Most Popular Choices
Share on Facebook 15 Printer Friendly Page More Sharing
OpEdNews Op Eds    H3'ed 9/29/10

The Big Guy's On Our Side

By       (Page 1 of 1 pages)   3 comments
Message Robert Scheer
Become a Fan
  (26 fans)
From Truthdig

Paul Volcker, or the "big guy," as President Barack Obama refers to the former Federal Reserve chair who heads his Economic Recovery Advisory Board, nailed it in a series of blistering remarks on the sorry state of our economy. But what he said was even tougher than was indicated by the media's scattergun reporting on his speech last Thursday to the Chicago Fed. Thanks to Reuters, which posted the video coverage online, it is possible to take the full measure of his concern over where we are and how we got here.

Volcker warned that "the financial system is broken. ... We know that parts of it are absolutely broken, like the mortgage market, which only happens to be the most important part of our capital markets [and has] become a subsidiary of the U.S. government." That sentence was quoted in brief mentions of the speech in The New York Times and other leading news outlets but not so his explanation of how this was allowed to happen: "I don't think anybody doubts that the underlying problem in the markets is this too-big-to-fail syndrome, bailout and all the rest."

Volcker is right that those too-big-to-fail banks were at the heart of the problem, but the folks who pushed through the legislation allowing the creation of those unwieldy financial monsters still feign innocence. They include Bill Clinton; his treasury secretaries, Robert Rubin and Lawrence Summers; former Sen. Phil Gramm, a Texas Republican; and former Federal Reserve Chair Alan Greenspan. Their success in smashing the wall between investment and commercial banking is the source of our current misery.

As Volcker observed, the investment banks stopped investing in truly productive ventures and turned into "trading machines instead of investment banks," resulting in "encroachment on the territory of commercial banks, and commercial banks encroached on the territory of others in a way that couldn't easily be managed by the old supervisory system."

That melding of Wall Street high rollers' risky bets with the federally insured deposits of ordinary folks required the U.S. government to bail out the former to save the latter. That was just what a small band of eight senators predicted when they alone voted against the radical deregulation that Clinton signed into law in 1999. The urgency behind passage of that law was the temporary waiver of the Glass-Steagall Act by the Fed, an action that allowed the merger of the Travelers insurance company and Citibank to form Citigroup, creating the biggest of the too-big-to-fail banks.

Click Here to Read Whole Article

Must Read 2   Well Said 1  
Rate It | View Ratings

Robert Scheer Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Robert Scheer is editor in chief of the progressive Internet site Truthdig. He has built a reputation for strong social and political writing over his 30 years as a journalist. He conducted the famous Playboy magazine interview in which Jimmy (more...)
 

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines

 
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Christopher Hitchens: Reason in Revolt

The Peasants Need Pitchforks

Robert Scheer Hosts Dennis Kucinich -- an Unpredictable American Original

Obama Pulls a Clinton

Geithner and Goldman, Thick as Thieves

How Little We Know About the Origins of 9/11

To View Comments or Join the Conversation:

Tell A Friend