Fed Saved Economy but Did Little to Rein in the 1 Percent
Bernanke and Co. should have shown same sense of urgency in making financial institutions change ways.
October 21, 2011
If you're asking has the Fed done too much to fulfill its statutory mandate to maximize employment in America, the answer is a clear and resounding no. The truth is that when Wall Street was on the verge of collapse, the Federal Reserve acted boldly, aggressively, and with a fierce sense of urgency to save our financial system from collapse with no strings attached. In fact, as a result of an amendment that I included in the Dodd-Frank Act, we now know that the Federal Reserve provided more than $16 trillion in low-interest loans to every major financial institution in this country, huge foreign banks, multinational corporations, and some of the wealthiest people in the world.
Sadly, now that the middle class is collapsing and a record-breaking 46 million Americans are living in poverty, the Federal Reserve has failed to act with the same sense of urgency to make sure that small businesses receive the affordable loans needed to put millions of Americans back to work and prevent millions of Americans from losing their homes by requiring bailed-out banks to make mortgages more affordable.
As a result, Wall Street is back to making huge profits, handing out multimillion-dollar compensation packages, and taking the same risks that caused the financial crisis in the first place. Meanwhile, 25 million Americans are unemployed or under-employed; middle-class families are making $3,600 less than they did 10 years ago; the foreclosure rate is still breaking new records; and the American people are still paying over $3.47 for a gallon of gas.
The financial crisis and the jobs crisis have demonstrated to the American people that we now have a government that is of the 1 percent, by the 1 percent, and for the 1 percent, as Nobel Prize-winning economist Joseph Stiglitz eloquently articulated. The rest of the 99 percent are, more or less, on their own. We now have the most unequal distribution of wealth and income of any major, advanced country on earth. The top 1 percent earn more income than the bottom 50 percent and the richest 400 Americans own more wealth than the bottom 150 million Americans.
Millions of Americans lost their jobs, their homes, and their life savings because of the greed, recklessness, and illegal behavior of Wall Street. The Fed did way too little to prevent the collapse in the first place and not nearly enough afterward to make major financial institutions change their ways. That has got to change.