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5:45 AM / Thursday April 25, 2024

9 May 2010

Wall Street reform: Really? When? How?

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May 9, 2010 Category: Commentary Posted by:

By Wendell P. Simpson

 

Talk about irony colliding with metaphor to make a statement about arrogance.

 

Take the famous statue of the charging Wall Street bull that stands sentry over New York City’s financial district. The icon has stood in Lower Manhattan since 1989, appearing in ads, in movies and on book covers as the symbol of the banking and investment industry’s efficacy in managing the financial stability of the American economy.

 

Ironically, the piece was installed in NYC’s Bowling Green Park as an act of insurrection. Artist Arturo Di Modica created the piece in 1989 as a symbol of the bullish resilience of the American people in the face of the calamity brought on by the debacle of the Stock Market Crash of 1987. Di Modica never got permission from the city to set the sculpture up; he just thought it up and did it.

 

In the interim, the massive egos that run Wall Street have presumed to adopt the statue as an homage to itself; the nerve, huh? And it is said a peek underneath the rampaging bull reveals a set of bronze balls equal to the proportions of the hubris displayed by the banking/investment industry since the economic collapse that its greedy machinations caused and the nearly $800 billion in taxpayer bailout money that saved its ass.

 

When banks wrote all of those sub-prime mortgages with low monthly payments, high interest rates and exploding balloon payments; and when brokerage houses invested in risky and speculative assets and ventures, they sacrificed security and solvency for the sake of greed and expediency. Wall Street’s unconscionable arrogance allowed it to devise a scheme that would provide it massive profits in the short term while setting the rest of us up for long term suffering.

 

“The economic crisis our nation finds itself in is a result of unbridled greed, a lack of responsible, and poor ethics,” said financial expert Chuck Young of the blog Rebel Traders. “One could even make the case that the actions that have created the largest financial since the Great Depression are even criminal.”

 

In an effort to ameliorate the mess, the Federal Reserve kept interest rates artificially low. Stock values surged as did the value of commodities, such as gold and oil ballooned; but unemployment continued to hover dangerously around 10.2 %, while the dollar tanked against world currencies, and manufacturing and production slipped to a crawl. According to the concerns of many economists, this meant that our economic recovery was built on a speculative economic bubble that could have burst at any time.

 

A year later, however, according to some of those same critics, the banks are still working with a surge of risky assets bolstered by artificially deflated interests rates and zero-interest credit to the banks, and huge debt—and they warn that if the modus operundi of Wall Street isn’t curtailed, we can and probably will go back down the road to collapse.

 

Which brings us to H.R. 4173, the Wall Street Reform and Consumer Protection Act. Last week a Senate investigative committee grilling executives of Goldman Sachs about its role in the sub-prime mortgage fiasco drowned in a sea of attitude, denial, doublespeak and unintelligible mumbling.

 

Sen. Carl Levin (D-MI) slammed Goldman Sachs CEO Lloyd Blankfein over an inter-office company email that described home loan securities and other financial products sold by the firm as “crap” and “one [expletive] deal.”

 

“They’re buying something from you and you are betting against it,” Levin said, “and you want people to trust you?

 

“Should Goldman Sachs be trying to sell [expletive] deals?”

 

The reform bill is supposed to curtail these kinds of activities—but will it?

 

Some critics—and I’m not talking about just the right-wing nuts who slam everything Obama and the Democrats do —claim that the Democratic version of the reform bill could institutionalize the notion of taxpayer funded bailouts. Others are concerned that reform as written ostensibly to guarantee their survival will allow the big banks to become larger and seemingly more indispensible. Still others suggest that at the heart of the problem is a Congress that has become the de facto enforcement arm of the corporate mandate and until the government can extract itself from that relationship, it will not be effective policing.

 

In the meantime, the Republicans are standing firmly on the side of the greedy robber barons while the banks and the brokers do their best to stonewall the American people. Last week, during Senate committee hearings, the heads of the investment houses sat on their hands and mumbled unintelligible jargon and sinewy logic and dared anyone to challenge them—or even admit that no one knew what the hell these Wall Street Rasputins were going on about.

 

And of course, none of that considers that Obama really is a corporatist who doesn’t want to jack Wall Street up. Could it be because Goldman Sachs wrote his biggest campaign check? I’m just asking…

 

The bottom line is, while the two percent of Americans who control 98% of its economic resources, continue to spin their wheels on real reform, the American people continue to sink into the muddy waters of insolvency.

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