$5 Billion in Lobbying for 12 Corrupt Deals Caused the Multi-Trillion Dollar Financial Meltdown

[depakid]

Best, most concise piece on the pattern of behaviors (both by Republicans and Democrats) that I've seen yet.
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What can $5 billion buy in Washington?

Quite a lot.

Over the 1998-2008 period, the financial sector spent more than $5 billion on U.S. federal campaign contributions and lobbying expenditures.

This extraordinary investment paid off fabulously. Congress and executive agencies rolled back long-standing regulatory restraints, refused to impose new regulations on rapidly evolving and mushrooming areas of finance, and shunned calls to enforce rules still in place.

"Sold Out: How Wall Street and Washington Betrayed America," a report released by Essential Information and the Consumer Education Foundation (and which I co-authored), details a dozen crucial deregulatory moves over the last decade -- each a direct response to heavy lobbying from Wall Street and the broader financial sector, as the report details. (The report is available at: www.wallstreetwatch.org/soldoutreport.htm.) Combined, these deregulatory moves helped pave the way for the current financial meltdown.

Here are 12 deregulatory steps to financial meltdown:

1. The repeal of Glass-Steagall

The Financial Services Modernization Act of 1999 formally repealed the Glass-Steagall Act of 1933 and related rules, which prohibited banks from offering investment, commercial banking, and insurance services. In 1998, Citibank and Travelers Group merged on the expectation that Glass-Steagall would be repealed. Then they set out, successfully, to make it so. The subsequent result was the infusion of the investment bank speculative culture into the world of commercial banking. The 1999 repeal of Glass-Steagall helped create the conditions in which banks invested monies from checking and savings accounts into creative financial instruments such as mortgage-backed securities and credit default swaps, investment gambles that led many of the banks to ruin and rocked the financial markets in 2008.

2. Off-the-books accounting for banks

Holding assets off the balance sheet generally allows companies to avoid disclosing “toxic” or money-losing assets to investors in order to make the company appear more valuable than it is. Accounting rules -- lobbied for by big banks -- permitted the accounting fictions that continue to obscure banks' actual condition.

3. CFTC blocked from regulating derivatives

Financial derivatives are unregulated. By all accounts this has been a disaster, as Warren Buffett's warning that they represent "weapons of mass financial destruction" has proven prescient -- they have amplified the financial crisis far beyond the unavoidable troubles connected to the popping of the housing bubble. During the Clinton administration, the Commodity Futures Trading Commission (CFTC) sought to exert regulatory control over financial derivatives, but the agency was quashed by opposition from Robert Rubin and Fed Chair Alan Greenspan.

More: http://www.alternet.org/workplace/130683/%245_billion_in_lobbying_for_12_corrupt_deals_caused_the_multi-trillion_dollar_financial_meltdown/

[liberal N proud]

1. If we know what brought us to this place, can we name names?

If we now how, can we determine who? Then prosecute the bastards for theft on the grandest of schemes.

[burythehatchet]

2. I'll start: William Jefferson Clinton

Lawrence Summers
Alan Greenspan
Phil "the Snapping Turtle" Gramm

[Iwillnevergiveup]

4. "snapping turtle"

Now that's funny...and perfect.:rofl:

[HowHasItComeToThis]

3. SHORT SELLING MUST GO

[burythehatchet]

5. Financial news networks must GO

[Tex-Slim]

6. Clue me in

How much of that went to Dodd, Conyers, Waters, Frank, etc... all the smiling faces who said that there was nothing wrong over at Fannie Mae and Freddie Mac as they were bundling billions of bad loans then passing them off to banks with a quasi-government seal of approval on them?

Those who do not understand the facts of the mistakes made are doomed to repeat them!

"The Financial Services Modernization Act of 1999 formally repealed the Glass-Steagall Act of 1933"

Interesting point. I didn't notice any mention of how REDLINING was treated in this bill... how, as a deal to get this bill through, our own representatives demanded that the government should start pressuring lending institutions to make ever riskier loans without any sensible cutoff point based on ability to pay, nor did you mention who actually signed the bill into law, if that matters to anyone...

I notice you left out mention of a few other key events in this chain... care to paint a broader picture, or are you done? I mean, does the government forcing companies to make risky, questionable loans to people have ANYTHING to do with this mess, or is that just propaganda?

When both sides have dirty hands, but we only call one on it, we don't solve any problems...

[depakid]

8. Both sides may have dirty hands- but the dirt came came primarily from one side

and was only acquiesced in by the other due to the influence of money in politics, deregulation of the American media and the consequent inability of America's judicial and regulatory systems to adapt.

We solve problems first by recognizing where they came from- dealing with root causes, so to speak.

Otherwise, we're all little Dutch boys plugging fingers into the dikes (or tossing sandbags -take your pick of anologies).

[chill_wind]

7. K & R n/t