Which Bank Is the Worst for America? 5 Behemoths That Hold Our Political System Hostage
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The Obama White House is no exception to the rule. Last spring, Politico reported that Rubin, who “watched his reputation as an economic titan shatter after he left the Clinton White House...still wields enormous influence in Barack Obama’s Washington, chatting regularly with a legion of former employees who dominate the ranks of the young administration’s policy team.”
Lewis Alexander went from the Federal Reserve to the Commerce Department and then did a stint at Citi before returning to politics as a counselor at the Treasury Department, and Maura Solomon went from the Office of Thrift Supervision, one of the bank regulators, to Citigroup, where she is presumably better compensated. And so, of course, did Peter Orzsag. Jacob J. Lew, who replaced Orzsag at the Office of Management and Budget (an office he also held under President Clinton), spent his time between those appointments as executive vice president of New York University and then at Citigroup. Gary Gensler, a former assistant secretary of the Treasury who spent 18 years at Goldman Sachs, now oversees the Commodity Futures Trading Association.
According to the Project on Government Oversight (POGO), the Securities and Exchange Commission – the primary agency for policing the financial industry – is inundated with former bankers. POGO's database of lobbyists includes, “219 former SEC employees [who] filed 789 statements between 2006 and 2010 announcing their intent to appear before the SEC or communicate with its staff on behalf of private clients.”
"Many former SEC employees leave the agency to join [lobbying] firms that represent clients in the securities industry. Several recent reports by the SEC Inspector General have raised troubling questions about whether the promise of future employment representing Wall Street causes some SEC officials to treat potential employers and their clients with a lighter touch."
Does anyone need to be reminded how the big banks broke the economy and then pocketed billions of tax dollars in bailouts? Have people already forgotten Henry Paulson (Treasury Secretary, 2006-2008; Goldman Sachs, 1974-2006) standing before Congress and demanding $700 billion in nearly oversight-free money to buy up the banks’ “toxic assets”—which were, of course, bad mortgages packaged into securities that were suddenly worthless. The bailouts received bipartisan support, and Obama pressed for the passage of what eventually became TARP, proving the value of those bipartisan campaign donations.
Perhaps you are underwater on your mortgage because of the crash in home values after the popping of the housing bubble, which was created by the insatiable need for profits, for more mortgages to package into securities to sell on the market. Perhaps you’re dealing with Bank of America or another one of the banks that are still unwilling to modify the majority of mortgages, continuing to foreclose on homes and throw families out.
Or perhaps you rent, but are unemployed. Perhaps you have a job but haven’t seen a raise since the crash, or have been pressured to put in more hours. The core problem in the brick-and-mortar economy is a lack of demand, and that drop in demand is a result of the $14 trillion in household wealth lost in the crash that Wall Street’s gamblers precipitated -- from stocks and bonds, real estate values and retirement accounts. The popping of the housing bubble alone and the corresponding drop in home values, according to Dean Baker, creates the loss of some $8 trillion in wealth, or $110,000 per homeowner.
The size of the financial industry alone is worrisome. As Katrina vanden Heuvel pointed out at the Washington Post, “Obama has said that we can't go back to an economy where the banks make 40 percent of all corporate profits. But the big banks are emerging from the crisis more concentrated than ever, and financial sector profits are already up to nearly 30 percent of total corporate profits.” Banking, like trucking, is known as an “intermediary good” -- nothing is produced by the industry – and if any other intermediary good represented around 10 percent of the U.S. economy, people would consider that a major problem.