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Mike Konczal Talks FinReg on GRITtv: Taxpayers Still on the Hook for Wall Street’s Recklessness

Mike Konczal Talks FinReg on GRITtv: Taxpayers Still on the Hook for Wall Street’s Recklessness

Courtesy of Tim Price writing at New Deal 2.0

Roosevelt Institute Fellow Mike Konczal joined Demos’s Nomi Prins and GRITtv host Laura Flanders last week to discuss the state of financial reform, whether the current bill does enough to change the culture of risk on Wall Street, and whether taxpayers are going to be stuck holding the bag — again.

Check out the full interview:

Mike notes that one of the key questions of reform is “who’s going to pay for this, and ideally we want the people who caused the trouble to pay for it, not regular citizens.” Instead, he says Republicans like Scott Brown have transferred the cost from banks to the FDIC and the savings accounts of average Americans.

On the subject of possible criminal charges for Goldman Sachs, Mike says that the lack of major arrests compared to previous crises “shows how much people haven’t internalized the disaster they’ve caused. The culture is still very much the same.” The problem, he explains, is that firms like AIG “thought they were being very clever when they were actually getting gamed.” The fact that we still aren’t sure how much of this was illegal “shows how disturbed the regulation is.”

Mike pushes back on AIG’s attempts to shift the blame for its reckless bets, noting that “when we talk about what AIG was doing, that’s millions of Americans who are actually in those bonds, that were given loans that they shouldn’t have so that AIG could juke some statistics.” Unfortunately, he offers a grim prognosis for AIG’s victims: “The foreclosure crisis is ongoing, it will be ongoing next year, and the President’s plan there, HAMP, has been a total failure that most credible people have walked away from at this point. We have a quarter of homeowners underwater and they have no relief, and they’re paying into a system that is pretty much insolvent.”

Finally, responding to deficit hawks’ calls for cuts to programs like Social Security, Mike argues that “if they were very concerned about protecting anyone, they would go much harder into financial reform. Because this is really where the deficit’s coming from right now, the fact that we have a major financial crisis. There’s two things that destroy an economy: financial crisis and war, and Republicans over the past decade have put us through a lot of both with no plans on paying for it.” 


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  1. ilene,
    Your research in causes and effects is excellent. I have feared deflation for 10 years and the only cure is to completely delverage the financial system. The great land grab 2 is proceeding as planned and in a few more years the banks will own more than half. There has been considerable debate on Phil’s blog and as you say the conservaative view is shallow. Do as I say not as I do because I know what is best for all omitting us 1%ers. The younger generations have their blinders on and think they have a cure that has failed over and over. Ask anyone over 70 what they think or remember and you quickly realize they are not buying this, they just don’t care to argue anymore. I remember being told by the majarity of people that if I really wanted to profit I needed to use credit leverageing myself to higher levels. I constantly said you are a puppet and have no idea who is pulling your strings, do the math, it doesn’t make sense or lead to anything more than more debt. Who cares who has the biggest hole in the end as they were the most inefficient.


  2. Shadowfax, thanks!  Maybe it comes down to trying to share thoughts from some of the best writers/commentators out there so that at least we are not tricked into taking false sides suggesting solutions that can’t work.