A year and a half since the excesses and swindles of Wall Street and the banking industry nearly drove the world into another Great Depression, we still have no reform of these dangerous sectors. The huge sums of lobbying money deployed by “financial services” have ensured that the nation remains vulnerable to another panic and consumers continue to be victimized.
As Bob Dole said, where’s the outrage?
Senate Banking Committee Chris Dodd says he will unveil yet another attempt at reform. The industry will be sure to fight against a consumer protection agency — and few lawmakers are willing to cut to the heart of the matter. This would entail a new Glass-Steagall Act that separates risky investment banking from taxpayer-insured commercial banking. More: It would regulate derivatives, including swaps, and provide oversight and transparency of the shadow banking system. It would break up the too-big-to-fail institutions. Nothing has been done, and Wall Street is not only back to business as usual — it had been emboldened to take more risks, loot greater amounts for executive compensation, believing taxpayers will always bail it out.
Republicans have fought reform at every step, which is to be expected. But Dodd himself received two sweetheart mortgages from the notorious Countrywide Financial — an ethical lapse that even an old-time goobah could have sniffed out. The more honest assessment came from Illinois Sen. Dick Durban, that the big banks “frankly own the place,” that is, the United States Senate. Meanwhile, President Obama has not spent a dime of political capital on financial reform, even though the next disaster, cooked on Wall Street, is quietly ticking.
The American people wrote a huge check on their future living standards to save the big banks. Perhaps things didn’t get bad enough to allow an FDR-like approach to take down “the banksters,” including prosecutions and a Pecora Commission to uncover all the frauds and hold the toffs accountable. Unfortunately, taxpayers lack the lobbyists to save the country from the bankers’ continuing excesses.
The Back Story: Oil companies are considering shutting down refineries as they try to recoup profits and address the possibility that gasoline demand may not return to previous levels, according to the Los Angeles Times.
Several other factors are behind this trend. First, the major oil companies are in eclipse, as more and more of the world’s oil is controlled by state-owned enterprises. Second, looming peak oil — when half of this one-time gift of nature is gone and the remainder is more costly to find, develop and refine — makes refinery investment a bad deal for the majors.
Meanwhile, oil prices remain more than $80 a barrel, a marker for economic recovery. That’s high already, and the higher prices rise the more of a drag they will become.
Today’s Econ Haiku:
Another loss here
Jones Soda went for big growth
And lost its flavor