– Big Banks “Bought” Congress … So Credit Derivatives Are Bigger than Ever (Washington’s Blog, Aug 21, 2014):
The Causes of the 2008 Crisis Have Never Been Addressed
We’ve also noted that the financial services industry has bought and sold Congress.
Indeed, Washington never fixed the causes of the 2008 financial crisis.
Yesterday, Janet Tavakoli gave a good overview of the problem to CBC:
We threw money at the banks, and it all came back to Washington in the form of campaign contributions.
And we changed our campaign contribution law sot hat corporations could be considered people. And banks hired the relatives of people who work in Congress.
So they pretty much bought Congress. So we can’t really rely on them for reform.
The low rates – and the changes we made to accounting rules – benefited the banks, and helped them to gloss over all of these problems on their balance sheets, which were never solved.
And in addition, it helped the people who were in financial engineering – the financiers – to do leveraged buy-outs, all debt-based, where basically they were raising debts to pay themselves huge dividends.
And all of the low rates enabled that kind of activity and that kind of leveraging up again.
And it shows that “made in the USA” … the complete irresponsibility of the in the financial forum.
And we will pay the price. It’s hard to say when. But when you see this kind of leverage and this kind of opacity, it doesn’t end well.
There aren’t better internal controls [at the big banks]. And they have a bigger, more opaque, more complex market with more players.