Wall Street On Parade is something of an historian when it comes to the shifting sands of the New York Times Editorial Board and its position on riding herd on one of its richest and serially corrupt hometown industries – Wall Street. The Times has vacillated over the decades between truculent finger wagging at Wall Street (typically after the public is already wielding pitchforks) to irrational indulgence of its excesses, to outright egging on of its wealth transfer schemes.
The Times is out with a new editorial today which is peculiarly titled: “Why the Return of Bigger Banks Means Bigger Risks for Everyone Else.” The title makes it seem like the Trump administration has had something to do with “the return of bigger banks.” In fact, it was the failure of the eight year Democratic administration of Barack Obama to enact reforms to break up these monster banking behemoths that has put us all at peril today. We’ll get to that in a moment, but first, some required background on the vacillations at the Times.
On March 12, 1988, the New York Times published an editorial titled: Dispel This Banking Myth. It was filled to the brim with whoppers. Consider the following paragraph:
“The Glass-Steagall Act of 1933 was intended to prevent another market crash by prohibiting banks from selling and underwriting securities. But in practice it merely built a wall around banking, a barrier that reduced competition and raised fees in the closely related securities industry without adding to financial stability.”
In fact, the Glass-Steagall Act kept the U.S. financial system safe for 66 years – from its passage in 1933 to its repeal in 1999. Just nine years after its repeal, Wall Street collapsed and brought down the U.S. economy in a repeat of 1929 and the economic crisis that followed. Glass-Steagall kept the U.S. financial system safe by preventing investment banks from sucking in insured deposits, backstopped by the taxpayer, and then churning the money into monster gambles and losses that could take down the entire mega bank and interconnected financial system.
Glass-Steagall did not result in “reduced competition” as the Times states. While Glass-Steagall was on the books, there was no Wall Street banking cartel of a handful of banks controlling 90 percent of all derivatives and almost half of all deposits in the United States, the situation we find ourselves in today.
In another editorial on September 22, 1990, the New York Times lauded “The Fed’s Sensible Bank Experiment.” It wrote: