Predator Nation

"It was, literally, the crime of the century, one whose effects will continue to plague the world for many years via America's economic stagnation and Europe's debt crisis." Deregulation's dangerous legacy.

"It was, literally, the crime of the century, one whose effects will continue to plague the world for many years via America's economic stagnation and Europe's debt crisis." Deregulation's dangerous legacy. The financial crisis of 2008 was the result of decades of financial deregulation, starting in the 1980s. This process removed crucial safeguards, allowing banks to engage in increasingly risky and fraudulent practices. Key milestones included: Repeal of the Glass-Steagall Act in 1999, allowing commercial banks to engage in investment banking Commodity Futures Modernization Act of 2000, which banned regulation of over-the-counter derivatives SEC's 2004 decision to allow major investment banks to calculate their own leverage limits Fraud and predatory practices. As regulation decreased, fraudulent and predatory practices increased. Banks and mortgage lenders: Created and sold toxic mortgage-backed securities Engaged in predatory lending, targeting vulnerable populations Manipulated financial products to hide risks from investors and regulators Used complex derivatives to bet against their own clients The result was a massive housing bubble and subsequent financial collapse that devastated the global economy, leading to widespread unemployment, foreclosures, and economic stagnation.

"By the fall of 2005, Merrill Lynch estimated that half of all U.S. economic growth was related to housing—including new construction, home sales, furniture, and appliances." The subprime mortgage machine. Wall Street banks fueled the housing bubble by creating a massive demand for subprime mortgages, which they could package into seemingly low-risk securities. This led to: Predatory lending practices targeting vulnerable borrowers "Liar loans" with no income verification Adjustable-rate mortgages with teaser rates that later skyrocketed Pressure on appraisers to inflate home values Securitization and risk concealment. Banks then packaged these risky loans into complex financial products: Mortgage-backed securities (MBS) Collateralized debt obligations (CDOs) Synthetic CDOs, allowing bets on the performance of other securities These products received high ratings from credit rating agencies, despite their underlying risks. Banks like Goldman Sachs even created products designed to fail, betting against them while selling them to unsuspecting clients.

"America is in decline—economically, politically, and also, in some ways, ethically and culturally." Concentration of wealth and power. The financial sector's unchecked growth has led to the emergence of a powerful oligarchy: Top 1% of Americans now control over 40% of the nation's wealth Financial sector profits soared to nearly 40% of all U.S. corporate profits during the bubble Political influence. This concentration of wealth has translated into enormous political power: Massive increase in lobbying expenditures and campaign contributions Revolving door between Wall Street and government positions Weakening of financial regulations and enforcement The…