The companies that come to have so much control over our financial system are so politically powerful that they cannot be allowed to fail. This we saw in the crisis with Citigroup, and with American International Group, the big insurer, as well as with Bear Stearns which was merged into JP Morgan to avoid complete failure.
We saw these companies that had been allowed to grow into monsters take enormous risks all the while, which then the taxpayer had to cover, had to "backstop,' when their risky deals went bad. Problem is, we are now nowhere closer than before to any kind of technique or strategy that could prevent such a reckless and largely unregulated behemoth from rising up again.
What's the explanation for the delay? Why has it taken so long?
The answer is that there are enormous amounts of money being poured into lobbying in Washington on behalf of the financial services companies. $150 million in 2009 went into lobbying from the commercial banks and the investment banks. And that doesn't include money from the real estate industry or from big insurance companies or mutual funds. That's just commercial banks and investment banks. Bottom line: Washington is crawling with lobbyists who are operating on behalf of these companies to make sure that reform does not threaten their profitability -- no matter what the risk to the country as a whole.
The lobbyists are the "mules' in our addicted political culture. They bring the drugs to the users. The users are members of Congress. In the same way that you can't have an illegal drug sale unless there's a user willing to buy, you can't have a bribe unless there's some politician willing to be bribed.
And isn't it amazing that the bankers who buy off our members of Congress have the temerity to come out of their holes right after driving the nation into the brink? It's stunning to watch the brazenness with which they swagger about town, throwing some of our bailout tax dollars at legislators to make sure the legislators won't put up a formidable regulatory framework.
How do they get away with it?
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