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.
Marketplace is on a mission.
We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.
Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?