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February 26, 2015

Wall Street's threat to the American middle class

“Presidential aspirants in both parties are talking about saving the middle class. But the middle class can’t be saved unless Wall Street is tamed.

“The Street’s excesses pose a continuing danger to average Americans. And its ongoing use of confidential corporate information is defrauding millions of middle-class investors.

“Yet most presidential aspirants don’t want to talk about taming the Street because Wall Street is one of their largest sources of campaign money.

“Do we really need reminding about what happened six years ago? The financial collapse crippled the middle class and poor, consuming the savings of millions of average Americans and causing 23 million to lose their jobs, 9.3 million to lose their health insurance and some 1 million to lose their homes.

“A repeat performance is not unlikely. Wall Street’s biggest banks are much larger now than they were then. Five of them hold about 45 percent of America’s banking assets. In 2000, they held 25 percent.

“And money is cheaper than ever. The Fed continues to hold the prime interest rate near zero.

“This has fueled the Street’s eagerness to borrow money at rock-bottom rates and use it to make risky bets that will pay off big if they succeed but will cause big problems if they go bad.

“We learned last week that Goldman Sachs has been on a shopping binge, buying cheap real estate stretching from Utah to Spain, and a variety of companies. If not technically a violation of the new Dodd-Frank banking law, Goldman’s binge surely violates its spirit.

“Meanwhile, the Street’s lobbyists have gotten Congress to repeal a provision of Dodd-Frank curbing excessive speculation by the big banks. The language was drafted by Citigroup and personally pushed by Jamie Dimon, CEO of JPMorgan Chase.”

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Read the full Baltimore Sun article by Robert B. Reich here

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