13 Bankers: The Wall Street Takeover and the Next Financial Meltdown — CHAPTER 4: “GREED IS GOOD”

1. 1. Wall Street spent billions on campaign contributions and lobbying to capture financial regulators, leading to deregulation that fueled the 2008 crisis.
2. 2. Alan Greenspan's free-market ideology led him to oppose regulation of derivatives, a stance he later admitted was flawed.
3. 3. Brooksley Born's 1998 warning about unregulated derivatives was dismissed by Greenspan, Rubin, and Summers, who blocked her proposal for CFTC oversight.
4. 4. Raghuram Rajan's 2005 Jackson Hole paper warned that financial innovation increased systemic risk, but he was dismissed by Greenspan and others.
5. 5. The financial sector's share of U.S. corporate profits grew from 10% in the 1980s to 40% by 2007, while its wages far exceeded those in other industries.
6. 6. The repeal of Glass-Steagall and the Commodity Futures Modernization Act of 2000 allowed banks to merge with insurers and trade derivatives without oversight.
7. 7. Robert Rubin, as Treasury Secretary, championed deregulation and later earned over $100 million from Citigroup, the bank that benefited most from those policies.
8. 8. The Office of Thrift Supervision (OTS) was a 'captured' regulator that allowed Countrywide and other lenders to issue risky mortgages with minimal oversight.
9. 9. Homeownership subsidies, including the mortgage interest deduction and Fannie Mae/Freddie Mac goals, inflated housing demand and prices, contributing to the bubble.
10. 10. Warren Buffett warned in 2002 that derivatives were 'financial weapons of mass destruction,' but his warning was ignored by regulators and bankers.
11. 11. The financial industry's 'greed is good' culture, epitomized by Gordon Gekko, attracted top talent from elite universities, diverting them from productive sectors.
12. 12. Andrew Cuomo's 2009 report revealed that Wall Street bonuses in 2008 were nearly $18 billion, despite banks receiving massive bailouts.