Mind and Destiny

“I make no pretension to patriotism. So long as my voice can be heard ... I will hold up America to the lightning scorn of moral indignation. In doing this, I shall feel myself discharging the duty of a true patriot; for he is a lover of his country who rebukes and does not excuse its sins. It is righteousness that exalteth a nation while sin is a reproach to any people.”- Frederick Douglass

Location: Delhi, N.Y., United States

The author and his webmaster, summer of 1965.

Friday, February 12, 2016

Protecting Wall Street

In 1999, Republican Senator Phil Gramm of Texas sought to convince the American people, that we need to believe that government isn’t the answer, when in fact it’s the only answer.  Phil Gramm got legislation through Congress that set derivatives free from virtually any regulation.

In 1933, the Glass-Steagall was passed to prevent another Great Depression. The Gramm-Leach-Bliley Act was passed to gutted Glass-Steagall.  It was advertised as legislation,which would enable American companies to compete in a new economy.  Nearly every member of the Senate voted to allow large financial holding companies to merge with banks and insurance companies.

Not unlike the pre-depression culture of the 1920’s, the predominate culture in Congress again became: “Wall Street knows best.”  Financial holding companies were allowed to take significant risk, as they began to gamble with investors money.

In 2004, Bush’s Securities and Exchange Commission scrapped a 20-year-old rule that made banks keep a certain amount of cash on hand to cover investment losses. 

In 2007, we again had an economic collapse, which required massive taxpayer bailouts.  Eventually Goldman Sachs chairman, became Bush’s treasury secretary and the person in charge of the bailout crisis.  He decided how the first half of the $700 billion in TARP funds were spent.

Once Wall Street executives could turn mortgages into derivatives, they had an incentive to engage in predatory lending practices.  Yet, no financial firm would buy a derivative based on a predatory mortgage, because they could be sued.

However, Congressman Bob Ney and his Republican colleagues blocked efforts to let the victims of predatory lending sue everybody who profited from it, which left Wall Street executives with virtually nothing to risk.

On 10/13/06, Republican Rep. Robert Ney of Ohio pleaded guilty to corruption charges arising from the influence-peddling investigation of lobbyist Jack Abramoff, becoming the first elected official to fall in the scandal that resulted in Democrats winning back the House of Representatives, after 12 years.

The nonpartisan Wall Street Watch project revealed that deregulation was purchased by Wall Street executives, by paying politicians for unprecedented freedom from oversights of banks, security firms, private equity and hedge funds, insurance and real estate.  For 10 years, Wall Street lobbyists spent more than $5 Billion to influence regulators.  In 2008, a total of 2,996 lobbyists spent $1.7 Billion on direct campaign contributions.


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