Last Saturday, while taking a little imposed hiatus from my favorite website (we all know why), I decided to re-watch a wonderful documentary narrated by Matt Damon, entitled ‘Inside Job’. It was released in May of 2010 and won that year’s Academy Award for best documentary. I watched it May of 2011 on one of my progressive websites whose identity I’ll protect. You’ll know why in a moment.
I returned to the website and kept clicking on ‘headlines’ until I arrived at May 26, 2011. I scrolled down to the 8-part ‘Inside Job’ video. I clicked on the arrow in the middle of the screen for part number 1. Instead of the opening music and credits I was greeted by a terse message that informed me that, “This video is no longer available due to a copyright claim by Sony Pictures Home Entertainment.†Oops! With a market cap of $21 billion, I can see why Sony would play hardball with this humble website. Might cost them a few thousand of their countless billions.
I think it’s vital that people get a sense of what this documentary taught us about how we got into this God-awful, almost 100% Republican mess that our president is spending years digging us out of. So with memory in tow and a few Internet visits, a review.
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Let’s start with deregulation. Nothing is more responsible for America’s near fiscal meltdown than deregulation. That’s why it’s so frightening that 4 corporate-owned, dense egomaniacs rail against the only brake on the further destruction of people’s bottom lines.
The door to impending disaster swung wide open in 1999 with the virtual repeal of the venerable Glass-Steagall Act, a staple of sensible regulation since 1933. The money boys had been fighting this important legislation for decades. They finally paid for passage of the Gramm-Leach-Bliley Act. This incestuous piece of shit allowed the moneyed family of commercial and investment banks, insurance companies and securities firms to intertwine in a writhing alliance of greedy crooks. Bill Clinton signed it into law.
The next year, one of the act’s namesakes, Senator Phil Gramm, inserted the ‘Commodity Futures Modernization Act’ into an Omnibus spending bill. It knotted the family of greed even tighter together. You now had the foundation of all that’s wrong with financial America today. You also had the enabler of the terrible period to follow.
I’m just going to hit the highlights of what happened next. You should know that after the fact of legislation run amuck that Bank of America, Wells Fargo, JP Morgan Chase and Citigroup controlled 40% of the nation’s bank deposits. On the securities side, Goldman Sachs and Morgan Stanley held one-third of that industries assets.
Eliot Spitzer (Gingrich makes him look like a high school kid copping a feel in the back seat), who could have played a prominent role in cleaning this mess up, tried everything in his power as New York’s Attorney General to get the regulators to move when he saw the train leaving the station. Nothing happened. Spitzer needs to re-emerge as a protector of citizen interests.
Most of you remember the precursor to the housing bubble – the Internet bubble. Investment banks were still touting what were known to be essentially worthless Internet stocks right up to moments before the crash. 10 banks and Freddie Mac were fined serious money for money laundering, fraud, hiding criminal activity and cooking the books. The unregulated derivatives market had turned into a potential worldwide catastrophe to boot. Some well-meaning financial overseers suggested that Clinton’s Treasury Secretary, Larry Summers, revisit the OTC derivatives market, maybe with an eye to at least modest regulation. Summers wasn’t hearing it nor was Fed Chair, Alan Greenspan. In a later feature, I’ll talk about the most dangerous derivative out there, Credit Default Swaps. CDSs could make this current mess look like a 3-inch snowfall.
The real cancer of the collapse was about to emerge. Investment banks started bundling mortgages, debts and massively-falsified loans, many of them subprime junk In a ten-year period subprime loans went from $30 billion to $600 billion. These questionable instruments were turned into collateralized debt obligations (CDOs). The CDOs were sold to investors. Ratings services, paid by investment banks to do so, gave them much higher marks than they deserved. Your dog could get a loan if he sat up straight. Monstrously inflated home prices followed.
Racists republicans jumped all over the Community Reinvestment Act, blaming poor people (read black) for taking advantage of the legislation to buy houses they couldn’t afford, thus being the root cause of the problem. What a crock. The act goes back to 1977 replete with safeguards and the crisis didn’t emerge until many years later. Unscrupulous money people were the bad guys here.
The unregulated happy hour was awesome for a very few while it lasted. Lehman’s CEO enriched himself by $485 million. Countrywide’s CEO dumped his soon to be worthless stock for $140,000,000. Mitt would have loved these guys. Who knows? He might have been pulling some of the strings from his offshore havens. A year before the bottom dropped out, financial institutions were responsible for 40% of S & P’s profits.
Then it all imploded. The herd of overpriced white elephants didn’t and couldn’t move as housing prices had doubled over the years. Foreclosures swept the nation. Hundreds of billions in CDOs and real estate just lay there with no takers. Financial institutions had to be bailed out with the Troubled Asset Relief Program and unemployment ballooned to 10%. Economists pegged the official start of the recession as 2007. This was all BUSH, all the time!
The unregulated scumbags ran roughshod during the Bush bought and paid for administration. They started it and Bush did nothing to stop it. In fact, he and his people exacerbated it with their inability or lack of inclination to do anything about the devastation while there was still time.
I’ve just tickled the surface. Get a copy of ‘Inside Job’. It’ll complete the story I’ve just started. You’ll come face to face with Wall Street and academic hustler economist you never dreamed existed.
When you’re finished viewing, take an oath to never vote Republican again. Ever!
Raised rural & small town, then lived in N.Y., Chicago & LA. Widely traveled. Returned from world wandering to pursue media life of anchorman/reporter and major, medium and small market talk radio. Highly active in politics. Once worked as orderly & security in Mens Lock Ward for the Criminally Insane at a state institution. Much more rational population than current Teapublicans. Great concern for country run by and for the extreme wealthy. The inhumane current running through this country has no precedent in modern history.
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