My Thoughts on the Bailout

Full disclosure: I don't understand the economy like I should (though I'm working on it), but I have been carefully listening to various explanations of what is going on, and what should be done--in fact, the more I read about it, the more I understand that most people don't get it either.

I was watching C-SPAN the other day (we had to for class... seriously), and this Senator from ND named Byron Dorgan was talking about this thing called the Glass-Steagall Act, which was repealed in 1999 (when the Senate voted for the further deregulation of the banks and end of GS, Dorgan said: "I think we will look back in 10 years' time and say we should not have done this, but we did because we forgot the lessons of the past... and that that which is true in the 1930s is true in 2010.")

In response to the Wall Street crash of 1929 and the resulting banking failures of the Depression, the U.S. government implemented a series of bank regulations within the Glass-Steagall Act. It created the Federal Insurance Corporation (FDIC) and introduced reforms that were to control speculation. Basically what it did was separate "banks that did risky investing from those that did basic lending" (NYT). Without the regulations, firms began taking bad mortgages and risking lenders' money. When the value of houses went down, the banks were stuck with all these mortgages, etc. etc.... And my understanding quickly dissipates from there (it's much more fun to discuss foreign policy!).

But essentially Glass-Steagall divided the banks into the safe banks that the public could depend on to be consistent, and the risk-taking banks who were allowed to make reckless investments. When this divide was eliminated, all the banks started taking huge risks with your money, and now it's all going to hell.

So the first bailout plan was 4 pages long and called for the Congress to hand over $700 billion to the Wall Street honchos to save their tails, no questions asked--thereby rescuing "Main Street" (what they are calling the common folk). The second one was longer, but still involved giving $700 billion to the same guys who got us into this mess. Granted I don't have a great grasp on all of the technicalities, but this seems REALLY SHADY. I really think that the federal government is being exposed for what it truly is: the Wall Street government. They reap in billions as a result of the criminal and disastrous Iraq War, and now they are trying to make out like bandits by getting a free pass for their reckless actions. When the Treasury Secretary is a former Golman Sachs exec, and the EPA is headed by energy company execs, something has gone terribly wrong.

When did our government become dominated by the selfish elitists? How did they take it from us? More importantly, what happened the last time Americans were abused by their rich minority leadership?