US Banks:The Great American Robbery(Robert Stiglitz)

When the government went about rescuing the banks, they should of thought about accountability.Capitalism can't work if private rewards are unrelated to social returns.Unfortunately, American- style capitalism didn't care about the public as fees increased their wealth beyond imagination. The incentives to undermine society was so great that they could have been living in the USSR during the Nixon administration as party leaders. When the great recession came, they tried to blame everyone but themselves.They became strangers to ethical behavior and led a nation to ruin.As the destruction entered every home,the bankers knew the safety net was waiting for their rescue. First,President Bush and later,President Obama, caved in to the "to big to fail" banks that laughed their way down the road to executive bonuses and refrains of "lets try do it again". These costly mistakes rank among the most of any modern democratic government at any time.The U.S guarantees and bailouts approach 80% of US GNP,some 12 trillion.

Both administrations decided against exercising any control over the recipients of massive amounts of taxpayer money.They claimed that to do so would interfere with the workings of a free market economy.What a farce. Bank executives acted as they are supposed to act in a capitalist system. They acted in their own self-interest by getting as much money for themselves and the shareholders. This self- interest wasn't in the nation's interest.The bankers didn't want to admit that there was anything fundamentally wrong with the system.(blamed government laws and regulations,poor,uneducated public).Politicians and deregulators(Reagan,Bush,Clinton,Bush again) didn't want to admit failure and stated that they just had to tweak the system. Obama didn't bring a fresh approach that was needed(Wall St. Reform and Consumer Protection Act came later).He wanted to provide confidence and continuity to the crisis so he didn't ask the right questions about what our country needed from the financial sector.

This legacy of debt will compromise economic and social programs for years to come.In months after the bailouts, the size of the deficit was being used as an excuse for reducing the scale of the health care reform.The deficit hawks went on a vacation beginning late summer of 2008 when the banks needed hundreds of billions only to return for health care and extension of unemployment benefits.We will never  recover what was given the banks.They claimed a return on investment but that is a big pipe dream floating down the halls of Wall Street.

More from Stiglitz in the days to come.