Wall Street welfare

Elizabeth Warren Comes Out Swinging at Banking Regulators

While there are a lot of people you can blame for the state of the US economy, government regulators are at the top of the list. So it’s satisfying that someone has finally taken them to task. Elizabeth Warren, finally on the Senate Banking Committee where she belongs, had some hard questions for banking regulators yesterday, specifically on why they are happy to accept pennies on the dollar to settle claims against banks.

What she got in response was a lot of hemming and hawing by the spineless regulators in question, none of whom seemed to know the last time anyone took a bank to trial.

I’m a little concerned that too big to fail has become too big for trial.

At Senate Hearing, Warren Comes Out Swinging” (NYT) (via Reddit)

The Nickel-and-Diming of Unemployment Insurance

“Banks also have benefited from the large increase during the recession in unemployment insurance. Increasingly, banks offer debit cards to the unemployed to collect their government benefits. These debit cards carry a range of fees that bolster banks’ bottom lines. What’s more, states — with their budgets shattered by the financial crisis and recession — have increasingly been moving to enroll new employees into Wall Street-run retirement accounts rather than government pension programs. That’s potentially more lucrative for Wall Street, which can charge fees for managing the savings of individual retirees.”

(Hat tip to Heidi Moore!)

After The Bailout AIG Bought Themselves A $440,000 “Retreat” At A California Resort

This American Life explains the financial crisis & the bailout

This American Life has done two excellent shows to help ordinary folks like you and me understand the morass that is the U.S. economy.

A few months ago, in The Giant Pool of Money, Ira Glass and his crew explained the link between the housing crisis, the turmoil on Wall Street, subprime lending, and more. Follow the link for the full show.

Today, TAL returned to the economy, trying to unpack the meltdown and figure out whether the country needs to bail out Wall Street, or not. Some key conclusions:

  1. The Wall Street meltdown happened because of the subprime meltdown, obviously, but that manifested in the financial sector in the form of the collapse of the commercial paper and credit default swap markets;
  2. The meltdown is both parties’ fault, not just Democrats’ or Republicans’;
  3. It is fair for taxpayers to be furious about the bailout, and to direct that fury at federal regulators who were sleeping on the job;
  4. The bailout is probably good, but may not work; and
  5. The Treasury should probably use its discretion and pursue a stock injection strategy rather than the Paulson plan (which is obviously unlikely).

If all that sounds like gibberish, listen to This American Life’s Another Frightening Show About the Economy. It was all gibberish to me before I listened to that show, too.

Stocks slump despite bank rescue

“Dow suffers worst weekly performance since the week after 9/11 attacks, as investors remain fearful about the economy.” Stocks slump despite bank rescue | CNN Money

House passes bailout

It’s official. Both houses of Congress have now passed what must surely be one of the most pork-laden bills in U.S. history: the Wall Street welfare bill of 2008. Or the bailout, whichever you like. House passes bailout | CNN