By Simon Johnson
Despite its key function in developing the ruinous monetary obstacle of 2008, the yank banking has grown greater, extra ecocnomic, and extra proof against legislation than ever. Anchored through six megabanks whose resources volume to greater than 60 percentage of the country’s gross household product, this oligarchy proved it will possibly first carry the worldwide financial system hostage after which use its political muscle to struggle off significant reform. 13 Bankers brilliantly charts the increase to energy of the monetary zone and forcefully argues that we needs to get a divorce the massive banks if we wish to keep away from destiny monetary catastrophes.
Updated, with extra research of the government’s fresh try to reform the banking undefined, it is a well timed and professional account of our political economic system.
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Extra resources for 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown (Vintage)
The measures proposed by the Obama administration placed some new constraints on Wall Street, but left intact the preeminence and power of a handful of megabanks; and even these proposals faced opposition from the financial lobby on Capitol Hill. The reform bill will probably bring about some improvements, such as better protection for consumers against abusive practices by financial institutions. But the core problem—massive, powerful banks that are both “too big to fail” and powerful enough to tilt the political landscape in their favor—will remain as Wall Street returns to business as usual.
5 What did that mean, “we’re all in this together”? It was clear that the thirteen bankers needed the government. Only massive government intervention, in the form of direct investments of taxpayer money, government guarantees for multiple markets, practically unlimited emergency lending by the Federal Reserve, and historically low interest rates, had prevented their banks from following Bear Stearns, Lehman Brothers, Merrill Lynch, Washington Mutual, and Wachovia into bankruptcy or acquisition in extremis.
But it will be quite a fight. * The CEOs and their banks were Ken Chenault, American Express; Ken Lewis, Bank of America; Robert Kelly, Bank of New York Mellon; Vikram Pandit, Citigroup; John Koskinen, Freddie Mac; Lloyd Blankfein, Goldman Sachs; Jamie Dimon, JPMorgan Chase; John Mack, Morgan Stanley; Rick Waddell, Northern Trust; James Rohr, PNC; Ronald Logue, State Street; Richard Davis, US Bank; and John Stumpf, Wells Fargo. 4 * Because the accounting treatment of derivatives was unclear, the amount of capital that banks had to set aside for their derivatives positions was generally disproportionately low compared to the amount of risk they were taking on.