Asleep at the Switch–With One Eye Open

Since I'm already antagonizing Toast today... Let me excerpt and link to an excellent column by Matt Taibbi that highlights the fundamental flaws in the financial system and its supposed overseers:

For what we’ve learned in the last few years as one scandal after another spilled onto the front pages is that the bubble economies of the last two decades were not merely monstrous Ponzi schemes that destroyed trillions in wealth while making a small handful of people rich. They were also a profound expression of the fundamentally criminal nature of our political system, in which state power/largess and the private pursuit of (mostly short-term) profit were brilliantly fused in a kind of ongoing theft scheme that sought to instant-cannibalize all the wealth America had stored up during its postwar glory, in the process keeping politicians in office and bankers in beach homes while continually moving the increasingly inevitable disaster to the future.

That's just about the most perfect capsulization of our recent history that I've seen anywhere. But he expands from there, getting into the failures of the regulatory agencies the media and both parties, and why we're really not in a position to make anything much better anytime soon.

Fannie, Freddie, and the New Red and Blue

Go read the whole thing.

Good News For From John McCain

As part of a move long overdue, John McCain emerges as a force for good—combining with Sen. Maria Cantwell (D-WA) to introduce legislation that should have come along with the bailout:

The anger at the nation’s financial behemoths is taking shape in a variety of ways, most notably in a bill from Sens. Maria Cantwell (D-Wash.) and John McCain (R-Ariz.), who are targeting big financial institutions such as JPMorgan Chase and Citigroup.

The bipartisan duo’s bill would reinstate the Depression-era law that built a wall between commercial banking and the riskier activities of investment banking. The separation — originally set up in the Glass-Steagall Act — was repealed in 1999.

[...] “The American people want us to do something about the fact that capital is [not] flowing down to them. It is flowing in a direction that is making Wall Street huge profits. Nothing wrong with making profit, but this consolidation has squeezed the American public out of needed capital. And I think that capital could be going to investment in technology, to new business start-ups, to things that are about the ingenuity of America, not the ingenuity of toxic assets,” Cantwell said on MSNBC.

Damn fucking straight. A key reason for the bailout was to help balance the books, but that was to free up capital for banks to lend money. Instead they simply kept it all and lent to each other. CRedit is still extremely tough to come by.

And Cantwell-McCain aren't the only ones getting in on the act:

Rep. Paul Kanjorksi (D-Pa.), who is generally seen as a rather pro-business moderate on the House Financial Services Committee, pushed language that would empower federal regulators to pre-emptively break up large financial institutions that posed a risk to the economy, even if they were currently healthy...

In the Senate, Bernie Sanders (I-Vt.) introduced the “Too Big to Fail, Too Big to Exist Act,” which would require the Treasury secretary to break apart any financial institution deemed too big to fail. The Vermont independent has become a populist hero on the left and the right of the political spectrum for his crusade against Fed Chairman Ben Bernanke, a mission also rooted in his belief that the American people want a change in the way Wall Street functions, and Bernanke and the Fed he runs represent the status quo, Sanders says.

Of course, much of this will die the death of a thousand amendments and compromises, but it's a clear move in the right direction.

Until it needs the approval of President Lieberman.