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 More Wall Street Corruption

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Join date : 2012-08-05

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PostSubject: More Wall Street Corruption   More Wall Street Corruption Icon_minitimeFri Sep 14, 2012 9:35 pm

The Inside Job is a revealing documentary about the deregulation of the financial market and the corrupt world of Wall Street. Through a short history of important economic and political decisions beginning in the Reagan era, the United States has led a march into a global recession. The financial derogation of savings and loans by the Reagan administration resulted in 124 billion dollars in losses and many people lost their jobs. Clinton continued Reagan’s legacy of deregulation and allowed for five large firms including Goldman Sachs to take over the financial sector. Clinton’s administration (mainly Greenspan) helped these firms grow larger and gain a monopoly in the banking industry. The later introduction of derivatives allowed investors to bet on anything but created an extremely unstable system at the core of which is dept. Derivatives allowed people to make money from nothing since loans were given out too carelessly. Many bankers and economists predicted that unregulated investing in derivatives and other markets through loans would result in a global recession; however many bankers fought against regulation because it would limit profits. Under the Bush administration the securitization food chain allowed for the five main investment banks to pump loans which received unwarranted good rating from one of the three rating agencies. Since the three securities insurance companies through derivatives allow bankers to insure other peoples companies it allows them to profit off of their losses. The securitization food chain quadrupled the amount of mortgages in 2003 since there was much less pressure to pay them back; thousands of risky subprime loans were given AAA ratings because they had higher interest rates. The excessive loans for investors caused a bubble in the market from 2001-2007 in which real estate prices skyrocketed, CEOs and bankers became extremely rich, loan volumes continued to increase, and money was just being created by the system. AIG was one of the largest insurance companies and offered credit default stocks on which they promised to pay back losses. It became a system where more risk meant more money and almost all investments received AAA or AA ratings even if they were known to be unprofitable. Goldman Sachs later began selling securities in which the more money the investor lost the more money they earned. In 2008 the oncoming recession had struck, foreclosure skyrocketed, securitization imploded, and both the Bush administration and the major investment banks accumulated billions of dollars in dept. On black Friday, the crash of the market temporarily stopped all financial activity, and caused mass hysteria and billions in bad dept. The wealthy class responsible for causing the recession are not being held accountable for their actions instead they continue to prosper while the working class suffers for their greed. Sad
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