Last night I attended a discussion at The New York Society for Ethical Culture featuring Matt Taibbi, Nomi Prins, and Daniel Gross that was fascinating and more than a little depressing, which is true about the act of learning things in general. The talk focused on corruption and manipulation of markets big banks and financial institutions engaged in, including a rare but necessary peek behind the curtain thanks to Nomi Prins. She was a Goldman executive before defecting to the Light side of the Force and becoming a whistleblower and journalist. After hearing her speak, I can't recommend her new book, It Takes A Pillage, highly enough. I want her and Wendell Potter (the invaluable heath insurance whistleblower) to get married. That would be a fun wedding.
The talk was too expansive to summarize here, but the two main takeaways for me came from Prins. First, when asked when we would see major reforms--including reinstating the Glass-Steagall act, which separated Depository banks and Investment banks--she responded, "Oh, I don't know. Maybe after the next serious meltdown. We're certainly not going to see it now." The certainty with which she spoke about another coming catastrophe was disturbing in its clarity. We're not out of the shit yet, it seems. Most of those toxic assets are still out there, and it's not clear that they will ever regain any of their "value" in the future--in part because their "value" never really existed in the first place.
Prins also made the extremely important point that as banks fail and are bought by those few banks who have survived the meltdown--thanks to tax-payer funded bailouts--a tragicomic thing has happened. The surviving banks are actually becoming bigger. Those banks now hold more deposits, have more capital, and, therefore, more power. Though Prins didn't say so explicitly, it also seems to me that the fewer, larger institutions will be more likely to be classified as "too big to fail." So...that fucking sucks. What a wonderful lesson for the country to learn.
On a related note, I think there's a parallel to be drawn between banks accruing more power and health insurance companies accruing more power. If the health care bill doesn't include a robust public option, but does include individual mandates, then Insurance companies will profit from that immensely. I have this crazy fear that after The Great Recession (or Depression if you're a minority) and "health care reform," we will actually see the two most destructive industries in this country--financial institutions and insurance companies--consolidate more wealth, access, power, and institutional inertia, thereby making future reform all the more difficult.
So not only does the government step in to save these massive corporations, we're actually taking steps to allow/encourage them to become MORE powerful. If all this proves to be unwarranted doom-saying, I'll push people over to be the first to apologize. Let's wait and see!