"Restarting Financial Reform" NY Times January 24, 2001.
Let me get this straight...our financial problems were caused by banks. Were these the same banks that were given billions in bailouts? Are these the same banks that gave the top donations to the Obama campaign? Are these the same banks that have their executives in the Obama administration?
"...an overgrown banking sector diverts resources from more productive uses and, in the process, amasses riches at the expense of everyone else. The entire country can see the evidence of that in stagnating wages, disappearing retirement savings, vanishing home equity and taxpayer-supported bonuses.
If you replace the word "banker" with "government" this paragraph now makes a lot of sense.
Remember, at the epicenter of the financial meltdown was the Fannie and Freddie institutions that were an extension of the federal government. Talk about being overgrown!
The banking industry is the most regulated industry in the United States. And the regulators failed.
One of the reasons the banking sector is overgrown is the implicit and explicit guarantees by the Federal Government. What if there were no deposit insurance? Or it was applied only to local banks? All of a sudden, we as depositors would be a lot more careful about where we parked our money. And I'll bet that the average investor would be a lot more smarter about this then the regulators.
With their anti-banking rhetoric, the administration should have let the banks fail.
Capitalism only works when it is disciplined by reality. The feds have removed that discipline years ago. And now the NY Times complains.
"an overgrown banking sector diverts resources from more productive uses and, in the process, amasses riches at the expense of everyone else. The entire country can see the evidence of that in stagnating wages, disappearing retirement savings, vanishing home equity and taxpayer-supported bonuses."
- Editorial - Restarting Financial Reform - NYTimes.com (view on Google Sidewiki)
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