Sold Out

I believe this is very important for everyone to read to fully grasp why our financial sector is in its current state. Don't let those people who thrive on providing you misleading information to either advance their own agenda or score cheap political points.

The following is from the report Sold Out: How Wall Street and Washington Betrayed America written by Robert Weissman and Harvey Rosenfield. The report states that thanks in large part to corporate America used money to influence the executive and legislative branch of government to help roll back various regulations that directly led to the current financial crisis we are in.

The authors state that for the last three decades the regulatory system that has kept the financial sector from acting on its own worst tendencies. The regulatory system aimed to force disclosure of publicly relevant financial information but during the late 90's and continued up to the present. The author's conclusions is that such deregulation has led directly to the financial climate of today.

The authors of this report have come to the conclusion that there were twelve Deregulatory Steps that led to this financial meltdown. Before listing these twelve aspects it is important to disclose how much money the financial sector spent to achieve this: $5.1 billion. Over the past decade $1.7 billion hasbeen spent in federal elections from 1998-2008 with 55 percent going to Republicans and 45 percent to the democrats.

Also they spent $3.4 billion on lobbying of federal officials. Just some facts:
-Accounting firms spending $81 million on campaign contributions and $122 million on lobbying
-Commercial banks spent $155 million on campaign contributions and $383 to lobbyist.
-Insurance companies donated $220 million and $1.1 billion on lobbying
It just goes to prove that if you have the money you can buy access. Every person gets a vote but the more money you spend the more your problems get addressed.

These are the twelve deregulatory steps that led us to our financial meltdown.

1. 1. In 1999, Congress repealed the Glass-Steagall Act, which had prohibited the merger of commercial banking and investment banking.
2. Regulatory rules permitted off-balance sheet accounting -- tricks that enabled banks to hide their liabilities.
3. The Clinton administration blocked the Commodity Futures Trading Commission from regulating financial derivatives -- which became the basis for massive speculation.
4. Congress in 2000 prohibited regulation of financial derivatives when it passed the Commodity Futures Modernization Act.
5. The Securities and Exchange Commission in 2004 adopted a voluntary regulation scheme for investment banks that enabled them to incur much higher levels of debt.
6. Rules adopted by global regulators at the behest of the financial industry would enable commercial banks to determine their own capital reserve requirements, based on their internal "risk-assessment models."
7. Federal regulators refused to block widespread predatory lending practices earlier in this decade, failing to either issue appropriate regulations or even enforce existing ones.
8. Federal bank regulators claimed the power to supersede state consumer protection laws that could have diminished predatory lending and other abusive practices.
9. Federal rules prevent victims of abusive loans from suing firms that bought their loans from the banks that issued the original loan.
10. Fannie Mae and Freddie Mac expanded beyond their traditional scope of business and entered the subprime market, ultimately costing taxpayers hundreds of billions of dollars.
11. The abandonment of antitrust and related regulatory principles enabled the creation of too-big-to-fail megabanks, which engaged in much riskier practices than smaller banks.
12. Beset by conflicts of interest, private credit rating companies incorrectly assessed the quality of mortgage-backed securities; a 2006 law handcuffed the SEC from properly regulating the firms.

Again this is a report that has not been widely reported on probably because these are complex issues and it is easier for people to blame the government for forcing banks to loan money to poor people which is untrue and not a root cause of our current financial situation.