Corrupt Deals And The Financial Meltdown

An article well worth reading:

$5 Billion in Lobbying for 12 Corrupt Deals Caused the Multi-Trillion Dollar Financial Meltdown

Robert Weissman, Multinational Monitor:

What can $5 billion buy in Washington?

Quite a lot.

Over the 1998-2008 period, the financial sector spent more than $5 billion on U.S. federal campaign contributions and lobbying expenditures.

This extraordinary investment paid off fabulously. Congress and executive agencies rolled back long-standing regulatory restraints, refused to impose new regulations on rapidly evolving and mushrooming areas of finance, and shunned calls to enforce rules still in place.

"Sold Out: How Wall Street and Washington Betrayed America," a report released by Essential Information and the Consumer Education Foundation (and which I co-authored), details a dozen crucial deregulatory moves over the last decade -- each a direct response to heavy lobbying from Wall Street and the broader financial sector, as the report details. (The report is available at: www.wallstreetwatch.org/soldoutreport.htm.) Combined, these deregulatory moves helped pave the way for the current financial meltdown.

Here are 12 deregulatory steps to financial meltdown:

1. The repeal of Glass-Steagall ...
   
   
2. Off-the-books accounting for banks ...
   
   
3. CFTC [Commodity Futures Trading Commission] blocked from regulating derivatives ...
   
   
4. Formal financial derivative deregulation: the Commodities Futures Modernization Act ...
   
   
5. SEC removes capital limits on investment banks and the voluntary regulation regime ...
   
   
6. Basel II weakening of capital reserve requirements for banks ...
   
   
7. No predatory lending enforcement ...
   
   
8. Federal preemption of state enforcement against predatory lending ...
   
   
9. Blocking the courthouse doors: Assignee Liability Escape ...
   
   
10. Fannie and Freddie enter subprime ...
    
    
11. Merger mania ...
    
    
12. Credit rating agency failure ...