While calls from Bernie Sanders and Elizabeth Warren to break up the gargantuan Wall Street banks have so far not resulted in any concrete legislative action, it appears that the progressive left is winning anyway. New regulations and the tide of public outrage over the absurd power of Wall Street and their reckless gambles with the finances of the American people is prompting the financial industry to shift course and downsize on their own accord.
As Wall Street darling Jeb Bush collapses in the polls and voting bases on both sides of the aisle recognize that lobbyist-bought Republican demands for deregulation simply put our economy at a greater risk of another collapse, the Wall Street giants are scrambling to adjust. POLITICO reports that:
JPMorgan Chase is selling off a chunk of its private equity business. AIG is contemplating breaking into smaller pieces. Goldman Sachs and Morgan Stanley are watching trading profits dwindle with no real clue whether or when they will ever come back. Giant banks including Wells Fargo will now be required to raise about $120 billion in new capital. General Electric is getting out of the financial services business entirely.
While the industry retains powerful lobbying influence in Washington, its clout is on the wane, a fact that reflects strong bipartisan support for even greater crackdowns on the financial industry. Community bankers now arguably hold bigger lobbying clout in D.C. than Wall Street does.
Financial analysts are pointing to the success of President Obama’s Dodd-Frank Act and Elizabeth Warren’s Consumer Financial Protection Bureau in coercing the banks to downsize on their own accord. Most importantly, it is an organic and self-initiated response – proof that the regulations are doing their job and the market is balancing itself to accommodate a new political atmosphere, a shift in culture away from the laissez-faire anarchy of the George W. Bush Administration that lead to such a crippling economic collapse.
Polls show that the majority of Americans would support a president aiming to crack down on the power of Wall Street and keep their rampant greed in check. The trauma of the 2008 market crash and ensuing global recession still pierces deep into our collective soul; the American people will not bail out the banks again. They know their lifeboat is leaking, and have decided to jump the gun. Warren herself admits the banks are beginning to behave themselves, but calls for caution: “We still have a problem. We have too-big-to-fail banks, and the question is how best can we wrestle with those banks.” But the news of this transition is a very encouraging sign, and inspires hope that we will not be perpetually at the mercy of Wall Street plutocrats and their selfish lust for profits.
Opinion columnist and former editor-in-chief of Occupy Democrats. He graduated from Bennington College with a Bachelor's degree in history and political science. He now focuses on advancing the cause of social justice and equality in America.