Writings and observations

Busting up the scam

On and on we see news scraps from D.C. like this one: “On Monday the president met with top banking executives at the White House (some by speakerphone) to plead with them to do more lending, even as the last of them, Citigroup and Wells Fargo, agreed to pay back their bailout money and free themselves of government control. Obama chided the execs for unleashing their powerful lobby on Congress in order to restrain new regulation.” You get lots of confidence, in other words, that the maniacs on Wall Street are anywhere near restraint.

Elsewhere in that same article (from Newsweek) comes something interesting, a deflater arrow aimed right at Wall Street from Washington Senator Maria Cantwell and (remarkably) Arizona Senator John McCain: To, roughly, bring back the Glass-Steagall Act, which separated investment and commercial banking. Over the last generation, the law has been weakened repeatedly and finally eliminated totally in 1999. With such wonderful results.

There’s some argument that the connections woven through the financial system have become too deep to undo; Newsweek quotes a Treasury official as comparing it to “going back to the Walkman.” Certainly the Obama Administration is opposed.

But middling measures aren’t going to make the sweeping changes Wall Street keeps demonstrating it needs. How far Cantwell, or McCain, will go with this isn’t clear; we couldn’t find anything about it on her web site. But if the public were well enough educated on the stakes and what’s needed to rip out the heart of the problem, there’d be a lot more support around the country for something like this.

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