Financial sector profits dramatically increased in the past several decades, peaking at over 40 percent of all corporate profits just before the economic collapse. Now the industry’s profits are chugging back up again.
After the inevitable crash, the financial sector and its investors had all the political clout they needed to ensure their swift rescue by the government. Instead of paying a hefty price for wrecking the economy with their bad bets as dictated by free market principles, they got bailed out at taxpayer expense.
The 2010 financial reform bill did not break up financial institutions that were too big to fail or too interconnected to fail. It also didn’t rebuild the Glass-Steagall Act’s wall between investment banks and depository banks. The six largest banks are now bigger than ever.
Congress rejected our calls for a windfall profits tax or financial transaction tax to help pay for the financial sector’s catastrophic damage to our economy. Instead Wall Street elites are again reaping enormous profits, leaving 29 million unemployed and underemployed people in the dust.
To pay for our rising public debt we’re being told to tighten our belts so that they don’t have to tighten theirs.
Economists assure us that the financial sector’s role is to prudently move excess savings into investment. But that’s not how Goldman Sachs, JP Morgan Chase, Morgan Stanley, the largest private equity funds and the largest hedge funds are raking in their billions. Their real cash cow is their secretive daily practice of “proprietary trading” — the equivalent of gambling in a rigged casino. This has nothing to do with investing in industries that might put our people to work. So our paltry economic growth is generating financial industry booty, not jobs.
Our billionaires might want us to think of them as great statesmen working to help our nation prosper and grow. But in reality, they’re busily siphoning off our nation’s wealth — and blocking all efforts to regulate or tax their destructive behavior.