Nobody covered the Wall Street collapse, bailout, and corrupt resurgence better than Rolling Stone’s Matt Taibbi, from giving Goldman Sachs its unforgettable epithet to covering the hearings on the bailouts to documenting the foreclosure mills, to deep dives into the sweetheart deals the banks got; to the revolving door between finance regulators and the finance sector to the rise of Occupy; to the consolidation of financial primacy after the collapse; to the double-standard for criminal justice revealed by the collapse; to the frauds that surfaced after the crash; to the tiny bright spots where bankers were brought to justice; all capped by an incandescent, outstanding book about the crisis and the systematic racial and economic justice it revealed.
Tomorrow is the tenth anniversary of the collapse of 2008, and in the intervening decade, Big Finance has gotten bigger, bankers’ bonuses have gotten larger, and we are barreling toward another debt crisis that will make 2008 look like a kid’s birthday party.
Writing in Rolling Stone, Taibbi lays out the decade’s sordid history: the way that Obama’s malpractice gave the banks more power, made the rich much richer, paved the way for a donor class that owns politics so thoroughly that they were able to buy themselves trillions in tax-breaks (with more to come).
No one makes this subject more accessible than Taibbi. We are still reaping 2008’s whirlwind. Read this today, think about it tomorrow, then register to vote and do something about it. If you’ve got $20 to spare (or better yet, $200), back the kinds of candidates who will do something about it.
If Trump has you outraged, read this. It is his secret origin story, the sordid tale of how the country came to vote for a man so manifestly incompetent: because rich people spent what it took to convince racists to elect him.
An argument is frequently put forth that the government made a huge profit on the bailouts. This is an impossible stance to counter. It’s like trying to quantify how plaid something is.Sure, in an environment in which the chief bailout recipients were allowed virtually limitless access to free capital; affirmatively non-prosecuted for severe regulatory violations (like rigging electricity prices or laundering money for drug cartels); repeatedly saved from crippling litigation by sweetheart settlements; and allowed to get financially well again overnight by feasting on direct cash injections, richly priced government-backed mortgages and other monster subsidies like the Quantitative Easing (QE) program… yes, in that universe, the bailout “earned” a profit. But for whom?
The real effect of the deal made that weekend has been a radical transformation of the economy. Previously, small banks traditionally enjoyed a lending advantage because of their on-the-ground relationships with local businesses. But the effective merger of the state with giant, too-big-to-fail banks has tilted the advantage far in the other direction.
Big banks post-2008 could now borrow much more cheaply than smaller ones, because lenders no longer worried about them going out of business. Some studies describe this “implicit guarantee” as a subsidy worth billions a year.
In 2012, Bloomberg put the number at $83 billion for just the top 10 banks. Fast-forward to last year. How much of the record $171.3 billion in profits earned by banks in 2017 was owed to the implicit guarantee?
Matt Taibbi on the 10-Year Anniversary of the Crash [Matt Taibbi/Rolling Stone]