Wall Street and the Dems

Many still love Bill Clinton, but it also clear that part of his legacy was setting us on the path toward the financial crisis of 2008. How? Among other things, he allowed major overhaul of banking regulation in 1998, including the exorbitant fees and interest rates we now pay on credit cards. But more important were two larger reforms: essentially ending Glass-Steagal and failing to regulate the expanding markets for derivatives. Outside the legislative process, Clinton started a trend that has continued ever since -- large Wall Street contributions to democrats, including incumbent Obama. In fact, an article by Salon today highlights the cozy relationship between the two: Democrats & Bain. Obama has, in fact, received more Wall Street dollars than did Bush and Dems actually received more than Republicans in the last election from the potential bane of Romney, Bain Capital, by a margin of 2:1 ($1.2 million to $480k). Beyond the presidency, one of the biggest supporters of Wall Street is Democratic Senator Charles Shummer, who has raised millions of dollars and blocked any attempt to regulate Wall Street ever since. Corey Booker, the up-and-coming enigmatic mayor of Newark angered many Dems yesterday when he called the Obama attacks on Bain Capital "nauseating." He later relented, but he too appears to have a comfortable relationship with the Kings of the Financial Universe across the Hudson. 

So what does this mean for democracy and our are economic future? I would argue nothing good. After 2008, there was widespread call for significant financial reform. But not only Republicans but Democrats sought to water down the bill and Republicans have now promised to overturn even those minor changes if they gain the two party majority. Obama backed down from giving Elizabeth Warren support for the new Consumer Financial Protection Bureau she was the architect of and uncertainly still remains around its mandate and power. Little has been done to address the power banks now hold in the country and world and the moral hazard problem is bigger than ever (just look at Jamie Dimon's $2 billion trading loss at J. P. Morgan). It is all part of the new reality in politics today. Whether a Democrat or Republican sits in the White House, corporate donors and Wall Street big wigs are given easy access, their interests are defended against the other "99%" and the obvious tax reforms that should have gone through years ago (taxing most of their income at only 15%) remains a pipe dream of true economic progressives. In New York, for example, a 1% tax on income over $1 billion could solve most of their deficit problems. But their power is too great, and their greed too strong, to ever allow that to happen.

After the Great Depression, the banks realized that they needed to reform themselves and worked with FDR to do just that; or at least enough of them to allow the New Deal to go forward. Today corporations are willing to spill large sums of cash to continue to do whatever they want, allowing profits to be siphoned off to top executives as the average worker just gets by and the rolls of unemployed increases. Is this the new future? It appears people across the U.S. and Europe have finally had enough and hope did emerge at a meeting of the G8 over the weekend, with Obama and other European leaders pushing German Chancellor Merkel to move away from her austerity approach to actually focus on economic growth. We shall have to see if our leaders actually heed the call and start representing the interests of the many of those of the few.