I am really excited that the long overdue battle over immigration reform and a path to citizenship has finally begun in earnest. While I am heartsick at the reason, it is good news that common sense gun safety laws are once again being discussed in this country almost two decades after we finally passed the Brady Bill. And the on-going, never ending budget fights remain urgently important in terms of stopping more damage to middle class and poor people in America. I know I will be engaging daily in the vitally important battles over all these issues, and I expect my progressive allies all over the country will be as well.
But I remain troubled, profoundly troubled, by the fact that fundamental economic issues seem to be the last thing on anybody’s minds in DC. Our economy may be slowly getting better, but we still have a very serious jobs crisis in this country- nowhere near to full employment and not on a path to get there for many years to come. Our manufacturing sector is still only limping along and our trade deficit remains catastrophically high. Our infrastructure is still badly in need of repair. Wages for most workers are still stuck in neutral or slipping compared to inflation, and a third of those who found new jobs after losing them in the great recession are being paid less than in the old job. Our housing market is getting stronger in some metro areas, but is still very weak overall in terms of prices, homeowners under water, and numbers of foreclosures and empty homes.
And looming over these economic problems is quite literally the elephant in the room: these gargantuan Too Big To Fail, and apparently Too Big To Jail, Wall Street financial conglomerates.
Because of their massive economic and political power, the financial sector swallows up more than 40% of the economy in this country, and because they can make more money doing speculative high-speed trading than by investing in manufacturing or infrastructure or making loans to small businesses, those sectors get starved for capital. Because of Wall Street’s obsession with short-term profit, workers are not invested in and wages keep getting driven down. Because these banks’ accountants have figured out that their short term stock prices will stay higher if they continue to show inflated housing assets on their books, they have been unwilling to work with homeowners to write down underwater debt. Because of tax policies such as low capital gains and the carried interest loophole that favor the financial sector, the federal budget is starved for resources, and because Wall Street wants to be able to speculate with senior citizens’ money, the pressure keeps building to cut or privatize Social Security, as well as state and local government workers’ pensions.
Financial sector problems have been in the news a lot lately. Standard and Poor’s is finally (finally, finally) being sued. New emails from JP Morgan traders and execs have come out showing that they engaged in very shaky and probably fraudulent practices in bundling mortgage securities together. Ted Kaufman and activists are demanding more bank investigations and prosecutions. Frontline raised hell about DOJ dropping the ball on Wall Street prosecution, and the guy in charge of that for DOJ resigned the next week. Elizabeth Warren is investigating weak settlements between regulators and bankers. LIBOR prosecutions are still ginning up.
Wall Street is not responsible for all the ills in our economy. I’m happy to give plenty of the blame to conservative politicians in the pocket of wealthy special interests, companies like Wal-Mart driving down wages and destroying small retailers, health industry companies driving our medical costs through the roof, carbon spewing polluters refusing to make way for the green jobs of the future, and big businesses driving their small business competitors out of business. But the damage Wall Street did to the economy, and the parasitic power they still hold over it, is at the very heart of why our economy has not been able to get back on the road to true prosperity and full employment. And all these stories make clear, the corruption on Wall Street stinks to high heavy. The biggest players there are playing a rigged game and screwing the rest of us badly.
The only answer to why all this is not getting fixed in spite of the flashing red warning signs is something America’s founders understood well: the problem of concentrated power. They constructed our entire system around the guiding principle of distributed power, checks and balances. They knew that there was no way a democracy would survive if any one politician, region, or business sector became too powerful for too long. That fear has been a real danger a few times over our country’s history- slave power in the years leading up to the Civil War and the Robber Barons’ power in the late 1800s being the two worst examples- but for most of our country’s history the pluralistic idea has kept our democracy healthy. But when something as central to a nation as its financial system is controlled by institutions that there are this monumentally huge, we have a serious problem. And if the problem doesn’t get fixed, it will crush either our economy or our democracy or- most likely- both.
When you have top officials like Lanny Breuer at the DOJ openly alluding to the fact that he won’t prosecute banks because of the harm it might do to the economy; when you have the most free market worshipping conservative President in modern history turning his philosophy upside down on a dime and handing out government bailouts like a drunken sailor; when you have a Democratic President presiding over record profits and bonuses for Wall Street banks less than a year after the biggest financial collapse in 80 years while the rest of the country’s economy is in terrible shape, and not seeming terribly upset by that dynamic; when you have the most blatant financial sector fraud in many decades, and not a single criminal prosecution of a major bank executive- when you have all that happening, it is clear enough to this old political guy that the guys at the top of the Wall Street system have amassed way too much power.
The only way to break that power is break these biggest banks up. Unless and until we do that, the economy will continue to limp along, and future financial collapses caused by their concentration of power and corruption will periodically occur. Thankfully, Senators like Elizabeth Warren and Sherrod Brown are gearing up for the battle. The rest of us need to fight by their side.