Gretchen Morgenson calling for disclosure of what taxpayers are actually buying:
Now, inquiring minds want to know, whom did we rescue? Which large, wealthy financial institutions — counterparties to A.I.G.’s derivatives contracts — benefited from the taxpayers’ $85 billion loan? Were their representatives involved in the talks that resulted in the last-minute loan?
And did Lehman Brothers not get bailed out because those favored institutions were not on the hook if it failed?
We’ll probably never know the answers to these troubling questions. But by keeping taxpayers in the dark, regulators continue to earn our mistrust. As long as we are not told whom we have bailed out, we will be justified in suspecting that a favored few are making gains on our dimes.
And Kevin Phillips talking to Bill Moyers about how the financial sector, instead of financing the economy, came to dominate it.
KEVIN PHILLIPS: But what’s here that doesn’t get the attention is the United States in the last 20 years undertook an enormous transformation of itself with no attention paid. And what it means is and what makes all this so frightening is the country is at risk because of the size of the financial sector that has never been graded on its competence and behavior in any serious way. They are the economy at this point. And we are now seeing what happens when a 20 to 21 percent of GDP financial sector starts to come unglued.
BILL MOYERS: But there are people, Kevin, who disagree with us, who say that this financial industry has created great wealth for America in the last 25 years.
KEVIN PHILLIPS: Oh, it’s created great wealth for a small slice of America. But if you go back and we remember the manufacturing heyday, the auto workers in Michigan had fishing cabins up on the lake. And the middle class had been fattened by the rise of the blue-collar middle class. Well, there’s no rising blue-collar middle class now. The middle class is shrinking.
The pie in a financial economy goes to the one or two percent — or even less- that have capital skills and education. We have never had so much polarization and wealth disparity and just groaning wealth right at the top of ladder as we have now under finance.
You had essentially a financial sector that, let’s say, was sort of neck and neck with manufacturing back in the late 1980s. But they got control in a lot of ways in the agenda. Finance has been bailed out. I mean, everybody thinks this is horrible now what we’re seeing in terms of bailouts. Even a lot of the people who do it think it’s bad.
This has been going on since the beginning of the 1980s. Finance has been preferred as the sector that got government support. Manufacturing slides, nobody helps.