The New York Times editors nail it today in a piece ridiculing the settlement between too-big-to-fail banks and states designed to assist anti-foreclosure efforts and underwater home mortgage victims.
Although the Obama administration did get some financial sector reforms through, like Dodd-Frank, the result seems to have been not a rewiring of the system to change the balance of power between economic stakeholders, particularly consumers and workers, but rather a resuscitation of the old system with some fig leafs (like this $26 billion foreclosure settlement) designed to cover up the corruption.
The editors write:
When it comes to helping homeowners, banks are treated as if they still
need to be protected from drains on their capital. But when it comes to
rewarding executives and other bank shareholders, paying out capital is
the name of the game.
And at a time of economic weakness, using bank
capital for investor payouts leaves the banks more exposed to shocks. So
homeowners are still bearing the brunt of the mortgage debacle.
Taxpayers are still supporting too-big-to-fail banks. And banks are
still not being held accountable.
National Journal Chief Correspondent Michael Hirsh concurs, writing along these lines a few days ago, “Has Wall Street Really Changed?” as well as his “A Tale of Two Financial Heroes” which pivots off The Atlantic‘s Economy Summit that brought together the likes of Paul Volcker, Robert Rubin, Sheila Bair, Lawrence Lindsey, Douglas Holtz-Eakin, Lawrence Summers, Gene Sperling, Laura Tyson, Allan Meltzer and others.
— Steve Clemons is Washington Editor at Large at The Atlantic, where this post first appeared. Clemons can be followed on Twitter at @SCClemons
photo credit: Reuters