NY Times: Wall Street Casino

Congressional Republicans have concluded that screaming foul about the banking bailout and blocking financial reform is a clever strategy for the fall elections.

This approach ignores some pretty basic history: that the banks imploded while Republicans held the White House; that President George W. Bush started the rescue; that many Republicans voted for the bailouts; and that they stabilized a financial system that was perilously close to collapse.

We do not know whether Goldman broke the law, but we know this gambling is too dangerous. Banks like Goldman turned the financial system into a casino. Like gambling, the transactions mostly just shifted money around. Unlike gambling, they packed an enormous capacity for economic destruction — hobbling banks that made bad bets, freezing credit and economic activity. Society — not the bankers — bore the cost.

The bailouts, which many Republicans acknowledged were necessary at the time, cost taxpayers about $87 billion, or 1 percent of gross domestic product. The crisis cost more. Falling tax revenues, unemployment insurance for millions of jobless workers and a fiscal stimulus to stop the economy’s slide is projected to boost the federal debt to more than 65 percent of G.D.P. next year.

Wall Street Casino