The Great Recession was not an accident: Goldman Sachs knew what it was doing and gleefully piled billions onto their salaries in bonuses beyond belief.
Remember that as you try to make sense of the transfer of wealth from us to the banks like Goldman Sachs.
As William D. Cohan says, Of course the taxpayer is subsidizing Goldman Sachs!
Ending the Moral Rot on Wall Street, Part 2: William D. Cohan
By William D. Cohan - Bloomberg
Can it be true that the trillions of dollars we spent bailing out Wall Street only restored the deeply flawed status quo, instead of bringing about the fundamental system overhaul we needed?
One of the unintended consequences of the rescue of the banks in 2008 was to restore many of the most heinous aspects of Wall Street’s culture, thus exponentially increasing the inherent risks in the system. Indeed, while Main Street continues to suffer from high unemployment and plunging home prices, the financial industry is dancing a jig after paying itself about $150 billion in compensation in 2010.
In September and October 2008, as the fear of financial and economic collapse was at its most acute, there was a brief moment when it seemed there was a real chance that Wall Street would be reformed. That didn’t happen.
Since 1970, when financial companies began selling shares to the public, the industry has ensnared the rest of us in repeated crises of its own making. There was the crash of 1987 and the credit freeze that followed, the Asian crisis, the Mexican crisis, the Russian crisis, the collapse of Long-Term Capital Management, the Internet bubble and, most recently, the risky mortgage-related behavior that led to the Great Recession and brought us to the edge of economic devastation. As the past few weeks have shown, we are still suffering its aftershocks.
At the time, each of these crises seemed existential and rendered the capital markets -- the engine room of capitalism -- dysfunctional for long periods. The increasing rapidity and intensity of each of these events is directly correlated with the decisions by Wall Street companies to go public. The consequence is that Wall Street replaced its traditional partnership culture -- where stakeholders shared profit and losses -- with a bonus culture that encouraged accountability- free, asynchronous risk-taking with other people’s money. Rather than accept responsibility for these recurring crises, Wall Street’s defenders resort to the patently false argument that they are the result of normal market vicissitudes.
Wouldn’t such an obviously broken system need repairing? Apparently not. Instead of a genuine fix, in the past two years, Washington has put Wall Street back on its feet without demanding any accountability for the damage caused to the economy and with only modest changes to the way business is done. Although a boon to congressional campaign coffers, such accommodation damages the credibility of markets and does little to rehabilitate an ailing economy.
Worse, the cozy relationship endures, as Wall Street’s lobbyists and executives exert influence over regulators such as the Securities and Exchange Commission and the Commodity Futures Trading Commission. This gives Wall Street sway over the drafting of the new rules governing our financial system that were mandated by the inadequate Dodd-Frank Act.
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