Simon Johnson says "concentrated financial power is a gift that keeps on giving":
Austerity and the Modern Banker, by Simon Johnson, Project Syndicate: Santa Claus came early this year for four former executives of Washington Mutual (WaMu), a large US bank that failed in fall 2008. The Federal Deposit Insurance Corporation (FDIC) had brought a lawsuit against the four, actions that included taking huge financial risks while “knowing that the real estate market was in a ‘bubble.’” The FDIC sought to recover $900 million, but the executives have just settled for $64 million, almost all of which will be paid by their insurers; their out-of-pockets costs are estimated at just $400,000. ...
But, according to the FDIC, the four still earned more than $95 million from January 2005 through September 2008. So they are walking away with a great deal of cash. ... At the same time, their actions – and similar actions by other bankers – are directly responsible for both the run-up in housing prices and the damaging collapse that followed..., including through the loss of more than eight million jobs.
It is also leading to austerity – taxes are increasing and government spending is falling at the local and state level around the country. ... Precipitate austerity is hardly likely to help the economy find its way back to higher employment levels. ...
Big banks represent the ultimate in concentrated economic power in today’s economies. They are able to resist all meaningful reform that could really change their compensation schemes. Their executives want to get all the upside while facing none of the true downside.
But capitalism without the prospect of failure is not any kind of market economy. We are running a large-scale, nontransparent, and dangerous government subsidy scheme for the benefit primarily of a very few, extremely wealthy people. ... concentrated financial power is a gift that keeps on giving – but not to you.
I don't understand why those who thought they would benefit the most from the inflated asset prices before the crash -- the ones who pushed the bubble the hardest -- and in many, many cases did reap huge gains even after the losses from the crash are accounted for aren't being asked to shoulder a disproportionate share of the costs of cleaning up the mess (I guess I do understand, power talks). One of those costs, and a big one, is the increase in the deficit due to the loss of tax revenue and the increased use of public services after the crash. But instead of asking those who gained so much to give some of it back to help to pay these costs and clean up the mess they created, we are cutting social programs and putting the costs on those who had nothing to do with causing the problems we are having.