If you’re marching at Occupy sites in lower Manhattan or Joliet, Illinois or Outremont, Quebec or Rapid City, South Dakota or any of a hundred other places across the continent, you surely came with your own reasons. But if you’re reading this and still asking what Wall Street ever did to you, try this:
You were robbed. In the biggest heist in the history of robberies.
It doesn’t matter that you’re young or old, Republican or Democrat — if you’re an American and own a home, collect a pension, pay taxes or have a savings account, you’ve almost certainly spent the last three years getting fleeced.
The national news media has passed off the crash of 2008 and the bailouts that followed as a logical response to a fluky historical accident — a “thousand-year flood” economic mishap that just happens every now and then.
And if you watched chin-stroking TV docudramas like “Too Big to Fail,” what you learned is that at crunch-time our banking and regulatory leaders buckled down and made tough decisions that rescued us all from the abyss.
That is all lies. It is not what happened. What did happen was a mass heist, carried out in four steps:
The theft started when banks created a vast Himalayan mountain range of debt, lending trillions of dollars to unscrupulous lenders like Countrywide and New Century with the aim of creating huge volumes of home loans. As recently as 20 years ago, banks didn’t make risky loans because they worried about collecting on them. But in this case, banks never intended to hold on to the loans; the loans were designed to be sold off as soon as the ink was dry.
Next, banks bought back all of those junk-rated home loans from the Countrywides of the world so they could be pooled and chopped up and resold to suckers in Europe, the Middle East, China and here at home as AAA-rated investments. This is not unlike buying a truckload of oregano, dividing the shipment into ten-thousand Ziploc bags, then touring rock concerts around the world and selling it off as high-grade weed.
Because the banks themselves knew how dicey the loans were, the smartest of them then went out on the market and placed massive bets against those loans.
Finally, when the deadly home loans blew up, creating a global tsunami of losses in which centuries-old companies worth billions vanished in seconds (and even their chief bookie, AIG, collapsed), the banks turned to dishwashers, janitors, firemen, teachers — they turned to us, the taxpayers — to pay off their bets.
Many of the banks’ best customers for these fraudulent oregano-loans were institutional investors like state pension funds; when the mortgages collapsed, retirement funds for state workers and unions all across America plummeted. Which is why retired schoolteachers from Los Angeles to Minneapolis might have woken up in September of 2008 to find their life savings had lost 40% in value.
Wall Street bankers nailed everyone they could find with those deadly mortgages. Every time they struck a deal with a Chinese wealth fund or a Mississippi carpenters’ union to unload their exploding product, they scurried back and forth with delight, high-fiving each other in those skyscraper offices you might now be looking up at from your perch in Liberty Square.
But Wall Street doesn’t shoulder the blame alone. Instead of forcing our criminal financiers to pay victims back, our government — through two equally corrupted presidential administrations, one Democrat, one Republican — doubled down on the theft by forcing the same retired schoolteachers to reach into their pockets a second time, spending tax money to pay off the bets the bankers made against those investments they had sold them.
This level of highly orchestrated, institutional crime is unrivaled in American history. Following the Savings and Loan Crisis in the 1980s our government referred more than 1,100 cases for prosecution; today, after a massive industry-wide mortgage scam, not one Wall Street executive has seen the inside of a prison.
After the crash, the banks were given access to billions in bailouts and zero-percent loans from the federal reserve with the implicit understanding that after we rescued them, they would kick-start the economy and put people back to work. But the banks’ very first move was to restore their own exorbitant salaries.
In 2009, barely a year after taxpayers rescued them from imploding, bailout babies like Goldman Sachs ($16.2 billion in 2009 compensation) and Morgan Stanley ($10.7 billion) were doling out record compensation pools — a trend that has continued to this day, as Wall Street’s annual revenues soared past $417 billion last year, with compensation at $135 billion, both all-time highs.
Three years into this “recovery,” few jobs have been created and a quarter of a million families are still losing their homes every three months. The bailouts did not help us. Instead, they helped the people who put us out of our homes and on to the streets.
There are a thousand reasons to occupy Wall Street — unending war, a failing health care system, the need for jobs and a living wage, gross wealth inequality. But if you need just one reason to join this movement, it is this:
You were robbed, and your government helped finish the job.
This article was published in the fifth print issue of The Occupied Wall Street Journal on November 18, 2011.