In These Times: The Pillage People

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The Pillage People
One year after the Wall Street bailout, real reform of the financial sector is still a dream.

By Roger Bybee


It’s as if last year’s meltdown—causing a $16 trillion bailout of the financial industry, the doubling of America’s unemployment rate and the loss of 2 million manufacturing jobs in 2008—had never taken place. Two of the five biggest investment banks, Bear Stearns and Lehman Brothers, have bitten the dust, but the survivors intend to party on, federal dollars in hand.

The Obama administration’s passive attitude creates despair for observers like Wall Street veteran Nomi Prins, a former managing director of Bear Stearns and Goldman Sachs and author of It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street (John Wiley & Sons, September). Whereas “the New Deal meshed government rescue with economic restructuring,” Prins sees few signs that the Obama team is going to insist that the big bailout be coupled with serious re-regulation of the financial sector.

“I think we are less stable now,” Prins told In These Times. “There are fewer banks and they are more concentrated and more influential than before. We might not have a crisis on subprime loans in five years, but it might turn out to be the financial sector not fully paying back their loans that causes a new crisis.”

Thus far, Obama seems unwilling to engage in an all-out fight with Wall Street or even fundamentally break from the trickle-down approach followed by former Treasury Secretary Hank Paulson (the former Goldman Sachs chairman and CEO). Paulson argued that major investment banks were “too big to fail” and then unleashed a gusher of federal assistance to Wall Street, starting with $787 billion in TARP funds. ...........(more)

The complete piece is at: http://www.inthesetimes.com/article/5011/the_pillage_people