Wall Street banks: Scapegoat or villain?

last updated 8 January 2015

By all rights, Americans should fear and loathe the Occupy Wall Street movement, said Harold Meyerson in The Washington Post. But even though many of the protesters are hairy, noisy, and “vaguely countercultural,’’ polls find that 59 percent of the public agrees with the growing national movement. Why? Simple: The protesters “are taking on the banks.’’ Today, “everyone hates the banks,’’ and for good reason: Since the 1990s, the nation’s big banks have done “none of the things that a financial sector should do”—invest in startups and existing businesses, and help other companies grow and expand. Instead, they’ve reaped vast fortunes by selling bad mortgages, and then packaging this toxic debt inside complex derivatives and selling them to suckers. When that scheme collapsed, and the global economy crashed, the banks got bailed out, while everyone else suffered. Hate the banks? You bet.

We have “some sympathy” for the young protesters adrift in a terrible economy, said The Wall Street Journal in an editorial, but they’ve picked the wrong target. The financial services industry employs over 7 million people in the U.S., and most of them work in administrative and back-office positions. And thanks to the White House treating Wall Street like “a piñata’’ to be bashed with the hammer of overregulation, banks are now in big trouble. Wall Street firms will soon cut 10,000 jobs, and Bank of America will lay off 30,000 because of new rules limiting the profits it can make from debit cards. Even Goldman Sachs is in trouble, said Susanne Craig in The New York Times. Goldman just reported a stunning $428 million loss in the third quarter. As new regulations bar banks from the derivatives trading they relied on for years, Wall Street faces a “diminished reality.’’

Don’t expect anyone to cry for the “bailed-out subsidy suckers of Wall Street,’’ said Timothy Carney in WashingtonExaminer.com. Last week, that poor Bank of America shifted a reported $55 trillion in derivatives from its Merrill Lynch investment arm to a retail bank covered by FDIC insurance, putting taxpayers at risk. What an outrage. We conservatives believe in free markets as the engine of prosperity, but banks don’t truly operate in a free market, and they’ve rigged the game so that they “profit from activities that weaken the economy.” On this, liberals and conservatives can agree: Banks “give capitalism a bad name.”