One of the biggest reasons that protesters are willing to risk their safety in places like Zuccotti Park and UC Davis is because they are fed up with government corruption at the highest levels. To many, it seems like government policy is rigged to only help out the rich and powerful, the 1% of American society. A recent example of this was the report that bailed-out banks may have made $13 billion from Fed loans.
According to new reports, though, another bigwig ostensibly in charge of steering the US economy used his insider information and power to help his old business buddies. Former Secretary of the Treasury Hank Paulson (who famously demanded a blank check from Congress to bail out banks) held several meetings in the summer of 2008 with the heads of funds that he was chummy with to give them insider notes about where the economy was headed — and what US policy would be.
According to the Bloomberg report, Paulson held a press conference at which he maintained that Fannie Mae and Freddie Mac were solvent and there was nothing to be worried about. Immediately afterwards, he met with stock managers he’d known from his time at Goldman Sachs to tell them the exact opposite — to bet against Fannie and Freddie. This kind of crony capitalism in unconscionable: a high ranking official, instead of looking out for all Americans, held a secret meeting where he gave stock tips to his pals.
This revelation fits exactly into what Occupy Wall Street protestors have been pointing out for months about inequality of wealth and power in America. Reuters finance blogger Felix Salmon perfectly sums up the scandal, “Paulson was giving inside tips to Wall Street in general, and to Goldman types in particular: exactly the kind of behavior that ‘Government Sachs’ conspiracy theorists have been speculating about for years. Turns out, they were right.”
Unfortunately, crony capitalism is not illegal… for now. If the Occupy Wall Street movement continues to resonate with people and politicians around the world, though, there’s no telling what kind of change we can achieve.
Photo credit: allaboutgeorge's Flickr stream.