And I love how the Center for Public Integrity packages the report, including a commentary by its executive director on what it all means, as well as interactive charts and data and a backgrounder on the overall financial crisis.
The commentary, by Bill Buzenberg, is superb. I’ll leave you with his first few paragraphs, which speak for themselves:
There is something of a myth surrounding the current economic crisis, how it unfolded, and the precise role of the world’s largest financial institutions in the global meltdown. That myth suggests these banks and investment houses were somehow surprised “victims” of unscrupulous subprime mortgage lenders, and that they could not have anticipated the damaging toxic assets that have so infected their balance sheets.
What’s missing from this story is the fact that this was a self-inflicted wound for which the rest of us are picking up a massive tab. The largest American and European banks and investment houses were not the unwitting “victims” of an unforeseen financial collapse, as they have so often been portrayed. The mega-banks not only invested in subprime lending institutions — they were the enablers, bankrollers, and instigators driving high-interest lending, and they did so because it was so lucrative and unregulated.
Worse, in many instances these are the same financial institutions the government is now bailing out with tax revenues.
Why hasn’t a newspaper or magazine done this?
The report on the interconnections between Wall Street and the mortgage subprime industry has the wrong emphasis, in that it seems to ignore the consequences of the repeal of Glass-Steagall in 1999. This repeal permitted the banks and other financial institutions to issue mortgage backed securities which previously had consisted of the collection of dud debtors accumulated by Fannie Mae and Freddie Mac and then issued to the world's banks. The banks affected by the repeal of Glass-Steagall could be European as well as American. This largely accounts for the disastrous American investments made by HSBC in 2003 and the Royal Bank of Scotland in 2007, compounded by the British Bank of England Act 1998. The Troubled Assets Relief Program approved by the US President on 3 October 2008 seems to have been selectively American in the bailouts it authorised. (I confess to being British, so I may be biased).
#1 Posted by Peter L. Griffiths, CJR on Wed 2 May 2012 at 12:39 PM