The Wall Street bailout did avert catastrophe, but it did NOT solve the problem.

From Robert Reich

I keep hearing Wall Street executives say the Wall Street bailout was a success because the banks remained solvent and paid the Treasury back all the money they received. (Even Hillary Clinton has defended her vote in favor of the Wall Street bailout by saying the banks “paid it back.”)

While the big banks did pay back the Treasury, that hardly makes the bailout – or the recklessness that led to the bailout -- okay. We’re still living with at least three unfortunate legacies:

1. The bailout continues to give the giant banks a competitive advantage over smaller banks because investors know the big ones are too big to fail – which explains why the 5 biggest now hold 42% of all banking assets (up from 25% before the bailout), thereby setting us up for an even bigger “too-big-to-fail” next time.
2. Millions of Americans are still living with the legacy of the banks’ recklessness. Millions of boomers can’t retire because their homes and savings are worth less than they assumed they’d be worth – because of the Great Recession brought on by Wall Street’s recklessness.
3. In total, 3.2 million homeowners nationally still owe more on their mortgages than their homes are currently worth, according to a new count by Black Knight Financial Services -- again, due to Wall Street's recklessness. Over half of the nation’s underwater properties are in the cheapest 20 percent of the housing market – the highest share on record. These are homes that need to be on the market in order for young renters to become homeowners.

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