Wall Street Is Back to Its Old Tricks
Robert B. Reich
President Obama travels to
I'm kidding. But it would be a smart move.
Americans of whatever stripe -- from Tea Partiers on the right to Occupiers on the left -- continue to hold
After the banks made wildly risky bets with our money, we bailed them out.
For example, it's impossible to know the Street's real exposure to the European debt crisis.
To stay afloat, several of
Executives on the Street say they're not worried because their assets are insured. But remember AIG?
The fact that
For more evidence, consider the fancy footwork by Bank of America in recent weeks.
Hit by a credit downgrade in September, BofA moved its riskiest derivatives from its Merrill Lynch unit to a retail subsidiary flush with insured deposits.
That unit has a higher credit rating because the
Wasn't this supposed to be illegal?
Keeping risky assets away from insured deposits had been a key principle of U.S. regulation for decades before the repeal of Glass-Steagall in 1999. (For the record, I was no longer in the Clinton administration.)
The so-called "Volcker rule" in the new
Dodd-Frank Act was designed to remedy this.
But under the pressure of
It would have been far simpler simply to ban proprietary trading altogether. Why should banks ever be permitted to use peoples' bank deposits -- insured by the federal government -- to place risky bets on the banks' own behalf?
Bring back Glass-Steagall!
And break up the big banks. In the wake of the bailout, they're bigger than ever. Twenty years ago, the 10 largest banks on the Street held 10 percent of America's total bank assets. Now they hold over 70 percent.
And the biggest four have a larger market share than ever -- so large, in fact, they've almost surely been colluding. How else to explain their apparent coordination on charging debit-card fees?
The banks aren't even fulfilling their fiduciary duties to investors.
Last summer, after Groupon selected
I doubt the president will be condemning the Street's post-bailout antics, or calling for a resurrection of Glass-Steagall and a breakup of the biggest banks. Democrats are still too dependent on the Street's campaign money.
That's too bad.
You don't have to be an occupier of
Available at Amazon.com:
- America's Growing Income Gap by the Numbers
- Wall Street Is Back to Its Old Tricks
- 7-in-10 Blame Economy for Hiring Freeze
- Grim Warnings for the Deficit 'Super Committee'
- Consequences of a Debt Committee Stuck in Neutral
- Is the Rising Star of U.S. Manufacturing Fading?
- Can Foreign Buyers Save the U.S. Housing Market?
- Consumers Spooked, But Still Spending (For Now)
- The Recession's Impact on Baby Boomer Retirement
- Cutting Taxes for the Rich Never Ends Well
- Secret of the Flat Tax
- Current Tax Code Is Confusing
- Flat Tax Would Eliminate 'Crony Capitalism'
- Flat Tax Would Introduce New Problems
- Flat Tax Unites Americans
- Flat Tax Unleashes Economic Growth
- Flat Tax Shifts Burden to the Middle Class
- Flat Tax Will Benefit Only the Rich
- Jobs Report Disappoints, but Unemployment Falls to 9 Percent
- Fed Stands Pat, But Signals Darker Days Ahead
- Young Adults Suffering More Financially than Older Generations
- The Perverse Side Effect of the Euro
- Equal Taxation for Wealth and Work
- Not All Taxes Have to Hurt
- GDP Up: Will Recession Fear Fade as Economy Shows Signs of Life?
- Measuring Economic Progress
- Great Recession Means a Diminished American Dream for Young Adults
- Inflation Could Help Flagging Economy
- Home Economics
- Skills Gap Plagues American Manufacturing Industry
- Beige Book Says Economic Recovery Still Slow. What Now?
- The Ranks of the Underemployed Continue to Grow
- More Americans Falling Behind On Mortgages
- Fed Created A Recipe for Disaster in Housing Market
- The Fed Caves to the Whims of Congress
- Federal Reserve is No Longer Beyond Influence
- Blame Bernanke and Federal Reserve for Economic Crisis
- Fed Saved Economy but Did Little to Rein in the 1 Percent
- For Better or Worse, Fed Is Just Doing Its Job
- Flat-Tax Fraud and Why America Needs a Truly Progressive Tax
- The Broken Contract: Inequality and American Decline
- The Wisdom of Retrenchment: America Must Cut Back to Move Forward
- Shortchanging Our Paychecks
- Unemployment Drops Sharply in October
- Recession Fears Fade But Euro Debt Crisis Still Looms
- Haves and Have-Nots: Cities with Highest and Lowest Poverty Rates
- Is the Economy Better Off Without Washington?
- How to Rein In Healthcare Costs
- Why Mortgage Rates Are Rising
- Industry Must Do its Part to Educate Workforce of the Future
- Jobs Council Issues Growth Proposals, Acknowledges Dysfunction
- September Jobs Report a Pleasant Surprise
- US Economic Woes Put China in the Political Crosshairs
- A Devalued Renminbi Makes Wealthier Americans
- Sluggish America Can Still Be a World Leader
- Behind Europe's Debt Crisis Lurks Another Wall Street Bailout
- United States - South Korea Trade Deal Win-Win for Jobs and Economy
- Obama's Trade Deal Delays Have Cost Jobs
- Reconsider Dodd-Frank, Piece by Piece
- Dodd-Frank Brings Transparency to Financial Industry
- Dodd-Frank is More Right than Wrong
- Dodd-Frank Is a Counterproductive Mess
- Repealing Dodd-Frank Would Put the Economy in Danger
- A People's History of the Great Recession
- Job Destroyers Don't Deserve Tax Holiday
- What the Recession Has Done to the Rich
- Pot Calls Kettle Risky: The Wit and Wisdom of Tim Geithner
- New Layoffs Are Harbingers of Broader Economic Changes
- Is Obama's National Infrastructure Bank the Answer on Jobs?
- We Are In a Modern-Day Depression
- Dunkin' Donuts, McDonald's Franchises Warn of Job Cuts
- Despite High Unemployment, Millions of Job Openings
- How Renters Could Save the Housing Market
- How Low-ball Appraisals Are Limiting Housing Recovery
- The Moral Question
- Rise of the Renminbi as International Currency
- United States Woos Foreign Shoppers to Boost Sagging American Economy
- How to Create More Jobs by Lowering Wages: Texas and America
- 15 Stunning Statistics About the Jobs Market
- Training Unemployed for Specific Jobs Could Solve Many Problems
- Housing Slump Will Hurt Economies Well Into Future
- Can the Government Help the Housing Market?
- Are American Consumers Relapsing Into Debt Addiction?
- Obama Deficit Plan Could Derail Hopes for Super Committee Success
- Raising Retirement Age: Reflection of Our Evolving Economy
- Why Math and Science Education Means More Jobs
- A Good Fight
- America's Government Contracting Bonanza Bilks Taxpayers
Available at Amazon.com:
Wall Street Is Back to Its Old Tricks | Politics
(c) 2011 Tribune Media Services, Inc.