Welcome to Pottersville

“Something is rotten in the state of banking.” Alright, that isn’t quite how the Bard put it, but you take my point. Our nation’s ongoing financial crisis – just shy of a year in the making – is far from over. Indeed, with unemployment and budget deficits at record highs (the ‘worst since the Great Depression’, as the official administration line goes) it seems like we’ve just skimmed the surface and Americans are madder than they’ve ever been – a point about which congressional Democrats, with eyes fixed on 2010, are rightfully nervous. But even as populist anger has surged in the months since the first bank bailouts, there is scarcely a consensus about how lawmakers ought to proceed – that is, to curtail the excesses of the banking industry and its ability to send shockwaves through the larger economy. Of course, there are some (particularly on the right) who would take issue with the problem, stated as such, but as the evidence mounts it’s becoming harder to ignore the implications – that, as Dean Baker concludes in his recent piece, “The Big Bank Theory”, the complicity of the banking industry is incontrovertible and regulation is not merely prudent, but necessary.

Read the rest of this entry »