Wednesday, Dec 25th
Last update09:45:43 AM GMT
Economic Glance
Four years after the banking system nearly collapsed from reckless mortgage lending, federal prosecutors have stayed on the sidelines, even as judges around the country are pointing fingers at possible wrongdoing.
The government also hasn't brought any prosecutions for dubious foreclosure practices deployed since 2007 by big banks and other mortgage-servicing companies.
"Over the past generation, the patterns of income growth have been radically transformed," said Paul Pierson, professor of political science at UC Berkeley, adding that the argument "that rising inequality is simply an economic reality ... too easily lets policymakers off the hook."
Meanwhile, wages have grown by nearly 40 percent for the top 10 percent of earners over the past three decades, while wages for the bottom 50 percent of earners have remained stagnant or fallen, she said.
Wells Fargo & Co. and regulators announced Thursday a $148 million settlement to resolve accusations that Wachovia, which was purchased by Wells, participated in a bid-rigging scheme that hurt state and local governments.
It's the fourth major bank to settle with the consortium of federal agencies and state attorneys general. Bank of America Corp. settled for $137 million last December.
So, now do you believe me? The stock market was rigged.
But now that another news organization has finally gotten off its lazy butt, I’ll tell it again: Under former Treasury Secretary Hank Paulson, confidential government information was regularly leaked to select people on Wall Street.
By giving confidential information to a roomful of traders, Paulson had to understand he’d influence the price of Fannie and Freddie stock and, by extension, the whole market.
Eileen Foster, a former senior executive at Countrywide Financial, told CBS's "60 Minutes" Steve Kroft that mortgage fraud was a way of business.
"From what I saw, the types of things I saw, it was — it appeared systemic. It, it wasn't just one individual or two or three individuals, it was branches of individuals, it was regions of individuals," she told Kroft.
Just take a look at banking. The "too big to fail" banks just keep getting bigger and bigger. Back in 2002, the top 10 U.S. banks controlled 55 percent of all U.S. banking assets. Today, the top 10 U.S. banks control 77 percent of all U.S. banking assets.
If you can believe it, the "big six" U.S. banks (Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo) now control assets equivalent to approximately 60 percent of America's gross national product.
Texas cotton grower Brad Heffington speaks Wall Street's language of hedges, correlation charts and the like as easily as he discusses weevils and pesticides. Yet today his financial knowledge is of limited use.
Heffington's been sidelined from the cotton futures market, thanks to a surge of financial speculators into the market, which originally was designed to protect farmers like him against price shifts.
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