You Think The Government Doesn't Want Big Banks? Think Again

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The Huffington Post

You Think The Government Doesn't Want Big Banks? Think Again

Tyler Cowen | Apr 19, 2010

How much political power do the big banks have? I'd like to air a skeptical note and ask whether they're really running the show.

To most people these days - whether on the left or the right - such a question smacks of insanity or deliberate stupidity. It barely seems worth addressing.

Have we not observed hundreds of billions in bailouts, up to three decades of lax regulation, massive and unjust CEO bonuses, and now the near-immediate return of record bank profitability? Are not many of the Republicans serving up knee-jerk opposition to virtually any kind of meaningful financial reform, perhaps because they receive campaign contributions from banks? On the surface, banks seem to be a nearly invulnerable interest group in American politics.

Yet this last week's SEC civil lawsuit against Goldman Sachs, which caused a thirteen percent decline in the company's stock in one day, should serve a cautionary note. Of all the big banks, Goldman is supposed to be the strongest and most politically connected. It remains to be seen how the charges will proceed, but at the very least it is odd that the Masters of the Universe would have let it come to this at all.

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