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Wednesday, January 20, 2016 The Nugget Newspaper, Sisters, Oregon
O
P
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Robert B.
Reich
illustration by Kathy DeggenDorfer
American Voices
Letters to the Editor…
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To the Editor:
Re: “Harney County Blues,” The Nugget,
January 13, pg. 22:
Well said, Craig. You said it best with this
line: “We can do a whole lot better. “
Keith West
Texas
s
s
To the Editor:
I was just writing Katy Yoder another note,
thanking her for several thoughts that were
gems for me in her latest column (“Living a
new way — one day at a time,” The Nugget,
January 13, page 26).
I am amazed at her courage to be open and
See LetterS on page 21
s
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If you haven’t yet seen
“The Big Short” I recom-
mend you do so.
Not only is the movie an
enjoyable (if that’s the right
word) way to understand
how the big banks screwed
millions of Americans out
of their homes, savings and
jobs, and then got bailed out
by taxpayers, but it’s also a
lesson in why they’re on the
way to doing all this again
— and how their political
power continues to erode
laws designed to prevent
another crisis and to shield
their executives from any
accountability.
Most importantly, the
movie shows why Bernie
Sanders’ plan to break up
the biggest banks and rein-
state the Glass-Steagall Act
(separating investment from
commercial banking) is
necessary, and why Hillary
Clinton’s more modest plan
is inadequate.
The movie gets the story
essentially right: Traders on
the Street pushed high-risk
mortgage loans, bundled
them together into invest-
ments that hid the risks, got
the major credit-rating agen-
cies to give the bundles Tri-
ple-A ratings, and then sold
them to unwary investors.
It was a fraudulent Ponzi
scheme that had to end badly
— and it did.
Yet since then, Wall Street
and its hired guns (including
most current Republican can-
didates for president) have
tried to rewrite this history.
They want us to believe the
banks and investment houses
were innocent victims of
misguided government poli-
cies that gave mortgages to
poor people who shouldn’t
have gotten them.
That’s pure baloney. The
boom in subprime mortgages
was concentrated in the pri-
vate market, not in govern-
ment. Wall Street itself cre-
ated the risky mortgage mar-
ket. It sliced and diced junk
mortgages into bundles that
hid how bad they were. And
it invented the derivatives
and collateralized debt obli-
gations that financed them
The fact is, more than
84 percent of the subprime
mortgages in 2006 were
issued by private institutions,
along with nearly 83 percent
of the subprime loans that
went to low- and moderate-
income borrowers that year.
Why has Wall Street been
pushing its lie, blaming the
government for what hap-
pened? And why has the
Street (along with its right-
wing apologists, and its
outlets such as Rupert Mur-
doch’s Wall Street Journal)
so viciously attacked the
movie “The Big Short”?
So we won’t demand
tougher laws to prevent
another crisis followed by
another “too big to fail”
bailout.
Which brings us back
to Bernie and Hillary. Hill-
ary Clinton doesn’t want to
break up the big banks or
resurrect the Glass-Steagall
Act, as Bernie does
Instead, she’d charge the
big banks a bit more for car-
rying lots of debt and attempt
to oversee them more care-
fully. She’d also give bank
regulators more power to
break up any particular bank
that they consider too risky.
And she wants more over-
sight of so-called “shadow
banks” such as hedge funds
and insurance companies
such as the infamous AIG.
In a world where the giant
Wall Street banks didn’t have
huge political power, these
measures might be enough.
But, if you hadn’t noticed,
Wall Street wields extraordi-
nary power.
Most of Clinton’s propos-
als could already have been
put into effect by the Fed and
the Securities and Exchange
Commission, but they
haven’t been — presum-
ably because of the Street’s
muscle.
The only way to contain
the Street’s excesses is by
taking on its economic and
political power directly —
with reforms so big, bold
and public that they can’t be
watered down. Starting with
busting up the biggest banks,
as Bernie Sanders proposes.
More than a century
ago, Teddy Roosevelt broke
up the Standard Oil Trust
because it posed a danger
to the U.S. economy. Today,
Wall Street’s biggest banks
pose an even greater danger.
Unless they’re broken
up and Glass-Steagall resur-
rected, we face substantial
risk of another near-melt-
down — once again threat-
ening the incomes, jobs, sav-
ings and homes of millions
of Americans.
© 2016 By Robert Reich;
Distributed by Tribune Con-
tent Agency, LLC
Opinions expressed in this column are solely those of the writer and
are not necessarily shared by the Editor or The Nugget Newspaper.