Sep
02

Why Do We Have to Pay for Anything?

By

Frank Rich asks, The 9/11 decade is now over. The terrorists lost. But who won?

Rich was on MSNBC to talk about his piece in New York Magazine that includes this:

By portraying Afghanistan and Iraq as utterly cost-free to a credulous public, the Bush administration injected the cancer into the American body politic that threatens it today: If we don’t need new taxes to fight two wars, why do we need them for anything? But that’s only half the story in this alternative chronicle of the decade’s history. Even as the middle class was promised a free ride, those at the top were awarded a free pass—not just with historically low tax rates that compounded America’s rampant economic inequality but with lax supervision of their own fiscal misbehavior.

To that point, the government just announced plans to sue several big banks for their fiscal misbehavior:

The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation.The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter.

Comments

  1. Tom Buckner says:

    As a clever fellow I work with notes: this business of perhaps bringing the banks to heel a bit seems as though the mechanism of government has somehow finally become unfrozen in this one area and has squeaked into motion; but… why? It isn’t congruent with the Obama administration’s listlessness enforcement in a dozen major areas of criminality. Sooo.

    My answer was that perhaps President Origami is now implementing a plan to look like he’s doing something after all, in time for the next election. Failing that, I don’t even have a theory.

  2. Well, here’s one take on it. grain of salt needed.
    http://www.forbes.com/sites/greatspeculations/2011/09/02/mind-blowing-news-from-fhfa/
    I read something last week about the NY Attorney General being a hold-out on a back-room bargain settlement that has been negotiated to relieve the banks of any future lawsuits and absolve them of wrong-doing. This may be political cover for that.
    It also makes a handy substitute for actual legislative action.

  3. Tom Buckner says:

    I forgot about the NY AG. Yes, that’s probably it. It only takes one person doing their job to shame a whole room full of hacks.

    Until the hacks can get rid of him.

  4. Tom Sullivan says:

    If you’ve a mind to support Eric Schneiderman, call the NC AG’s office and tell Roy Cooper you oppose handing the banks a “Get Out Of Jail Free” card. Or you could join calls for (ostensible public servant) NY Fed board member Kathryn S. Wylde’s resignation over this quote she gave the Times over her displeasure with Schneiderman for standing in the way of a settlement:

    “it is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”

    If crashing world financial markets, robo-signing thousands of legal papers, serially presenting phony mortgage documents in court, and fraudulently marketing toxic mortgage-backed securities as AAA assets don’t qualify as indefensible practices warranting civil and/or criminal investigation as far as Wylde is concerned, she needs to find another line of work.

  5. Diogenes says:

    For the American economy – and for many other developed economies – the elephant in the room is the amount of money paid to bankers over the last five years.

    In the United States, the sum stands at an astounding $2.2 trillion for banks that have filings with the US Securities and Exchange Commission.

    Extrapolating over the coming decade, the numbers would approach $5 trillion, an amount vastly larger than what both President Barack Obama’s administration and his Republican opponents seem willing to cut from further government deficits.

    That $5 trillion dollars is not money invested in building roads, schools, and other long-term projects, but is directly transferred from the American economy to the personal accounts of bank executives and employees.

    http://www.project-syndicate.org/commentary/taleb1/English