We’ve Tolerated ‘Too Big to Fail’ for Far Too Long (July 23, 2014)

too-big-to-fail-hbo-paul-giamatti-andrew-ross-sorkin-william-hurt

With international disasters and foreign policy imbroglios everywhere you turn, it’s easy to forget that we have numerous domestic issues with which we still must contend. To drill it down even further, we even have problems that warrant attention above and beyond nonstop Republican House attempts to disable Obamacare, either through legislation or lawsuit. And though it’s been hard to put faith in an unbiased justice system of late, I have decided to share our own Jason Easley’s optimism, located in his piece “Federal Court Ruling That Obamacare Subsidies Are Illegal Expected To Be Overturned.

The Great Recession. Remember that? Although it’s been nearly six years since the catastrophic burst of the housing bubble and the subsequent stock market crash of late 2008, and though many experts tell us the worst was over in June 2009, most Americans aren’t feeling recovered. For a host of reasons including, but not limited to, sluggish job growth, stagnant wages, high levels of personal debt and underwater mortgages, the middle and working classes are struggling. And although the Big Banks would like very much for us to collectively forget their culpability in this mess, playing the persecuted victim card as often as possible (see U.S. venture capitalist Thomas Perkins’ letter to The Wall Street Journal, likening the “rising tide of hatred of the successful 1 percent” to the persecution of the Jews during Nazi Germany), their Jedi Mind Tricks have been only marginally successful.

Early this week, The New York Times columnist Joe Nocera brought the issue of the Great Recession back to collective consciousness with his piece, “Did Dodd-Frank Work?” In it, he observes, “There are many aspects of the law on which Democrats and Republicans disagree. But there is one area in which the two sides are largely in agreement: ‘Too Big to Fail’ is still with us.”

I don’t think we need to be financial experts to comprehend that not much has altered with our precarious system. While Bank of America, et al may be out of the subprime mortgage business, and the stock market has come back in a big way since the collapse of 2008, it’s tough not to feel that the financial system’s rebound continues to come at our expense – without us enjoying similar progress.

It also seems hard to believe that if a major institution once again found itself in dire straits, Uncle Sam wouldn’t ride to the rescue. The more things change, the more they stay the same after all and anyone left with the impression that the health and well-being Corporate America comes second to that of human citizens just hasn’t been paying attention.

Moving beyond common sense intuition to actual legislative fact, Nocera points out that, “In one part of Dodd-Frank, the banks are required to write ‘living wills,’ laying out how they could wind down without causing a financial catastrophe. Although they are now on their third round of living wills, the documents are thousands of pages, and the government hasn’t yet told them whether the second round of living wills, filed a year or so ago, passed muster.”

I can’t pass up the opportunity to point out another obvious corporate vs. citizen double standard. Though there are cities in America where it is essentially illegal to be poor and homeless, you can count on one finger how many bankers went to jail over derailing the global economy. And anyone who has undergone a personal bankruptcy proceeding can attest to the dehumanizing, humiliating scrutiny of medical bills, student loan amounts and income. It can take up to a dozen years before any entity will issue an individual credit again. Yet despite the disproportionate bluster, the nation’s banks operate as though they didn’t come to Washington with collective hats in hand little more than a leap year ago. And apparently they are not being held accountable to ensure it never happens again.

What we are left with, in the words of Nocera, is this: “the ultimate problem: We have no way of knowing whether ‘too big to fail’ still exists until we have another crisis. Let’s just hope we don’t have to find out anytime soon.”

Yeah, that doesn’t work. We must demand better of our lawmakers and regulators. What’s that they say about the definition of insanity?

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