bartleby the scrivener | Following up on my comments on the IG's findings about the first round of AIG bonuses and Deb's piece yesterday, here's a piece at HuffPost on how the bailouts by Main Street -- still a scene of deserted store fronts as far as the eye can see -- have enriched Wall Street. And the government's done its share to ensure that the people with all the money continue to have all the money -- not so much intentionally, but through regulations intended to get the banks back to the business of lending money to the boring people who bailed them out. The New York Times reports:
Many of the steps that policy makers took last year to stabilize the financial system — reducing interest rates to near zero, bolstering big banks with taxpayer money, guaranteeing billions of dollars of financial institutions’ debts — helped set the stage for this new era of Wall Street wealth.
Titans like Goldman Sachs and JPMorgan Chase are making fortunes in hot areas like trading stocks and bonds, rather than in the ho-hum business of lending people money. They also are profiting by taking risks that weaker rivals are unable or unwilling to shoulder — a benefit of less competition after the failure of some investment firms last year.
So even as big banks fight efforts in Congress to subject their industry to greater regulation — and to impose some restrictions on executive pay — Wall Street has Washington to thank in part for its latest bonanza....
[T]he decline of certain institutions, along with the outright collapse of once-vigorous competitors like Lehman Brothers, has consolidated the nation’s financial power in fewer hands. The strong are now able to wring more profits from the financial markets and charge higher fees for a wide range of banking services. (NYT)
Once again, Paul Krugman was right.
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