Gretchen Morgenson writing for the New York Times has an article called The Rescue That Missed Main Street in the paper today.
Here’s the lead in paragraph –
FOR the last three years we have been told repeatedly by government officials that funneling hundreds of billions of dollars to large and teetering banks during the credit crisis was necessary to save the financial system, and beneficial to Main Street.
She explains that we were right to be concerned that benefits were designed to help all. For one thing, the bank bailout was not 600 billion but double that. That information was only available by use of the Freedom of Information Act (Our thanks to Bloomberg, Business and Financial News). It seems our government felt that telling us that they had bailed out banks for 600 billion when the actual number was double was information we could not be trusted with.
Another fact that concerns the public that has been widely publicized are the enormous profits culminating in record bonuses for the executives of the bailed out institutions. This is particularly disturbing in the light of likely fraud and other illegal misconduct during the course of the bank meltdown. Of course, since the federal government has failed to launch any prosecutions and the statute of limitations has expired, we will never know what level of misconduct was involved in the catastrophe.
But we do know that incompetent executives often acting without regard to their fiduciary duties to their clients have made a great deal of money and have not been penalized in total contrast to an American public placed under incredible strain.
The public, innocent of almost destroying the world economy, suffered the loss of tens of millions of jobs, roughly one third of their retirement investments and now suffer increasing economic insecurity.
The contrast between the winners and losers, the undeserving and the deserving can hardly be more pronounced.
Let the article explain further –
This important topic of bailout inequities came up in Congress earlier this month. Edward J. Kane, professor of finance at Boston College, addressed a Senate banking panel convened on Aug. 3 by Sherrod Brown, the Ohio Democrat. “Our representative democracy espouses the principle that all men and women are equal under the law,” Mr. Kane said. “During the housing bubble and the economic meltdown that the bursting bubble brought about, the interests of domestic and foreign financial institutions were much better represented than the interests of society as a whole.”
THIS inequity must be eliminated, Mr. Kane said, especially since taxpayers will be billed for future bailouts of large and troubled institutions. Such rescues are not really loans, but the equivalent of equity investments by taxpayers, he said.
But the inequity will not be eliminated.
We do not live in a society where the needs of people below a certain income level need be considered. Increasingly this nation is a society of haves, have nots, and those who are losing ground.
Those who are losing ground still harbor hope in elections and democracy. Whether or not this hope is justified will be evident soon.
- Too Little Too Late (about Too Much Too Soon) (momocrats.typepad.com)
- NY AG Schneiderman charges Bank of New York with defrauding investors (americablog.com)
- Robert Scheer: Amnesty for the Indefensible (huffingtonpost.com)
- Call for Resignation: Kathryn S. Wylde, NY Fed (ritholtz.com)
- Obama is a Bad President: An Answer to Jonathan Alter – John Ransom – Townhall Finance (gds44.wordpress.com)