Will This Financial Crisis Lead to True Reform or Plunder without End?

NEW YORK - It is almost
axiomatic to argue that renewal comes out of chaos. And reform and change
are born in crisis.

The financial meltdown of 1907
led to the formation of the Federal Reserve Bank. The Crash of '29
ushered in the New Deal, the FDIC, the SEC, The Glass-Steagall Act,
etc. Even the disaster at Enron permitted new statutes requiring more
transparency like Sarbanes Oxley. And now this greatest of great recessions
is leading to a new wave of financial regulation. The public is already
said to believe recovery is just around the next corner.

So, relax we are told, read
your history books and recognize that disruptions of the established
order lead inexorably to the measures to fix it, to stabilize it, to
restore it, to renew confidence, to get the economic engines going again.
So what if it takes money? Sure it will be expensive, but what's a
few trillion between friends?

President Barack Obama has
already warned us that not everything will work out but promised you
can trust his team will do its best. Some progressives see this crisis
as a time to push a reform agenda but few organizations have engaged
these issues directly.

So far, the winds of reform,
however mild, are blowing, and some think, blowing up a storm. The Credit
Card Bill has passed, never mind that it doesn't cap interest rates
or go into effect for a year. A new financial fraud bill was passed
mandating an investigation by Congress. Said Obama: "the commission
was important so that we make sure a crisis like this never happens
again."

So far so good, or so it appears.

Scratch deeper and you find
questions and contradictions that make you wonder if any of this is
really about change, or just restoring a flawed and failed system that
has imploded.

When the music stops who will
still be standing and in control?

Let's start with the Financial
Crisis Commission which will emerge from a divided Congress more used
to the arts of unprincipled compromise than the unfettered search for
truth. As we know from the 9/11 Commission, bi-partisan panels don't
necessarily find answers to tough questions.

Isaiah Poole contends on Our
Future.org that public vigilance is the only guarantee of a process
we can believe in.

"What's also clear is that we will have to watch the watchdog. The
administration could hamstring this commission with constitutional privilege
claims, and Republican appointees could cripple the commission to score
political points and protect its Wall Street bankrollers. Finally, a
media preoccupied with what it perceives to be sexier issues and weakened
in its capacity to do its own investigative journalism could allow the
commission's work to fall into obscurity, thus robbing it of its power
to drive fundamental reforms. We will have to be ready to push the commission
to confront the tough questions; to call out the obstructionists, regardless
of who they are; and to amplify the commission's findings as we forge
new and better rules for our economy."

And what of the economic "stabilization"
measures that have poured taxpayer money into the coffers if the very
institutions that wrecked the economy in the first place? Andy Kroll
argues on TomDispatch.com that these measures are a swindle, restoring
Wall Street and propping up a broken financial system:

"The legislation's guidelines
for crafting the rescue plan were clear: the TARP should protect home values and consumer savings,
help citizens keep their homes, and create jobs. Above all, with the
government poised to invest hundreds of billions of taxpayer dollars
in various financial institutions, the legislation urged the bailout's
architects to maximize returns to the American people.

That $700 billion bailout has
since grown into a more than $12 trillion commitment
by the U.S. government and the Federal Reserve. About $1.1 trillion of that is taxpayer money -- the TARP
money and an additional $400 billion rescue of mortgage companies Fannie
Mae and Freddie Mac. The TARP now includes 12 separate programs, and
recipients range from megabanks like Citigroup and JPMorgan Chase to
automakers Chrysler and General Motors.

Seven months in, the bailout's
impact is unclear. The Treasury Department has used the recent "stress
test" results it applied to 19 of the nation's largest
banks to suggest that the worst might be over; yet the International Monetary
Fund as well as
economists like New York University professor and economist Nouriel
Roubini and New York Times columnist Paul Krugman predict greater losses in U.S. markets, rising
unemployment, and generally tougher economic times ahead."

Media outlets, predictably,
are not looking at all this too carefully, not probing who is getting
what, not investigating a massive new theft that is compounding an old
one. So far, Wall Street is still sitting pretty, still giving itself
outsized salaries and bonuses, still enjoying its ill-got lucre.

And, according to Sam Pizzigati editor
of Too
Much,
an online weekly on excess and inequality, they will come out of this
just fine.

"The awesomely
affluent of high finance, if current trends continue, seem almost certain to survive the
mess they've created - with their wealth and power largely intact.
And Treasury and Congress don't appear to really mind.

...The nation's
richest 1 percent have, since the 1970s, over doubled their share of
the nation's income and wealth. Last fall, this gravy train - for
the rich - derailed. America's biggest banks collapsed. The stock
market tanked. The unthinkable, a real depression, suddenly became thinkable."

When the trickle
down stopped trickling, the government, and the Fed stepped in to rescue
financial markets while millions lost jobs and homes.

Will the inequities,
imbalances, and structural inequality be addressed? Is this a
reform or a new redistribution of wealth from the needy to the greedy?
History is replete with examples of well-intentioned initiatives creating
undesired consequences.

What is the
likely outcome? Business Journalist Gary Weiss who has written
books on many Wall Street scandals has low expectations. "I'd say that we will willingly and
cheerfully make the same mistakes again, because that is the way the
system is setup," he told me. "The system is not designed to correct
or to change in a fundamental way. Nothing that's happened, so far,
none of the actions taken by the Obama administration regarding the
financial crisis portends change."

History also
offers us telling voices, like this painful confession by an earlier
reformer, and Democratic President, Woodrow Wilson, who signed the Federal
Reserve Act in l913 in essence giving private interests control over
our Central Bank.

He later said
with chilling candor, mark these words, "I am a most unhappy man.
I have unwittingly ruined my country...the growth of the nation therefore
and all our activities are in the hands of a few men. We have come to
be one of the worst ruled, one of the most completely controlled and
dominated governments in the civilized world...."

Unfortunately,
Woodrow Wilson's dissection became our destiny. Today members of Congress
are struggling for full disclosure on how much the FED has spent in
its bailouts and who got its billions.

Woodrow's
truth goes marching on, its lesson ignored at our peril. What went around
then is still coming around now.