We forget that Wall Street is supposed to be a support function. Its primary role was intended to be helping CEOs come up with cash to make investments. But since Ronald Reagan, Wall Street has become the tail that wags the economic dog. Today, Paul Krugman highlighted this by pointing out that in the 1960s Wall Street accounted for just 4% of GDP -- by 2007 that figure had doubled to 8%. Reagan began the process of deregulating Wall Street, and in 2004 the SEC accelerated it. The result is an unprecedented economic catastrophe, including an American International Group (AIG) bailout that will cost another $1.6 trillion.
This is why I am grateful for New York Attorney General, Andrew Cuomo, who seems to be the only government voice not cowed into submission by the promise of enormous Wall Street campaign contributions. He's moving beyond the outrage over AIG's $218 million in bonuses and focusing on what I posted was the bigger issue of AIG's paying $105 billion of taxpayer money to cover derivatives "losses" for Goldman Sachs Group (GS) -- which alone received $12.9 billion from the deal -- and a posse of European banks. So he's launching an investigation into why these banks got 100 cents on the dollar while ordinary investors are having to take a major haircut.