Unsurprisingly there is a public desire to see big banks broken up and to see tighter regulation of the financial system. The population as a whole is suffering under austerity whilst attempting to repair the damage caused by greedy individuals and institutions who took financial risks and kept the resulting rewards, but left the taxpayers to pick up the bill when the risks finally, inevitably, went bad. People are entitled to be disillusioned if some banks appear to be above the law – as exemplified by the Administration’s hesitancy in prosecuting HSBC for money-laundering in America – and if lawmakers are seen to be unduly influenced by Wall Street. It is unlikely, though, that any progress will be made in fixing the financial system before progress has first been made in fixing the way that big financial corporations are able to manipulate America’s political system. Three recent stories illustrate some of the problems:
As reported in an earlier post on this website, America’s Attorney General acknowledged that some banks are ‘too big to jail’ in his testimony before the Senate Judiciary Committee on 6 March. Repeated fines, such as the HSBC deal and the fines paid by JPMorgan Chase (which were the subject of a tweet on 8 May by this website), are no substitute for criminal prosecutions.
There is a potential conflict of interest if wealthy individuals occupy key positions in an Administration. Hank Paulson, who had been CEO of Goldman Sachs, was Bush’s Treasury Secretary from 2006 to 2008 and proposed the bail-out of the financial sector – in which he himself had been such a major player. And this Administration appears to be making another contentious appointment; as mathbabe recently tweeted, in response to a Bloomberg report on 20 May about the nomination of Chicago billionaire Penny Pritzker to run the Commerce Department: “Obama thinks only mega rich people can help him run the country”.
As reported yesterday, the finance sector is proposing regulations which are being merely rubber-stamped by lawmakers: “Lobbyists working for Citigroup Inc., a multinational financial services corporation, wrote 80 percent of a regulation bill that was approved by the House Financial Services Committee this month”.
Insufficient progress has been made on breaking up big financial institutions and tightening regulation to avoid another crash. There are some signs that things might be about to change in the HSBC money-laundering case; as The Guardian reported yesterday, a judge is considering rejecting the bank’s deal with the Department of Justice and there might yet be a criminal prosecution. This would be a small, but significant, indication that the finance sector might be starting to lose its impunity. Major change, though, can only come about if people’s votes were to empower politicians who want to govern in the interests of the whole population and who are not being told what to do by wealthy individuals and corporations.