The government made some rather flimsy claims during the financial
crisis -- among them, that the bank bailout would help struggling
homeowners and that the big banks were fundamentally sound.
But, according to Rolling Stone's Matt Taibbi, the claims weren't just flimsy; they were outright lies.
"The lie was the bailout," Taibbi told HuffPost Live
on Thursday. "That was really part of the whole rescue effort, was
telling the American public that all of these companies were healthy
when in fact they weren't."
Days after Lehman Brothers collapsed in 2008, then-Treasury Secretary Hank Paulson
said that "the American people can remain confident in the soundness
and the resilience of our financial system." But even last year, four big U.S. banks, including Citigroup, failed the Federal Reserve's stress tests.
Looking back today, many experts claim that the recession would have
been worse had the country's biggest banks failed. A recent poll, for
example, found most top economists agree that the bank bailouts reduced the unemployment rate.
But if you ask Taibbi, he'll say such improvement may prove
temporary, especially since Wall Street only stayed intact because of
the government's implicit promise to bail out the industry again if
necessary. "They just threw a ton of money at Wall Street, papered over
the problems, and... waved a wand over it and said everything will be
all right," Taibbi said.
Taibbi has been hammering home the argument that the financial system
is still fundamentally broken. In a recent Rolling Stone article, Taibbi wrote
that the "only reason investors haven't run screaming from an obviously
corrupt financial marketplace is because the government has gone to
such extraordinary lengths to sell the narrative that the problems of
2008 have been fixed."
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