EconomicCrisis.US

From Enron to Madoff, bear markets to financial crises, bubbles to bailouts, jobless recovery to double-digit unemployment — this has been an economically brutal first decade for the new millennium.

It has bred doubt about the resilience of the American economy. It has stirred calls to dust off New Deal designs.

It has turned our world upside down.

After all, the 1990s were a jobs machine, a deficit destroyer, a stock market utopia. We even deflated the Y2K threat.

It seems now that all those zeros on our new calendars were trying to warn us about the encroaching fleet of financial Hindenburgs.
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One year after the near-collapse of the US financial sector, the Democratic-controlled Congress continues to strip away even the minimal regulations to the financial system that existed prior to the 2008 meltdown. This is going on behind the scenes of a largely pro-forma debate over the number of regulatory bodies required to police the financial system, and over the role of the Federal Reserve in regulation.

Earlier this month, the House Financial Services committee voted to largely neuter the Sarbanes-Oxley Act. The Sarbanes-Oxley Act, passed in 2002 in the wake of the Enron scandal, requires companies to have independent auditors evaluate their internal protections against fraud. The vote would allow companies worth less than $75 million to be exempt from this requirement and sets the stage for even larger companies to follow suit.
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Several congressional Democrats said on Wednesday they plan to introduce legislation next week to cap credit card interest rates.

With unemployment and Wall Street bonuses incongruously rising together, the chairman of the House Rules Committee said she will offer a bill to cap rates at 16 percent, a proposal that could catch a wave of Populist sentiment in the House.

“Things were a lot better for the average person in this country when we had usury caps,” Representative Louise Slaughter, head of the rules panel, said in a statement.

“Watching how credit card companies have exploited people by increasing rates up to 30 percent and more is criminal and this bill will allow us to put an end to this,” she said.
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There is much to be thankful for this holiday, including the fact that we live in a country that has been remarkably good-natured, generous and pragmatic in the face of a nasty economic crisis. The rates of unemployment and under-employment have already hit a combined 17 percent. Household wealth has been significantly diminished. Reluctantly, we agreed to take on more public debt to finance a massive bailout of a financial sector that badly let us down. We stepped up our household savings and embraced the new frugality.

What really sticks in our craw, however, is that while most of the country is hunkered down, Wall Street continues to feast on a bounty of trading profits. You’d expect that a new liberal Democratic president would find a way to give voice to this populist outrage and constructively channel this public anger. But too often, the response from the administration has been to try to convince us that there’s little we can do, or should do, to ensure that the economic harvest is more equitably distributed. Now, the White House and congressional leaders find themselves scrambling to get ahead of a growing political backlash that threatens to upend their carefully calibrated agenda, not to mention their political fortunes.
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