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Issue #14 - Wall Street abuses

The response to the threatened “meltdown” of the U.S. credit industry in 2008 has been underwhelming. Wall Street firms have made substantial campaign contributions to the federal officials who could reign in their power. The relationship between Wall Street and the federal government is essentially corrupt.

What needs to be done? Maybe we should reimpose Glass-Steagall and again separate banking from investment services? Maybe we should outlaw derivatives or disallow enforcement of such contracts in U.S. courts? Maybe we should stiffen the penalties for investment firms that deceive their investors? Maybe we should impose penalties on the rating firms that gave high ratings to financial pieces of junk. Maybe we should impose a transaction tax on currency exchanges? Maybe hedge-fund managers should pay federal income tax on their earnings?

Institutional investors have too much power in the corporate world. The fund manager’s main concern is to maximize quarterly profits; and this imperative is transmitted to corporate CEOs. We complain about these heartless CEOs but maybe corporate management cannot treat people humanely even if it wanted to.

To correct the situation, the articles of incorporation of major corporations should be amended to disallow voting by institutional investors. Only individuals who own stock should be allowed to vote at the annual meetings. We need real people making decisions, not representatives of money-making systems.

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