In a new report, Robert Weissman of Multinational Monitor points to twelve deregulatory steps that led to the financial meltdown. It also does an analysis of the amount of money Wall Street poured into Washington in campaign contributions and lobbying over the last ten years. Their answer? A staggering $5.1 billion over the past decade.
Step 1: Repeal of the Glass-Steagall Act allows risky investment banks to merge with FDIC backed commercial banks
Step 2: Hiding toxic liabilities with off-Balance Sheet Accounting is allowed by the Financial Accounting Standards Board
Step 3: Greenspan/Rubin/Summers prevent the CFTC from regulating derivatives.
Step 4: Phill Gramm’s Commodities Futures Modernization
Act signs into law derivative non-regulation
Step 5: The SEC (at the urging of Goldman Sachs & Hank Paulson) allows banks to set their own debt-to-capital ratio
Step 6: The so-called Basel Standards allow banks all over the world to set their own debt-to-capital ratio
Step 7: Federal regulators do nothing to stop obvious predatory lending
Step 8: The Federal government prevents states from enforcing their own laws against predatory lending.
Step 9: Buyers of securitized mortgages are made immune from any liability for illegal features of those mortgages.
Step 10: Fannie Mae and Freddy Mac (spurred by their for-profit status) acquire over $57 billion worth of sub-prime assets.
Step 11: With antitrust principles abandoned banks merge and become “too big to fail”, yet still elude meaningful regulation.
Step 12: Credit Rating conflict of interest: Firms award high ratings to banks toxic-assets in order to keep their customers happy, and to obtain new deals with other banks.