shambles. An unholy trinity of mortgage brokers, investment firms and
gargantuan banks, let off the leash of regulation, had sodomized
anything and everything they could lay their hands—and other body
parts—on.
The
economic equivalent of unwanted pregnancies and sexually-transmitted
diseases came with an enormous price tag—one which was borne
by the tax-paying public. Congress fixed Wall Street in a single weekend,
earmarking 700 billion dollars to bail out the very firms whose
deregulation-inspired recklessness had destroyed the economy.
(Permit
me a moment to point out how cries of “socialism!” accompany such
aid when it is directed at individuals, but an amount which would
fund the SNAP program for a decade was given away in a matter
of days without so much as a syllable of protest.)
Fast
forward to Fall, 2014 and the creation of a new national budget.
With the
nation still mired in a slow-motion recovery, Wall Street feels
put-upon. This despite a robust four-year run that finds the DOW,
which bottomed-out in March of 2009 at 6,626, having more than
doubled, closing on December 5th at 17,958.
For
the mathematically-challenged, that's an increase of 63.1%. Clearly,
their economy is doing just fine.
But
it's not enough.
The
creation of a consumer protection agency and the Dodd-Frank financial
reform left Wall Street and our corporate banks feeling picked-on.
Unloved. Unappreciated. Why haven't we cuddled them and kissed them goodnight?
Never
mind that the consumer protection agency isn't headed by firebrand
Elizabeth Warren because the banks and Wall Street were afraid she
might actually do something, or that the Dodd-Frank bill was
drastically watered-down to ensure quick passage by an obstreperous Congress.
No,
the petulant and entitled product of unbridled wealth and privilege
wants more.
Step number-one is the removal of safeguards which were
designed to limit our liability in the event Wall Street and Citibank
couldn't control themselves. Translated, we (that's you and me) are
now liable if Wall Street and our ginormous banks get too much
slobber on the steering wheel and lose control of the car.
I'll
let CNN explain:
“At the center of the dispute are
arcane financial instruments known as loan swaps. Those are contracts
between banks used to spread the risk in their loans and trades.
A rule that would have limited the use of those swaps by
commercial banks (think Citigroup (
C)
or JPMorgan Chase (
JPM))
was essentially stripped out of the law during budget negotiations in
recent days.
Swaps were ground zero of the 2008
meltdown of the global financial system. That's because banks had
bundled risky mortgage loans and sold them as bonds. And to make the
bonds more appetizing to investors, swaps were created as a form of
insurance that the bonds would pay as promised.
So when the housing bubble burst and so many people couldn't
afford their mortgage payments anymore, those bonds blew up. And the
banks and firms like AIG (
AIG)
that held the suddenly-toxic swaps contracts needed bailouts.”
And
later:
“One provision of Dodd-Frank to
protect taxpayers was a rule saying major banks couldn't use their
normal commercial banking operation to create, buy or trade these
kinds of swap contracts. Instead those contracts had to be held by
separate entities whose assets were not insured by the Federal
Reserve or the Federal Deposit Insurance Corp.
"If Wall Street banks want to gamble, Congress should force
them to pay for their losses, and not put the taxpayers on the hook
for another bailout," said a letter signed this week by both one
of the most conservative senators, David Vitter, and one of the most
liberal, Sherrod Brown.
Even though Dodd-Frank was signed into law more than four years
ago, the rules to limit banks gambling with taxpayer-backed money are
not yet completely in place.”
So.
You get this, right?
If
Citibank and Wall Street fuck-up, it's on us. Their losses will be
insured
by the same people who insure your bank account—the taxpayer-funded FDIC. Which is
another way of saying we the people are on the hook for it.
It's called gaming the system. Casino-owners in Las Vegas will throw you out on your ass and put you on their permanent shit list if they catch you doing this, but in Washington D.C. it amounts to following best practice.
I'd
be fine with this if we also shared in Wall Street's gains. But
strangely enough, those will remain in the private sector. Only their
losses
will find their way to the public sector.
Privatized
gains, publicized losses. Still think the President runs the
country?
Call
America what you want. Just don't call it a democracy.
