Cantwell's fight against 'financial weapons of mass destruction' essential to avoid new collapse
Source: The Seattle Times
Top of the News: Let's hope that Washington Sen. Maria Cantwell persists in her effort to regulate derivatives and even restore separation between commercial and investment banking. Republicans the past year have shown how potent even one senator can be.
Most Americans don't realize that the Wall Street "innovation" called derivatives -- better labeled "financial weapons of mass destruction" by Warren Buffett -- continue to be employed. The profits are great for the big banks, and the risk to the financial system even bigger. We saw this with rotten mortgages bundled into derivatives and sold to foolish investors. Goldman even bet against the exotic investments it was selling its own clients. And AIG, insurer of derivatives, nearly brought the system to collapse, requiring a massive taxpayer rescue.
Yet nothing has changed. The casino is still open. We're now learning that Goldman Sachs used derivatives to hide Greece's deficit (and who says we don't have export industries). All the incentives, such as big bonuses, are still in place for risky behavior. And derivatives, as well as the entire shadow banking system, lack regulation or transparency. As Americans wake up poorer for having had to bail out Wall Street, they should understand this is not just a complex issue involving rich folk. If anything the financial system is more at risk than ever, and with it the fragile recovery.
Cantwell faces a financial lobby that can deploy hundreds of millions of dollars to prevent reform. With the recent Supreme Court ruling, you can bet they'll come after her when she comes up for re-election.
The Back Story:Metro areas generate 75 percent of American GDP and contain two-thirds of our population. In addition, they account 72 percent of seaport tonnage, 92 percent of air passengers and transit miles, and are the place where where 93 percent board trains.
Yet an analysis of stimulus spending by the Brookings Institution finds that just 41 percent of all projects and 59 percent of transportation spending went to the 100 largest metros. The relatively small TIGER grants did better (Seattle won money to fix the Mercer Mess, but nothing for transit). But American policy continues to show a disconnect between metro needs and infrastructure spending -- one that will be a headwind against recovery.
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