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When Americans think of how the economic rules are stacked against them, they naturally think of Wall Street.
When the Wall Street bubble burst in 2008 because of excessive risk-taking, millions of working Americans lost their jobs, health insurance, savings, and homes.
But The Street is back to many of its old tricks. And its lobbyists are busily rolling back the Dodd-Frank Act, intended to prevent another crash.
The biggest Wall Street banks are also much larger. In 1990, the five biggest banks had 10 percent of all of the nation’s banking assets. Now, they have 44 percent – more than they had at the time of the 2008 crash.
They have a virtual lock on taking companies public, play key roles pricing commodities, are involved in all major U.S. mergers and acquisitions and many overseas, and responsible for most of the trading in derivatives and other complex financial instruments.
And as they’ve gained dominance over the financial sector, they’ve become more politically potent. They’re major sources of campaign funds for both Republicans and Democrats.
Wall Street banks supply personnel for key economic posts in Republican and Democratic administrations, and lucrative employment to economic officials when they leave Washington.
It’s a vicious cycle. The bigger they get, the more likely it is that government will bail them out if they get into trouble again. This, in turn, confers on them an ever-larger competitive advantage over smaller, community-minded banks that don’t have the implied guarantee – which gives the biggest banks even more economic and political power.
