Baseline Scenario's Simon Johnson tells us about what else went terribly wrong
"After 9 months of hard fighting, financial reform came down to this: an amendment, proposed by Senators Jeff Merkley and Carl Levin that would have forced big banks to get rid of their speculative proprietary trading activities (i.e., a relatively strong version of the Volcker Rule.)
The amendment had picked up a great deal of support in recent weeks, partly because of unflagging support from Paul Volcker and partly because of the broader debate around the Brown-Kaufman amendment (which would have forced the biggest 6 banks to become smaller). Brown-Kaufman failed, 33-61, but it demonstrated that a growing number of senators were willing to confront the power of our biggest and worst banks. Yet, at the end of the day, the Merkley-Levin amendment did not even get a vote."
The NY Times noted that the lobbyists have not given up in using money to fight restraints on money, "Executives and political action committees from Wall Street banks, hedge funds, insurance companies and related financial sectors have showered Congressional candidates with more than $1.7 billion in the last decade, with much of it going to the financial committees that oversee the industry's operations."
Leave it to former Bank regulator Bill Black to get to the heart of the problem:
"In essence, what we have here folks is a characterization of the banks and the government that has assumed the risk profile of these banks as some sort of 1,000 pound men, unable to move without assistance. They have suckered everyone else into the idea that if anything is done to move these overweight, unhealthy "persons" to health they will have a heart attack and kill us all since they sit upon the crossroads of commerce and have sold most folks the idea that they are the heart of the nation and indeed the world.
Given these "objective" circumstance the government is not only beholden to the 1,000 pound persons, but is one of them itself, will do everything to make the rest of us carry them so as to save them the indignity of actually addressing their morbid obesity and the cycle of codependency that enables them all to remain so fat. Anyway you look at it, the too big to fails are not needed and they are dragging our economy into a black hole."
That black hole is here. The sovereign debt crisis is sweeping the world with another credit crunch on the way. Many economists fear a rise in inflation, and the dreaded "double dip" recession that will sink us even more. Paul Krugman anticipates a ten year decline ala Japan.
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