Selling Out America to Wall Street - by Stephen Lendman
Project Censored's top 2010 story was "US Congress Sells Out to Wall Street," highlighting that since 2001, "eight of the most troubled firms have donated $64.2 million to congressional candidates, presidential candidates and the Republican and Democratic parties." It's no surprise that they own them, what Wall Street Watch.org showed in a March 2009 Essential Information and Consumer Education Foundation report titled,"Sold Out: How Wall Street and Washington Betrayed America."
The accompanying press release said:
Over the past decade, "$5 billion in political contributions bought Wall Street freedom from regulation, (and) restraint." From 1998 - 2008, "Wall Street investment firms, commercial banks, hedge funds, real estate companies and insurance conglomerates (the FIRE sector)" spent over $1.7 billion in political contributions and another $3.4 billion on lobbyists, in return for which:
-- they were freed from regulation;
-- could speculate on financial derivatives and an alphabet soup of securitized garbage, including asset-backed securities (ABSs), mortgage-backed securities (MBSs), collateralized mortgage obligations (CMOs), collateralized debt obligations (CDOs), collateralized bond obligations (CBOs), credit default swaps (CDSs), and collateralized fund obligations (CFOs) - combined, sliced, diced, packaged, repackaged, and sold in tranches to sophisticated and ordinary investors, many unwittingly through mutual funds, 401(k)s, pensions, and the like;
-- could merge commercial and investment banking and insurance operations;
-- bilk investors and the public through fraudulent schemes; and
-- get trillions of bailout dollars when the economy crashed.
For decades, Wall Street and successive governments colluded to defraud the public, using various schemes to transfer wealth from them to the privileged. Carter spearheaded deregulation Nixon and Ford began by hiring Alfred Kahn to head the Civil Aeronautics Board (CAB). The 1978 Airline Deregulation Act followed. It dissolved the CAB, removed industry restraints, eased consolidation, and subsequent bills deregulated trucking and railroads - the 1980 Motor Carrier Act and 1980 Staggers Rail Act, following the 1976 Railroad Revitalization and Regulatory Reform Act.
Carter also phased out interest rate deposit ceilings, and gave the Fed more power through the 1980 Depository Institutions and Monetary Control Act, removing New Deal restraints and enabling subsequent administrations to go further.
Under Reagan, energy deregulation followed, notably oil and gas, then electric utilities under GHW Bush and Clinton, the result being high prices, brownouts, and Enron-like scandals. In the 1980s, the 1982 Alternative Mortgage Transactions Parity Act led to exotic feature mortgages with adjustable rates or interest-only. They carry low "teaser" rates for several years, after which they're adjusted much higher, often making loans unaffordable, especially for low-income, high-risk borrowers using subprime and Alt-A loans.
The 1982 Garn-St. Germain Depository Institutions Act deregulated thrifts and fueled fraud, so much that the Savings and Loan crisis followed, hundreds of banks failed, and taxpayers got stuck with most of the $160 billion cost. In 1987, the Government Accountability Office (GOA) declared the S & L deposit insurance fund insolvent because of mounting bank failures.
In 1988, global regulators imposed minimum bank capital requirements, known as the Basel Accord or Basel I, enforced in the G-10 countries.
In 1989, the Financial Institutions Reform and Recovery Act abolished the Federal Home Loan Bank Board and FSLIC, transferring them to the Office of Thrift Supervision (OTS) and FDIC. It also created the Resolution Trust Corporation (RTC) to liquidate troubled assets, assume Federal Home Loan Bank Board insurance functions, and clean up a troubled system.