Tuesday, January 26, 2010

Wall Street Is Choking Americans

By Chester Campbell

This isn't the blog I had intended to write for today. That one will have to wait until next time. Something I read online this morning prompted the change. Like many of you, I suspect, I receive a flood of emails daily on every subject from health to wealth to stealth (those are the mystery related ones). Some of these I asked for, but a lot of them came collaterally from websites I visited. Some I seldom read, some I only read when a headline catches my eye. Here's what caught my eye this morning:

Wall Street's Stranglehold on the Economy Is Choking Americans

It was in the Money Morning financial newsletter and was written by Shah Gilani, contributing editor. I'll give you the link in a moment, but what I read is the most succinct, understandable, east-to-read explanation of the mess we're in and what needs to be done that I have read in a long time.

It isn't a political piece. He shows there's equal blame for Democrats and Republicans starting back with the Community Reinvestment Act of 1977. It had a laudable goal, the prohibition of discrimination on the basis of race, sex, and other characteristics in the credit and housing markets. But like so many well-meaning ideas, it led to disastrous unintended consequences.

Gilani starts out by saying that after 234 years, the Founding Fathers' worst fears have come true. Their fear was that a concentration of power, particularly among banking interests, could "hijack our fledgling democracy." We're no longer fledgling, but it's happening. He says it's time to look at the truth about Wall Street's tyranny and develop a safe banking system, "not a system rigged by banks."

The article describes how succeeding administrations and congresses kept pushing the boundaries to get more Americans into houses, many  into bigger homes than they could afford and with mortgages they couldn't pay when the economy went south. It explains how the big banks kept playing games with risky loans they were making, creating esoteric products that few people understood.

Gilani shows how greed pushed the banks into ever more risky deals that the executives planned to pawn off on unsuspecting investors. They re-formatted their junk and got it rated AAA by their buddies at the rating agencies. In the end, he says, "Because of their greed, banks actually made the boat and forced us into it. They sunk, along with us, but got bailed out while we were left to drown."

He concludes that we need to break up the big banks and spread the pieces around the country, putting the economy back in the hands of the people. Let banking be done on Main Street, not Wall Street. Gilani says the enormous amount of power that has been concentrated in Wall Street and the banking system is an assault on our freedom.

You can read the full article at Money Morning.


Marilyn Meredith a.k.a. F. M. Meredith said...

How true! Good post!


Beth Terrell said...

So it is. And the harder the federal government tries to fix it, the worse they make it.