The financial disaster and the criminals that created it.

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The Finance Lobby's Free-For-All

It's now been 16 months since the global banking system nearly melted down in September 2008. In the space of just a couple of weeks, Fannie Mae and Freddie Mac were nationalized, Lehman Brothers collapsed, Merrill Lynch was the target of an 11th hour rescue, AIG was bailed out, Wachovia Bank was taken into receivership, the commercial paper market froze, and the $700 billion TARP bill was rejected and then subsequently passed by a panicked Congress. And that was just over the course of two weeks.

Within the financial world, this was far more catastrophic than 9/11 was in the national security world. And yet, while 9/11 provoked a massive reorganization of our intelligence apparatus, two foreign wars, and a sweeping increase in domestic surveillance, the economic meltdown of 2008 has provoked....almost nothing.

Oh, it's provoked some talk. And there are some bills moving slowly through Congress that would reform a few aspects of our financial system. But Republicans are almost unanimously opposed to them and even Democrats are lukewarm. As a result, reforms that were mild to begin with have already been watered down even further, and by the time Congress is finished with them they're likely to be only a shadow of what they ought to be.

Serious regulation of derivatives? Probably not. Increased consumer protection? Maybe, but probably in pretty weak form. Crackdowns on debt and leverage, the dual cornerstones of the crisis? None to speak of. Serious ratings agency reform? No. Smaller banks? A financial transaction tax? An end to gambling within the regulated banking sector? No, no, and no.

Why? The short answer is that the finance industry has the biggest, richest, and most influential lobby in Washington, DC. For a few months they lost that influence, but the Wall Street bailout worked just well enough to remove the sense of crisis we all felt in 2008, and that gave the finance lobby all the room it needed to step in, regain its footing, and make sure Congress wouldn't do anything serious to threaten its profits.

But that's only the short answer. For the longer answer, check out "Capital City

 

," my piece about the finance lobby in the latest issue of Mother Jones. And today my colleague David Corn and I will be on Bill Moyers Journal

 

to talk more about the lobby and how it works. Check your local listings for the air time in your area.