As the Supreme Court shows every sign of throwing out "Obamacare" and leaving 30 million Americans without health insurance, another drama is being played out in the quiet corridors of the Federal Reserve system that may affect even more of us.
Taxpayers will be on the hook for another giant Wall Street bailout, and the economy won't be mended, unless the nation's biggest banks are broken up.
That's not just me talking, or the Occupier movement, or that wayward executive who resigned from Goldman Sachs a few weeks ago. It's the conclusion of the Dallas Federal Reserve, one of the most conservative of the Fed's regional banks.
The lead essay in its just released annual report says a cartel of giant banks continues to hobble the recovery and poses an ongoing danger to the economy.
Wall Street's increasing power remains "difficult to control because they have the lawyers and the money to resist the pressures of federal regulation." The Dodd-Frank act that was supposed to control Wall Street "leaves TBTF [too big to fail] entrenched."
The Dallas Fed goes on to argue that the Fed's easy money policy can't be much help to the U.S. economy as long as Wall Street is "still clogged with toxic assets accumulated in the boom years."
So what's the answer, according to the Dallas Fed? It's "breaking up the nation's biggest banks into smaller units."
Thud. That's the sound the report hitting the desks of Wall Street executives. They and their Washington lobbyists are doing what they can to make sure this report is discredited and buried.
When I spoke with one of the Street's major defenders in the Capitol this morning he snorted, "Dallas represents small regional banks that are jealous of Wall Street." When I reminded him the Dallas Fed was about the most conservative of the regional banks and knew firsthand about the dangers of under-regulated banks -- the Savings and Loan crisis ripped through Texas like nowhere else -- he said, "Dallas doesn't know its [backside] from a prairie gopher hole."
So as Republicans make the repeal of "Obamacare" their primary objective (and Alito, Scalia, Thomas, Roberts and perhaps Kennedy sharpen their knives) another drama is taking place at the Fed. The question is whether Bernanke and company in Washington will heed the warnings coming from its Dallas branch, and amplify the message.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
Robert Teitelman: The Dallas Fed and Too-Big-to-Fail
With that, coupled with a breakup of the big banks, we'll see the banks having SOME of the money that they would otherwise be out, we'll see the people who have the properties that the banks currently have as toxic assets be able to afford to stay there, AND we'll see a boom in the economy because those same people will be paying FAR less for the property and thus have money left over to spend on OTHER aspects of the economy!
The banks have become so big and so used to the nearly free loans via Fed discount window that these loans and future bailouts are baked into their business plans. In other words, they require our tax dollars to operate, and future bailouts are part of their financial forecasts. You better believe it!
Of course, what shines through as the most obvious (and well poisoning partisan hackery) is his hit on Republicans at the end of the piece.
Obama and company are just as owned and just as responsible for this mess and Dodd-Frank does nothing to stop TBTF, and everyone knows it.
If Reich either stuck to the point or (impossible for him to just do the right thing I know...) hammered both sides of the political powers (because both sides are equally responisble and resistant to change), one could take him seriously. He proves once again that doing the right thing doesn't matter as much as trying to score cheap political points with only half the truth.
This mess will never get solved with political hackery to "score a win for me" being the motivator.
1. I belong to no party and vote for whomever I think is best - regardless of party. That is the opposite of partisan. You should learn to use a dictionary.
2. I did exactly what you said. There was no need to add to what Reich said about agreeing with the Dallas Fed.
3. Unfortunately, you (along with Reich) are only concerned with "winning." He ignores (and you are doing it as well) and in fact makes sure that he only blames one side when both are just as responsible) in order to score partisan points and give people the image that his (and your) side is the correct side on the issue.
This does nothing but put forth false information, a false narrative and serves no other purpose except to further his (and your) sense of "winning."
You really need to come out of that partisan closet, learn how to use the English language and learn how to use logic and develop critical thinking skills.
I don't expect the rabid and rich to care a whit for the larger well being of the country nor the recovery from the crash. The middle is out gunned in numbers and marketing money. Not enough people who are honest, smart and care to do the right thing.
why do we continue to vote for politicians who made this not only possible but made damn sure it happened?
What is worse though, is the number of Americans who support this evil and actively encourage more abuse and theft. Really, for no other reason than they can have their hate button pushed so they can spew venom at their fellow human, and feel good about it with the false excuse of religion.
We get what we ask for
When was that, in reality, not rhetoric? Seems to me the conservatives have always talked about balanced budgets and low debt, but increase debt exponentially when they get the chance. They hope the Democrats have to cut their hallmark programs to balance the deficits they leave behind.
This is a serious question for anyone who knows. I like the idea, but how would it be implemented and would it really solve the problem?
Unfortunately, no one will listen to this report. Big banks own our government.
It's the same old bromide-----the harder you work & the more responsible you are, the more the government wants to shaft you.
The Fed loans should be given to the people directly.
We the people will then create the needed jobs and invest in the troubled real estate while the banks will be forced to stop speculating in commodities.
What do you think?