Right now in our nation’s capitol, Congressman and Senators are meeting to discuss potential financial reform legislation. It has been almost two years since the financial markets collapsed. Since that time there has been nothing done to reform or fix the system. There are two sides to this debate. The people of this nation want to see meaningful reform in the financial markets. The people want to see rules set in place to ensure that this type of collapse doesn’t happen again. Wall Street wants us to forget about the mishap and allow them to continue on with business as usual. Wall Street claims that reform is not needed and that they have everything under control. The problem is that they made these claims before. They made these claims right before the collapse took place.
The American people deserve to know exactly where their politicians stand on the issue of financial reform. Do we want a partisan bill with tough rules that will address the reasons the collapse happened or do we want a bipartisan bill that is watered down and offers little safeguards? One key issue in the proposed Senate legislation is a provision that financial institutions pay into a fund that will be available if a bailout is needed. The initial financial bailout cost taxpayers over $700 billion. The fund would be paid into only by the financial institutions and would provide as a back up if there were another collapse. Tax-payers would not be on the hook for a future bailout. The move is similar to someone paying money into a savings account to be used in the event of catastrophic injury or illness. The financial market collapsed because various firms were just too large to function. They had too many hands in too many pots and were finally unable to keep track of what was in danger of spilling over. The repeal of Glass-Steagall in the late 90’s was a significant catalyst for the financial collapse. The repeal allowed the financial market to get larger and larger. Eventually they collapsed.
One theme was prevalent with the collapse of the financial institutions. The financial collapse featured an array of gambles made by Wall Street executives and the public were the guinea pigs. Goldman Sachs is currently under investigation for fraud. They were discovered to have been providing security backed mortgages to another party in order for those packages to be sold. The fraud occurred because Goldman Sachs and the second party new that the packages contained toxic assets and that failure was the probable outcome. It would be as if a car dealership knowingly sold you a sports car with faulty brakes. The dealership knows that it is likely that you will crash and so they take out an insurance policy on the car and on your life. The dealer is betting against you in order to profit. That is similar to what happened at Goldman Sachs. They put together packages that were likely to fail and offered them as high quality mortgages. They stood to gain by selling the toxic assets for a large profit to unknowing buyers. However, enough of these gambles backfired and let to large losses for the companies involved.
How can anyone in this country not be bothered by the casino like attitude of Wall Street executives? Bankers are supposed to be sound financial people that will properly weigh risks before making a decision. However, the financial meltdown has proved that they will act like complete idiots if there are no rules to stop them. We need reform of the financial markets. We need safeguards in place that will prevent another collapse. We need to hold the institutions accountable for their mismanagement of our money. If we can’t get our politicians to make changes now, when will we ever get them to do it? Call, email, or write your US Congressional delegation. Tell them to take a stand for the taxpayers and to provide strict rules that our financial sector needs. We need to know where our money is and how its being spent. We need transparency. We need to ensure that future generations will not be facing another financial collapse.
Get Informed and Get Involved!