Receiving nearly $29 trillion in financial liquidity since the beginning of the financial crisis — including loans, loan purchases and loan guarantees — Wall Street has now become the new welfare state.
Welfare spending for the truly indigent, which includes food stamps, Medicaid and Section 8 housing, has totaled nearly $6 trillion since the financial crisis, seemingly low relative to Wall Street standards and much more onerous to the country.
Republicans have been taking the lead, sometimes with Obama's complacency, in undermining the Dodd-Frank financial reform legislation, which was meant to protect Main Street from Wall Street by creating a more level playing field for consumers, small businesses and community banks in terms of business entry expenditures and effective average tax rates.
Republicans are experiencing political schizophrenia, abandoning their fiscal, financial and monetary conservatism and responsibility for more liberal policies than those on the left of the political spectrum.
Since the great recession began, through financial speculative demand, Wall Street has inflated the prices of financial assets instead of lending to businesses, deteriorating the employment landscape and increasing income and wealth inequality. Since the wealthy spend less of their income on consumption and more on financial speculation, employment continues to wane and financial disparities worsen.
In 2012, it is estimated that the aggregate profits for the top five "too big to fail" banks have been effectively subsidized by the taxpayers in the form of lower insurance premiums for deposits used for speculative derivative transactions. Apparently, these banks are also "too big to manage" and "too big to regulate" as well.
Thus far, the destruction of Dodd-Frank includes the following measures: 1) permit funding of high-risk derivative products
with FDIC-insured deposits, 2) limit mortgage-loan risk retention
and property down payments, 3) provide at least two additional years for banks to divest from speculative investments in private equity funds and hedge funds, 4) delay for at least one year forcible bank downsizing if they do not demonstrate a responsible bankruptcy liquidation process and 5) postpone for two years the ban on holding collateralized loan obligations.
Fortunately, Sen. Elizabeth Warren, D-Mass., who helped conceive of the Consumer Financial Protection Bureau, has taken the lead in highlighting the excesses of Wall Street and fighting for the lower and middle class.
Her recent triumph has been to derail the re-nomination of Anthony Weiss, the global head of investment banking at Lazard, to Under Secretary for Domestic Finance at the Treasury Department, the third-highest ranking position. She cited his extremely close ties to Wall Street as an international corporate merger specialist and a lack of credentials in protecting consumers from Wall Street excesses and overseeing domestic financial regulations.
Also impacting this decision was a possible $20 million payment to Weiss if he was confirmed to the post and did not join a financial competitor. This was perceived as a possible conflict of interest, in which he might give preferential treatment to his former employer. A large obstacle was Lazard's work to help Burger King relocate its headquarters abroad when it acquired Tim Hortons, the Canadian fast-food chain, in a corporate inversion plan to reduce U.S. tax liabilities.
Instead, Weiss has accepted an immediate position as a counselor to Treasury Secretary Jack Lew.
Tom Donahue, head of the U.S. Chamber of Commerce, the largest business lobby, has said they plan on further undermining the Dodd-Frank legislation. The strategy appears to be based on the packaging of bills and amendments into existing legislation that can be approved en masse, since a stand-alone bill would be too transparent and less likely to pass. Approximately one-third of the rules mandated by Dodd-Frank have not been completed, providing more opportunities to eviscerate the legislation.
The danger of this scenario is the severe concentration of economic and political power that favors the few at the expense of the many: an erosion of economic prosperity and democracy.
While President Obama has been, at times, in step with the republicans, such as with the re-nomination of Weiss and the recent removal of derivatives from proper regulation, he is no longer campaigning for elective office.
The Republicans are digging a very deep hole for themselves in the upcoming 2016 presidential and House races
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