At its peak, financial industry earned a staggering 40 percent of all US corporate profits, four times what they earned in 1980, while the average Wall Street paycheck doubled, and top bonuses sextupled. Not surprisingly, the finance lobby is the strongest campaign contributor in Washington, with an astonishing $475 million during the 2008 election cycle, almost $60 million more than two decades ago. The finance lobby is known as the FIRE lobby—Finance, Insurance, and Real Estate, and it includes basically anyone who makes money by handling money. That includes big money-center banks, small community banks, Wall Street investment banks, insurance companies, mortgage brokers, hedge funds, credit card issuers, trade groups (ISDA), private equity firms, credit unions, and more. To understand just how extravagant the finance lobby’s power is, we need to understand some history first. Continue reading ‘The Power Of Money’
Tag Archive for 'Glass-Steagall'
Since the beginning of the year, governments all over the world have worked on new sets of regulations for financial institutions after they spent more than a year bailing out firms like AIG, Northern Rock or Royal Bank of Scotland. In my opinion, the absolutely necessary process of re-regulating the banks is starting to get more traction and political support. The methods that lawmakers have used handling the too-big-to-fail investment banks, have created a moral gap between Wall Street and Main Street. Between 1933 and 1999, the Glass-Steagall Act restricted commercial banks to underwrite stocks and bonds, and investment banks to take in deposits from customers. It turns out that a very plausible cause of the global banking meltdown could be the 1999 repeal of the Glass-Steagall Act, which gave financial giants the power to outplay the regulators. Continue reading ‘Washington vs. Wall Street’
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