This story was written by Jonathan Reed, The Crimson White
I am as much of an expert on economic issues as Sen. John McCain admits to being (i.e., not much of one), but I do know that if you leave children unattended for too long, theyll almost always end up doing something that gets them into trouble. If you get them out of that trouble and let them off without any repercussions, theyll do it again. Its only common sense.
The nations largest investment firms are not children, but their actions are the type which put our economy on the brink of if not already in yet another crisis.
We, as taxpayers, are paying to bail out some of these firms that engaged in dubious financial practices: Bear Stearns, Fannie Mae, Freddie Mac, IndyMac, AIG, etc. Our government officials had second thoughts about handing your cash over to another firm Lehman Brothers to recoup their losses from questionable lending.
What does it tell these businesses: Do whatever you want; the government will back you up?
Deregulation since the New Deal has allowed these corporations to take on riskier investments in hopes of generating more profit, and now the damage to the consumer is becoming even more apparent. It goes beyond the tax dollars and foreclosures; these are the entities that finance our entire economy. Our jobs our livelihoods are on the line here.
McCain and Sen. Barack Obama have both announced plans to increase government oversight of these industries; both see the importance of protecting the American people.
Albert Einstein defined insanity as doing the same thing over and over again and expecting different results. In 1929, faced with an economy full of the dubious practice of buying on margin, the stock market collapsed.
After three years of Herbert Hoover, who believed the free market could solve everything, a third of the country was unemployed and we were trapped in what would forever be known as the Great Depression.
In 1932, the American people overwhelmingly chose Franklin Delano Roosevelt to be the next president, and the New Deal was born. The new Securities and Exchange Commission would limit the questionable business practices that led to the crash. The Glass-Steagall Act separated the commercial banks from the investment banks, keeping the speculators away from the people who hold your money.
In 1999, however, the Gramm-Leach-Bliley Act overturned the Glass-Steagall Act; a move much loved by major banks and investment firms, which had already begun to merge together. Businesses such as Citigroup and Bank of America have become monstrosities with the power to take on high-risk loans in the hope of high profits. These high-risk loans often cost both the banks and their clients immensely.
Now theyre costing the entire nation enormously.
In the words of deregulation champion, investment firm lobbyist and McCain advisor former Sen. Phil Gramm, We have sort of become a nation of whiners. Of course, now it is Wall Street doing the whining, and the government is more than willing to listen.