While the debate on health care reform is receiving the lion's share of attention, something else is looming on the horizon for President Obama and the Congress, something which the president will address today when he goes to New York--the financial institutions that were considered too big to fail are even bigger, and Wall Street is up to it's old tricks again.
"The failure of Lehman, the biggest bankruptcy in U.S. history, and the panicky sale of Bear Stearns Cos. Inc. to JPMorgan and Merrill Lynch & Co. Inc. to Bank of America Corp. also have transformed Wall Street. The surviving investment banks have fewer competitors and more market share.
The big banks now are more powerful than before," said Simon Johnson, former chief economist with the International Monetary Fund. "Their market share has grown."
Through mergers and the failure of Lehman Bros. Holdings Inc., the mammoth banks whose near-collapse prompted government rescues have gotten even bigger, increasing the risk they pose to the financial system. And they still make bets that, in the aggregate, are worth far more than the capital they have on hand to cover potential losses."
Wall Street is still gambling--with our money, of course:
"Goldman Sachs Group Inc., JPMorgan Chase & Co., and others that have received tens of billions of dollars in federal aid are once more betting big on bonds, commodities, and exotic financial products, trading that nearly stopped during the financial crisis.
Big banks and their traders are also still finding creative - some say speculative - ways to profit. They are still packaging risky mortgages into securities and selling them to investors, who can earn higher returns by buying securities tied to the riskiest mortgages. That was what helped inflate the real estate bubble and spread financial pain around the globe."
If that weren't enough, outrageous compensation is back, too.
"Pay is already returning to pre-crash levels, topped by the 30,000 employees of Goldman Sachs who are on track to earn an average of $700,000 this year.
...an analyst at J.P. Morgan in London, predicted this week that eight major American and European banks would pay the 141,000 employees in their investment banking units $77 billion in 2011 -- about $543,000 per worker, not far from the 2007 peak."
President Obama has been calling for Congress to enact tougher regulations on the financial sector. But here's where, as in the health care debate, money talks.
"There have been no significant changes to federal rules governing their behavior. Proposals that have been made to better monitor the financial system and to police the products that banks sell consumers have been held up by lobbyists, lawmakers, and turf-protecting regulators."
And the beat goes on.
"The failure of Lehman, the biggest bankruptcy in U.S. history, and the panicky sale of Bear Stearns Cos. Inc. to JPMorgan and Merrill Lynch & Co. Inc. to Bank of America Corp. also have transformed Wall Street. The surviving investment banks have fewer competitors and more market share.
The big banks now are more powerful than before," said Simon Johnson, former chief economist with the International Monetary Fund. "Their market share has grown."
Through mergers and the failure of Lehman Bros. Holdings Inc., the mammoth banks whose near-collapse prompted government rescues have gotten even bigger, increasing the risk they pose to the financial system. And they still make bets that, in the aggregate, are worth far more than the capital they have on hand to cover potential losses."
Wall Street is still gambling--with our money, of course:
"Goldman Sachs Group Inc., JPMorgan Chase & Co., and others that have received tens of billions of dollars in federal aid are once more betting big on bonds, commodities, and exotic financial products, trading that nearly stopped during the financial crisis.
Big banks and their traders are also still finding creative - some say speculative - ways to profit. They are still packaging risky mortgages into securities and selling them to investors, who can earn higher returns by buying securities tied to the riskiest mortgages. That was what helped inflate the real estate bubble and spread financial pain around the globe."
If that weren't enough, outrageous compensation is back, too.
"Pay is already returning to pre-crash levels, topped by the 30,000 employees of Goldman Sachs who are on track to earn an average of $700,000 this year.
...an analyst at J.P. Morgan in London, predicted this week that eight major American and European banks would pay the 141,000 employees in their investment banking units $77 billion in 2011 -- about $543,000 per worker, not far from the 2007 peak."
President Obama has been calling for Congress to enact tougher regulations on the financial sector. But here's where, as in the health care debate, money talks.
"There have been no significant changes to federal rules governing their behavior. Proposals that have been made to better monitor the financial system and to police the products that banks sell consumers have been held up by lobbyists, lawmakers, and turf-protecting regulators."
And the beat goes on.
I, too, hope we have not "woken up a sleeping giant." Now for every three big banks, we have one REALLY BIGGER bank.
For every three big brokerage houses, we have one REALLY BIGGGER brokerage house.
For every three big insurance companies, we have one REALLY BIG BIG BIG BIG insurance company. WITH OUR MONEY!!!
I fear we may have closed the barn door AFTER the horse escaped.
And I forgot to mention - The next Civil War will come when the banks start hiring mercenaries for foreclosures. It's closer than we think!
Des - What you have described is the precursor to the descent into the abject poverty that I suspect that we will experience before this economic crisis is over. It is the last feeding frenzy by the financial institutions before the entire system collapses and the dollar becomes history. The bankers will have been paid with toilet paper in the end (sic), and the rest of us will be on a Bartertown economy.
Gas up the Lamborghini - We're gonna have to be Road Warriors for real!