e3ff380346f86fb007130b06_pa3222c.jpg Paul Lachine

Austerity and the Modern Banker

Big banks represent the ultimate in concentrated economic power in today’s economies: their executives want to get all the upside while facing none of the true downside. But capitalism without the prospect of failure is not any kind of market economy.

WASHINGTON, DC – Santa Claus came early this year for four former executives of Washington Mutual (WaMu), a large US bank that failed in fall 2008. The Federal Deposit Insurance Corporation (FDIC) had brought a lawsuit against the four, actions that included taking huge financial risks while “knowing that the real estate market was in a ‘bubble.’” The FDIC sought to recover $900 million, but the executives have just settled for $64 million, almost all of which will be paid by their insurers; their out-of-pockets costs are estimated at just $400,000.