Most call it one of the biggest financial crises in living memory. Others call it one great big Ponzi scheme. Whatever you want to call it, a bunch of people lost a bunch of money and the world of high finance may never be the same. But don’t worry – that doesn’t mean that we’ve fixed all these problems or punished the people responsible. It just means that next time you can’t get a loan or a higher credit limit, the banks will have an excuse.
Our “most unwanted” list includes guys like Martin Feldstein. He was an economics professor at a little school called Harvard (maybe you’ve heard of it) and served as Ronald Reagan’s Chief Economic Advisor. He was a major architect in Reagan’s deregulation scheme (which is either the best thing ever in the world to some political views, or the worst thing in the world to others).
Alan Greenspan is also responsible, some believe. He was paid $40,000 to testify on behalf of extreme bank looter Charles Keating. Greenspan spoke of his “sound business plans” and “expertise.” Of course, these kind words didn’t come for free.
Robert Rubin was the Treasury Secretary and also a former CEO of Goldman Sachs. He teamed with Larry Summers to get Congress to pass the “Gramm-Leach-Bliley Act.” Whatever that did, he went and used it to make $126 million as Vice Chairman of CitiGroup.
Last up is Larry Summers, who also served as Treasury Secretary. Another Harvard economics professor (not looking good for that place). He was another key player in deregulation and also helped create derivatives, the trading of which was a major contributing factor to the financial collapse.
Companies and Their (Illegal) Activities
With all the time giant financial corporations spend doing shady and downright illegal things, it’s a wonder that they have any time left to do…whatever it is that they are actually supposed to do. Let’s take a look at some notable post-deregulation antics of those wacky corporations:
JP Morgan: Bribed government officials
Riggs: Laundered money for Chilean dictator Augusto Pinochet (a military leader – for those who don’t know – who led a coup in Chile and was said to have brutally crushed, killed, and interred all who opposed his illegal regime)
Credit Suisse: Laundered money for Iran in violation of US sanctions
Freddie Mac: Accounting fraud
Fannie Mae: Accounting fraud (which, in this case, means overstating their earnings by 10 billion over 10 years, which is NOT the same as slightly exaggerating your salary to impress someone at the bar)
ENRON: Fraud – Citibank, JP Morgan, and Merrill Lynch tried to help conceal the fraud
Of course, this is just the beginning. Review the infographic to see how, exactly, the economic crisis of 2008 occurred and you be the judge: who’s to blame? Are we out of the dark yet? And are we making the right choices now?
The views and opinions expressed herein are the author’s own and do not necessarily reflect those of EconMatters.
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