16
In 2009 Main Street got the shaft
Robert Reich
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
TEXT OF COMMENTARY
KAI RYSSDAL: The past 364 days have been, when you stop to think about it, quite a year. But if 2008 will be remembered as the year of Lehman Brothers and TARP and too big to fail, what will 2009 leave to the history books?
Commentator Robert Reich offers this suggestion.
Robert Reich: 2009 will be remembered as the year Wall Street came back and Main Street got shafted. It started with hundreds of billions of taxpayer dollars bailing out Wall Street's big banks -- and much of that money, according to the TARP inspector general's recent report, will never be paid back.
It ended with those banks enjoying record profits and about to dole out some $20 to $30 billion dollars in bonuses, while Main Street's small businesses can't get loans, and a record number of Americans have lost -- or are in imminent danger of losing -- their jobs, and homes and savings.
At the start of the year, Wall Street's biggest banks were said to be too big to fail. By the end of this year, they were even bigger. And they knew for sure they wouldn't be allowed to fail if their bets turned bad. Which meant the bets could be even riskier than before.
It was the year when the political power of Wall Street money became clearer than ever -- in the form of generous contributions to both parties and platoons of lobbyists blocking reform. Even though Wall Street's recklessness caused the mess in the first place, the year ended without any congressional agreement on how to prevent it from happening again. Not even a modest proposal to better protect small borrowers and small investors from fraud.
The President called them "fat cats" and Congress thundered at them. But Washington did not plan to tax their upcoming bonuses, which they would not have earned without the bailout. Nor did Washington even attempt to claw back billions of taxpayer dollars quietly passed through AIG to counterparties like Goldman Sachs.
Nothing was said in official Washington about resurrecting the Glass-Steagall Act that had once separated investment from commercial banking. No mention was made of applying the antitrust laws to break up the giant banks. Nothing came of allowing struggling homeowners to use bankruptcy to renegotiate their mortgages.
2009 was the year when Washington called the bankers fat cats but let them grow even fatter, while the rest of America got the scraps.
Ryssdal: Robert Reich is a professor of public policy at the University of California, Berkeley.
Pages
The other problem being ignored, is that America is moving away from production as the economic engine, and towards finance as the economic engine.
Jobs have moved offshore. Investment in R&D? We're 5th in the world. The end of the Cold War has reduced government investment in created new military technology that trickles down. A trip to the moon that creates new products like microchips? Yeah right! Manufacturing giants General Electric and General Motors, have already moved towards making money off financial markets, rather than selling light bulbs, powerplants, and vehicles.
And what's the biggest financial creations we've invested in? Savings and Loan debacles. Derivitives no one understands. Junk bonds. Tech stock and medical stock bubbles. Enron's fake trades. WorldCom. Below prime home loans rated artificially high by Standard & Poor and Moody's.
This is how America makes its money now. Instead of creating new energy technology to lead the world, we're going to let the Chinese do it, and we'll buy it from them...while we find the next financial flim-flam to sell. And that's the real problem we don't want to admit to.
I wish our leaders and media would focus more on the problem of excessive compensation.
The reality is, in many coporations, pay packages are divorced from reality. Futher, the checks and balances to prevent these excesses don't work, or are intentially, but legally, circumvented.
There is a solution to this problem - have shareholders directly approve compensation packages -- no more board "compensation committees". I have been fortunate enough to own shares in several companies, but I am very frustrated that I don't get a direct say in how the officers and executives, who should be working for me, are paid.
Maybe there are "fat cats" and "deep-pocket" lobyists derailing any reform efforts, but why aren't Mr. Reich and other leaders proposing solutions?
How and where is the "stimulous'' money being spent? Are there infrastructure projects, new manufacuturing, new jobs-training programs? Wasn't this the part that would help all of us on "Main Street"?
It is sad, to me, that political party loyalty takes priority over the need to unite for a stronger country, and a real recovery. If we have an elected President, is it more important to fight everything he tries, or to speak and act responsibly for better solutions??
Well, this really should not be let stand. Geithner and Summers should go. The names of the bonus-takers at AIG and elsewhere (the people to whom they lateraled tax-paper money) should be listed. The listed should become social outcasts.
It is quiet understandable ,but sad, that a Proffesor of "public policy" has got it SO wrong. Congress, and its members ,who know absolutely NOTHING about finance are to blame for the collapse, not banks who simply enjoyed the idiotic policies of the "Barney Franks" socialists.
Thanks, Mr. Reich, for both being in a position to say and for saying what so many of us in this nation, Republican, Democrat, and Independent, feel about the affairs of this last year. Left unsaid is that while a few banks were deemed "too big to fail" many banks have been deemed too small to save. Gone in the last year are 140 community banks nationwide that political and corporate America would not save, and many more will follow. It's almost certain that the same regulators who allowed the practices of the previous eight years without restriction will now enforce strictly those same rules that could have prevented these community tragedies. Not only will Congress not restrict Wall Street, neither will it investigate the FDIC and SEC failures that enabled and facilitated financial mismanagement we taxpayers are now required to pay for.
I am sorry to but professor got this wrong.
Both wall street and also irreponsible in main street got bailed out. The list of programs that bailed out irresponsible in main street got bailed out is too numerous to list.
The ones who got shafted are the responsible and prudent people.
thanks for telling it like it is. now we need to make a list of all these criminals and their government supporters with all their associations and personal activities so we can start a full press boycott against them. do you service their car? stop. do they attend your church? close the door. do you have any investments with them? move them away. it is time for intelligent and effective direct action.
Bravo Professor! Thank you for succinctly stating why so many americans are disgusted and angry at the Congress, the White House and the Treasury. I am particularly pleased that you have reminded us all ..."Nor did Washington even attempt to claw back billions of taxpayer dollars quietly passed through AIG to counterparties like Goldman Sachs". Let's see that was $12 Billion dollars. Hmm, isn't Goldman Sachs paying out $18 Billion, a record, in bonuses? There are about 1,800 homeless children in Reno, NV; certainly the $12 billion in taxpayer money could have been used far more effectively during this recession. And anyway, isn't $6 Billion more than enough money to pay bonuses to Goldman employees? In this instance, greed is not good; greed is disgusting.
Pages
