I heard a man named Mike Lofgren being interviewed on Bill Moyers' PBS TV program, Moyers & Company.
Lofgren held a position in government. He had been a Republican but has switched parties to become a Democrat.
He has recently published a book entitled The Party Is Over: How the Republicans Went Crazy, The Democrats Became Useless, and the Middle Class Got Shafted. As you might guess from the book's title, both the Republican and the Democratic parties come in for criticism from him.
He talks about how very wealthy individuals (as well as corporations) have been contributing very heavily to the Republican party. I have written about this. Both individuals and corporations are currently able to contribute unlimited amounts and remain anonymous at the same time. When PACs and foundations and other groups have complex and interlocking structures, it is frequently difficult to trace the ultimate source of much of this money.
I can add—this is not a number from Mr. Lofgren—that 89% of corporate contributions go to the Republican Party and only 11% to the Democratic Party.
Wealthy individuals hope to "buy" lower taxes on themselves. Corporations and Wall Street hope to influence government regulations such that regulations will fail to be enacted, or will be weak or otherwise favorable to these business entities.
As I have theorized in previous blog postings, Republicans and other right-wing interests have managed to gain support from many people who are not among the "one percent" by taking conservative stances on social issues; for example, they know they can win the support of the Religious Right, evangelicals, and other social conservatives by having right (in both senses) stances on issues such as same-sex marriage. Lofgren called these issues or the appeal to these voters "rube bait." But this is how a definite non-majority—the very wealthy--has been gaining wider support.
Lofgren explains how people, when they define issues as being a matter of good or evil (for example, according to or against their religious notions), will see any compromise as giving in to evil. This is why our government has been deadlocked on many of the vital issues before Congress. This can have effects such as when, in the stalemate over debt-limit-extension legislation a year ago, the delay necessitated a lot of shuffling of the books which in turn cost our country $1.3 billion.
Lofgren says that much of what has been going on on our political scene has been the result of one over-riding goal on the part of Mitch McConnell (the Senate Minority Leader): to make Obama a one-term president; but that most likely has been apparent to many people.
Mr. Lofgren also blames Democrats who, he says, have also become "corporatized." Bill Clinton greatly contributed to the economic crisis of 2008 by repealing the Glass-Steagall Act, which had been enacted during the Depression to separate investment banking from consumer banking; and deregulating derivatives. Obama, by giving in to the interests of the pharmaceutical industry, has made the Health Care Reform Act ("Obamacare") considerably more expensive than it needed to be.
Copyright © 2012
Showing posts with label Glass-Steagall Act. Show all posts
Showing posts with label Glass-Steagall Act. Show all posts
Sunday, September 2, 2012
Wednesday, May 2, 2012
Dangerous Dealings on Wall Street (and Whose Fault It Is)
Conservatives frequently blame President Obama for the economic situation of the last three years: high unemployment, slow economic growth, many people losing their homes to foreclosure, etc. They have conveniently short memories because they are forgetting that the problems began in 2008, before Obama was inaugurated and in fact a few months before he was elected.
If you are looking for someone to blame, perhaps former President Bill Clinton should be a candidate. He signed a law repealing the Glass-Steagall Act. Glass-Steagall was a Depression-era (1933) law enacted to address some of the abuses of the banking industry that had led to the stock market crash of 1929 which in turn was the trigger for the Great Depression. The Glass-Steagall Act prohibited both regular (or "retail") banking and investment banking from being performed by the same company. With the Act's repeal, now the large banks trade in securities and thus act in their own interest, often to the detriment of their own clients, not to mention the detriment of the national and even the world economy. Thus the banking industry now is much less regulated than it had been for six decades. This is a bad thing. It led to the financial crisis of 2008 – 2009, and the freewheeling of the banking industry continues--despite the enactment of some new legislation, which does too weak a job of regulating Wall Street and thus courts the danger of further troubles.
A four-episode program in the PBS' (the US's Public Broadcasting System) "Frontline" series entitled "Money, Power, and Wall Street" profiled three or four young people who went into Wall Street jobs upon graduating college. These people had degrees in mathematics and computer science, and began work in the highly sophisticated and automated trading of complex securities at the big Wall Street banks. Such jobs carried very attractive starting salaries of $150,000—perhaps three times what an average college graduate would earn—and could in a short time lead to incomes 10 and even 100 times that amount.
Yet these young people left their jobs because they had concerns that what they were doing in their jobs was harmful. These derivatives, swaps and other innovative financial instruments were being sold to individuals, cities, counties, and even convents of nuns in the US and even to national governments such as Greece. The risks of investing in these securities were usually very poorly understood by those who bought them. They went bad (to put it extremely simply), and this caused (just as a couple of examples) the bankruptcy of Jefferson County, Alabama, and the financial troubles of Greece.
There are at the very least 1000 examples of buyers of these very risky investments; no one actually knows how many people or entities bought them.
And, for every individual like the three or four who spoke to "Frontline"'s cameras to testify to the harmfulness of their former employers' securities dealings, there are no doubt 1000 or 10,000 or many more who continue to do this work. Greed often trumps people's consciences. And the problem is not, of course, just the front-line troops who sit all day at their computers but the heads of these banks.
Copyright © 2012 by Richard Stein
If you are looking for someone to blame, perhaps former President Bill Clinton should be a candidate. He signed a law repealing the Glass-Steagall Act. Glass-Steagall was a Depression-era (1933) law enacted to address some of the abuses of the banking industry that had led to the stock market crash of 1929 which in turn was the trigger for the Great Depression. The Glass-Steagall Act prohibited both regular (or "retail") banking and investment banking from being performed by the same company. With the Act's repeal, now the large banks trade in securities and thus act in their own interest, often to the detriment of their own clients, not to mention the detriment of the national and even the world economy. Thus the banking industry now is much less regulated than it had been for six decades. This is a bad thing. It led to the financial crisis of 2008 – 2009, and the freewheeling of the banking industry continues--despite the enactment of some new legislation, which does too weak a job of regulating Wall Street and thus courts the danger of further troubles.
A four-episode program in the PBS' (the US's Public Broadcasting System) "Frontline" series entitled "Money, Power, and Wall Street" profiled three or four young people who went into Wall Street jobs upon graduating college. These people had degrees in mathematics and computer science, and began work in the highly sophisticated and automated trading of complex securities at the big Wall Street banks. Such jobs carried very attractive starting salaries of $150,000—perhaps three times what an average college graduate would earn—and could in a short time lead to incomes 10 and even 100 times that amount.
Yet these young people left their jobs because they had concerns that what they were doing in their jobs was harmful. These derivatives, swaps and other innovative financial instruments were being sold to individuals, cities, counties, and even convents of nuns in the US and even to national governments such as Greece. The risks of investing in these securities were usually very poorly understood by those who bought them. They went bad (to put it extremely simply), and this caused (just as a couple of examples) the bankruptcy of Jefferson County, Alabama, and the financial troubles of Greece.
There are at the very least 1000 examples of buyers of these very risky investments; no one actually knows how many people or entities bought them.
And, for every individual like the three or four who spoke to "Frontline"'s cameras to testify to the harmfulness of their former employers' securities dealings, there are no doubt 1000 or 10,000 or many more who continue to do this work. Greed often trumps people's consciences. And the problem is not, of course, just the front-line troops who sit all day at their computers but the heads of these banks.
Copyright © 2012 by Richard Stein
Subscribe to:
Posts (Atom)
