March 31, 2018–In a special section entitled “10 Years After the Crisis,” published on March 27, Wall Street’s newspaper of record, the Wall Street Journal, put together a highly interesting compilation of charts and graphs which tell a sorry truth: Injustice and risk remain an imminent risk to the financial system, just as they did before the 2007-2008 crash. At the conclusion of the series of graphics, the Journal then cites two “experts,” mega-speculator Carl Icahn and former California State Treasurer Phil Angelides. Icahn baldly declares that “I don’t believe it’s safer” today, and Angelides says that there has been “no change” in the way the system operates.
As the head of the Federal Financial Crisis Inquiry Commission, which released its report in January 2011, Angelides has exhaustive knowledge of the causes of the crisis. That report concluded:
More than 30 years of deregulation and reliance on self-regulation by financial institutions, championed by former Federal Reserve chairman Alan Greenspan and others, supported by successive administrations and Congresses and actively pushed by the powerful financial industry at every turn, had stripped away key safeguards, which could have helped avoid catastrophe. This approach had opened up gaps in oversight of critical areas with trillions of dollars at risk, such as the shadow banking system and over-the counter derivatives markets. In addition, the government permitted financial firms to pick their preferred regulators in what became a race to the weakest supervisor.
The Angelides Commission then summarizes the case: “Our financial system is, in many respects, still unchanged from what existed on the eve of the crisis. Indeed, in the wake of the crisis, the US financial sector is now more concentrated than ever in the hands of a few large, systemically significant institutions. “The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done. If we accept this notion it will happen again.”
Unstated were the measures that needed to be taken to prevent the crisis: Not Dodd-Frank, but reinstatement of Glass-Steagall banking separation, and a source of government-backed, long-term low interest credit to rebuild the physical economy of the nation.
Here are some of the summary results the Journal’s charts show:
- Median household income is up only 5.3% since 2008.
- 3% of all jobs in the economy are low-wage.
- Income inequality has substantially increased from 2007 to 2016: The income of the top 1% has gone from 33.7 to 38.7%; that of the bottom 90% has gone down from 28.6% to 22.8%.
- The 6 largest commercial banks have paid $110 billion in penalties for malfeasance since 2008, but only one top banker, Kareem Serageldin of Credit Suisse, has gone to jail.
- The 10 largest commercial banks control 55% of total assets.
- Credit bubbles in student loans, auto loans, and credit cards.
If even Wall Street sees the danger, what is Congress waiting for?