Why We Need to Reform Wall Street

By Wade Lee Hudson

The fundamental restructuring of our financial system is essential because Wall Street negatively impacts every aspect of our society.

Most big bank profits come from buying and selling financial instruments (“paper”) – not from making loans to businesses and consumers. With its lucrative trading in this nonproductive “paper economy,” Wall Street has helped to hollow out industrial America by sucking money out of the “real economy.” One-third of our nation’s corporate profits goes to the financial sector and that percentage is increasing.

When their speculative bubbles burst, Wall Street inflicts even greater damage on the economy. More unemployment and increased poverty result. But the big banks love instability because it enables them to make even more money, partly by betting beforehand that bubbles will burst.

Economic stagnation results in reduced revenues for local and state governments, which weakens their ability to provide vital public services.

The big banks are so important to the economy taxpayers must bail them out when they get into serious trouble in order to prevent catastrophe.

Thanks to federal subsidies that give them competitive advantages, the big banks are driving our community banks (the traditional source of loans for consumers and businesses) out of business.

Their obscene greed cheapens our culture.

Their cheating, fraud, and other violations of the law undermine confidence and encourages more of the same.

With most of the nation’s total banking assets, the biggest banks hold enormous political power. And they use their power to block positive reform, including progressive tax reform.

All of these elements contribute to social discord, widespread anger, and despair.

But if the American people unite to assure that our banks serve the public interest, we can help lay the foundation for transforming our nation into a truly compassionate community.