Just four years after receiving billions of dollars in government bailout money, U.S. banks are once again making record profits. But to think that everything is fine with the financial sector would be to miss a big story.
Matt Taibbi--whose new article, "The Secrets and Lies of the Bailout," is featured in the current issue of Rolling Stone--joined NOW with Alex Wagner Thursday to give his take on what really happened behind the scenes. It wasn't pretty.
"The original bailout plan was the government was going to buy up troubled mortgages and then they were going to allow people to modify them and that's how it got through Congress and they literally unilaterally disposed of that entire idea," he said. "They never cared about it. The people who actually administered the bailout were not really worried about foreclosures. This was not about saving people's mortgages, this was about rescuing the people who Tim Geithner and Larry Summers had spent their entire lives around."
In his piece, Taibbi argues that the banks--which were considered "too big to fail"--before the 2008 financial crisis, have become even bigger since. So big, in fact, that effective regulation of them is virtually impossible.
"Even the companies themselves don't know what's going on with their own accounting. We saw this with last year with JPMorgan Chase and the "London Whale" episode," he said. "They have no idea what's going on with their balance sheets and if they don't know, we don't know, and yet we're publicly declaring them healthy. What this does is it sends a signal to the market that we're gonna back them no matter what."
The panel also discussed the super meritocracy at the top--what is essentially revolving door between White House officials and the big Wall Street firms, most elegantly detailed by New York Magazine's Gabriel Sherman in his April 2011 piece, "Revolver."
"It's all the same people, it's a culture, it's the same group of people on both sides of the aisle and that's the problem, "Taibbi lamented.
"Something tells me that there is a desk at a firm waiting for Tim Geithner," Wagner joked about President's Obama's outgoing Treasury secretary.
"A big desk," crowed Mother Jones' David Corn. "A REALLY big desk!"