In thinking about the Occupy Wall Street movement, it is useful to focus on the main impetus rather than the presence of the crazies, the supportive statements of folks like Nancy Pelosi, the litany of issues addressed on the OWS web site, or the effort to get attention by various unions and anti-capitalism activists. (Living in San Francisco I see enough protests to not be bothered by the trash heaps left behind by the environmentalist protesters or the verbal conformity demanded by the “free speech” groups.)
We do have a problem – a big problem – that has not been addressed by the Obama administration or by the Republican presidential candidates: Wall Street almost brought our whole economic system down; they got bailed out at great public expense; nothing significant has changed; and the bankers have been able to thumb their noses at us.
The why is easy. Barack Obama receives more campaign donations from Wall Street than any politician in history – millions more than his Republican opposition in 2008. Thus far for 2012, financial bundlers are leading Obama’s fundraising which may reach $1 billion. This is not news. If the Democrats weren’t the largest recipients, the New York-based media might be harder on the New York-based financiers, but what is is. And everybody knows it.
The Obama administration has given us a sop in Dodd-Frank which addresses the small things which directly affect consumers – credit card fees and the like – while huffing and puffing about transparency and accountability. But look at what has not been done:
1. The Depression-Era Glass – Steagall Act which prohibited investment banks (which issue and trade securities) from owning commercial banks (which loan to individuals and companies) was repealed under President Clinton and has not been reinstated. The casino owners have access to our money. (The“Volker Rule” which would limit banks using deposits to speculate for their own accounts continues to get discussion, but has not been decided upon.)
2. “Too big to fail” banks have not been broken up. In fact due to the acquisitions that occurred during the 2008 crisis – Lehman Brothers; Countrywide; Merrill Lynch; Chase; and many others – the six largest banks now control assets equal to 60% of GDP, up from 20% in the 90’s.
3. Fannie Mae and Freddie Mac remain in place as the purchasers of bundled mortgages, without the discipline brought by originating banks holding their commitments. So far this has cost the taxpayers $130 billion with no plan for fundamental change or accountability for the politically-connected leaders.
4. The rating agencies – S&P, Moody’s, and Fitch – continue to be paid by the issuers of the bonds that they are rating. The only punishment thus far is directed at S&P which had the temerity to state that USA debt wasn’t AAA.
5. Hedge fund managers, some of whom made billions by accelerating the near-collapse of 2008, continue to have their income taxed at the 15% capital gains rate rather than the marginal 35+ % that mortals pay.
6. Nobody has gone to prison for the blatant fraud (for example, Goldman Sachs touting mortgage-backed securities which they were shorting on their own account) that preceded the 2008 collapse. In contrast, over 1000 folks were jailed after the Savings and Loan scandal of the 90’s.
The center-right Tea Party movement, focused on small government and fiscal responsibility, has done a very good job of policing itself, disappointing the Left by not going after social issues or allowing right-wing crazies on the stage. If the center-left component of the Occupy Wall Street movement can keep their crazies out and force movement to really reform Wall Street, more power to them.
As for the politics of attacking Wall Street, it is hard to see how the attention can help a president who is owned by the enemy. On the Republican side, it is probably not good for Bain Capital’s Mitt Romney.
This week’s video lightly touches on the political corruption of the Solyndra loan, which included a perhaps illegal restructuring to place the government last in collecting any residual value. The larger principle: government support of targeted research is essential; serving as a venture capital fund to pick companies inherently leads to corruption and failure.