Banks: We’ve paid you back, so we’ll now be on our way . . .

The big banks are taking the position that they have paid back most of money they received from taxpayers, so that they can go back to business as usual. Think Progress reminds us that paying back the TARP funds was the tip of the iceberg, and that the big banks are heavily in debt to taxpayers:

While most banks have already paid back their portions of TARP, as White House economic adviser Austan Goolsbee told CNBC, the government has not charged the banks for the huge emergency guarantees provided to them by the FDIC, nor for allowing investment banks to convert to deposit banks, which gave them access to loans from the Federal Reserve. Moreover, the entire sector has benefited from taxpayer help. The government has provided financial firms with trillions of dollars in low-interest loans and outright equity purchases through programs like the Federal Reserve's Discount Window and loan guarantees, and they also benefited from the bailout of AIG. TARP represents only a small portion of the total support for the financial sector, so even firms that did not receive funds under the program -- or have already paid back their portion -- owe taxpayers.
This Think Progress post is link rich, in case you'd like to dig in deeper.

Continue ReadingBanks: We’ve paid you back, so we’ll now be on our way . . .

Wall Street Journal commentator: Greed is not good.

Princeton economist Alan S. Blinder recently wrote a notable op-ed at the Wall Street Journal. It was notable because Blinder's theme runs counter to the mantra of the many free market fundamentalists who got us into the big mess we are in. In his hard-hitting piece, Blinder argues that greed is not necessarily good:

When economists first heard Gekko's now-famous dictum, "Greed is good," they thought it a crude expression of Adam Smith's "Invisible Hand"—which is one of history's great ideas. But in Smith's vision, greed is socially beneficial only when properly harnessed and channeled. The necessary conditions include, among other things: appropriate incentives (for risk taking, etc.), effective competition, safeguards against exploitation of what economists call "asymmetric information" (as when a deceitful seller unloads junk on an unsuspecting buyer), regulators to enforce the rules and keep participants honest, and—when relevant—protection of taxpayers against pilferage or malfeasance by others. When these conditions fail to hold, greed is not good.
Blinder's article is not optimistic that we will be able to seize the moment by "slamming the door on the lobbyists" and enacting strong financial reform.

Continue ReadingWall Street Journal commentator: Greed is not good.

Wall Street, redux

Chris Hedges pulls no punches at Truthdig when he discusses what's wrong with Wall Street banks:

These deeply stunted and maladjusted individuals, from Treasury Secretary Timothy Geithner to Robert Rubin to Lawrence Summers to the heads of Goldman Sachs, Morgan Stanley, J.P. Morgan Chase and Bank of America, hold the fate of the nation in their hands. They have access to trillions of taxpayer dollars and are looting the U.S. Treasury to sustain reckless speculation. The financial and corporate system alone validates them. It defines them. It must be served. This is why e-mails from the New York Fed to AIG, telling the bailed-out insurer not to make public the overpaying of Wall Street firms with taxpayer money, were sent when Geithner was in charge of the government agency. These criminals sold the public investments they knew to be trash. They used campaign contributions and lobbyists to turn elected officials into stooges and gut oversight and regulation. They took over retirement savings and pensions and wiped them out. And then they seized some $13 trillion in taxpayer money so they could lend it to us with interest. It is circular theft. This is why we will endure another catastrophic financial collapse. This is why firms like Goldman Sachs are more dangerous to the nation than al-Qaida.

These corporations don't make anything. They don't produce anything. They gamble and bet and speculate. And when they lose vast sums they raid the U.S. Treasury so they can go back and do it again. . . . The foundation has not changed. The regulations are bullshit. The old assets are still crap.

Why does any of this matter? Because dollars are fungible, and so are tax dollars. They are not pre-marked for specific uses such as paying someone tens of millions of dollars in a "bonus" that is unwittingly financed by taxpayers. Those dollars that are being wasted on Wall Street banks could be going to critically important purposes, such as developing new methods of producing energy, researching new medicines, retraining workers. Or they could be providing better nutrition to people in need, including children. Of course, those dollars would be better used than they are currently being used even if they merely remained in the possession of the workers who earned them, rather than taxing those workers and then handing those dollars to too-big-to-fail banks.

Continue ReadingWall Street, redux

Strange bedfellows fight for reform of Wall Street

Huffpo's Ryan Grim brings us up to speed on a broad coalition that is revving up to reform Wall Street:

On Thursday evening, a roomful of people more accustomed to fighting each other met to unite against a common enemy: Wall Street. The forces that are gathering against the bankers include energy companies, airlines, truckers, farmers and other end users of derivatives, along with unions, consumer advocates and a host of progressive organizations.

Continue ReadingStrange bedfellows fight for reform of Wall Street