Third World America - Arianna Huffington [48]
The investment paid off in spades with the rollback of the financial regulations that had kept the worst excesses of corporate greed in check since the Great Depression, leaving in their place a shaky edifice of self-policing and cowed regulators powerless to rein in the galloping bulls of Wall Street. The results for corporate America: record profits, record pay packages, and record bonuses. The results for the rest of us: the savings and loan crisis, the corporate scandals of the Enron era, and the economic collapse we are still struggling to dig our way out of.
That collapse, by the way, has only caused the banking lobbyists to redouble their efforts in an all-hands-on-deck effort to thwart financial reform. Over the course of the debate about reforming Wall Street, the finance industry—which has been bailed out with trillions of taxpayer dollars and cheap loans from the Fed—has spent an estimated $1.4 million a day to convince our lawmakers to kill real reform.11
For instance, when the Senate was crafting its financial reform bill, it included absolutely no reform of Fannie Mae and Freddie Mac.12 This despite the fact that in just the first quarter of 2010 Freddie—one-half of what the New York Times’s Gretchen Morgenson calls “the elephant in the bailout”—reported a loss of $6.7 billion.13
As of May 2010, according to Morgenson, “serious delinquencies in Freddie’s single-family conventional loan portfolio—those more than 90 days late—came in at 4.13 percent, up from 2.41 percent for the period a year earlier.”14 And the number of foreclosed units Freddie controlled stood at nearly 54,000, up from 29,145 at the end of March 2009.
“I don’t understand why people are not talking about it,” says Dean Baker of the Center for Economic and Policy Research.15 “It seems to me the most fundamental question is, have they on an ongoing basis been paying too much for loans even since they went into conservatorship?”
And why would they do that? It’s part of what Baker calls a “backdoor bailout” of the banks.16 In other words, an under-the-radar way to continue shoveling money from struggling taxpayers over to the richest Americans.
This unseemly link between money and political influence is the dark side of capitalism. And like a swarm of termites reducing a house to sawdust, moneyed interests and their lobbyists are making a meal out of the foundations of our democracy.
In 2008, the American people voted for change. But there’s been a change in the plans for change. The detour was created by D.C. lobbyists who, since President Obama took office, have watered down, gutted, or out-and-out killed ambitious plans for reforming Wall Street, energy, and health care.
The media like to pretend that something’s at stake when a big bill is being debated on the House or Senate floor, but the truth is that by then the game is typically already over. The real fight happens long before. And the lobbyists usually win.
This disconnect between perception and reality reminds me of the time a friend took a family trip on a cruise ship. Her ten-year-old son kept pestering the crew, begging for a chance to drive the massive ocean liner. The captain finally invited the family up to the bridge, whereupon the boy grabbed hold of the wheel and began vigorously turning it. My friend panicked—until the captain leaned over and told her not to worry, that the ship was on autopilot, and that her son’s maneuvers would have no effect.
And that’s the way it is with our leaders. They stand on the bridge making theatrical gestures they claim will steer us in a new direction while, down in the control room, the autopilot, programmed