Third World America - Arianna Huffington [72]
We need to return to that approach to outrageous lending practices. We need to once again become a country where it’s not acceptable to financially trick millions of working families, binding them to the whims of bankers who have lost all sight of fairness.
CLOSING DOWN THE WALL STREET CASINO
Right after President Obama’s election, Rahm Emanuel famously declared, “Rule one: Never allow a crisis to go to waste.71 They are opportunities for big things.” But since the financial meltdown, it is actually the very people who created the crisis who have taken advantage of it and achieved “big things”—especially big profits and bonuses.
We obviously need to fix Wall Street. Desperately. And there is much to be fixed. But on a nuts-and-bolts level, the three things we absolutely must do are:
Regulate all derivatives and other exotic “financial instruments” that played such a big part in the meltdown and have turned Wall Street banks into much shadier versions of a Las Vegas casino (at least in Vegas, you know the odds going in).
Create a Glass-Steagall Act for the twenty-first century, restoring the Chinese wall between commercial and investment banking.
Follow the path of Teddy Roosevelt and break up the big banks. It’s essential to end “too big to fail” in order to ensure that taxpayers are not on the hook next time.
Even Alan Greenspan, the oracle of free markets and a longtime cheerleader for banking deregulation, thinks the megabanks are too big.72 In October 2009, he said, “If they’re too big to fail, they’re too big.… So I mean, radical things—you know, break them up. In 1911, we broke up Standard Oil. So what happened? The individual parts became more valuable than the whole. Maybe that’s what we need.”
After the near-collapse of the economy, precipitated by Wall Street, you would have thought that reining in the big banks would have been a no-brainer. But the best Washington can muster are diluted reforms that won’t prevent another meltdown.
Beyond new regulations, we need a new mind-set. We need to think bigger and begin eradicating the culture of greed and corruption that has come to dominate Wall Street. Discussing the economic crisis, Michael Lynton, chairman and CEO of Sony Pictures, told me, “I’m often asked if, given Hollywood’s struggles, I were building a movie studio system from scratch, is the current model what I would build?”
The answer was no.73 Likewise, given the chance to rebuild America’s economy, is the current system, even with a few hundred billion dollars’ worth of patches, the one we would want to build? Of course not. Even Greenspan conceded there was a “flaw in the model.”74 But there’s not a flaw in the model—the model itself is flawed. It’s not that capitalism isn’t working. It’s that what we have right now is not capitalism. What we have is corporatism. It’s welfare for the rich. It’s the government picking winners and losers. It’s Wall Street having its taxpayer-funded cake and eating it, too. It’s socialized losses and privatized gains.
A magnetic compass should always point north; a moral compass should always point out that cheating and fraud are dead wrong. But demanding that companies stop being bad is not enough. We have to demand that they start being good. That has to be the bottom line on financial and corporate reform.
We need to create an economy where productivity doesn’t come at the cost of quality of life. In 1967, speaking at the University of Kansas, Robert F. Kennedy called on Americans to look at our economy in a radically different way.75 “Our gross national product is now over $800 billion a year,” he said, “but that GNP—if we should judge America by that—counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors, and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets.