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15 Oct, 2009 06:32

Wall Street puts profit over people

“The main driving force within any Wall Street company is the bonus and the profit. The bonus comes first and the profit later,” scorns Nomi Prins, former banker, author of ‘It Takes A Pillage’.

“It is not always even about the money that this bonus represents, it is about this idea of the game and the competition of various people going up the chain of command trying to achieve more power and better stature in the firm… The number of the bonus comes after, it’s like a stamp of approval,” says Prins.

Speaking about the US financial system, Prins notes that it is based on leverage and borrowing and that “they basically created this whole upside-down pyramid of debt to continue to push that debt throughout the world, selling it everywhere around the world to keep the process going.”

“In the end, when there is a problem at the bottom of the pyramid, with any of the sub-prime loans that ultimately catalyzed the crisis – everything else collapsed,” Prins says.

As for the start of economic recovery in the US, Nomi Prins thinks the “jobless recovery” gives false hope, because “the banks recovered, but largely because of that money that has been given to them by the government.”

Prins says that taxpayers gave up to $14 trillion for subsidizing the banking system and bailing out Wall Street.

“There is a very tight relationship between Wall Street and Washington. First and foremost, Wall Street and the banking industry in general is the largest political donor to both parties in the US.”

Regarding the recent calls to audit the Federal Reserve of the US, Nomi Prins put it simply: “The Fed has not been accountable for anything that it has done during this crisis… and it is important to have some accountability.”

“What should have been done, instead of bailing out some of the banks, is to actually bail out consumer loans and mortgages at the individual level. That would have actually stopped this pyramid from spiraling out of control and toppling over. That would also help people stay in their homes and would help the general economy from deteriorating further,” she believes.

She insists that the Obama administration lacks reality if it chooses to congratulate Ben Bernanke for “heading us out of this recession”, instead of auditing the Fed, and dissecting the biggest banks instead of merging them.

“There is nothing coming on the horizon that will actually jump-start a major recovery,” she says. “There is still a tremendous crate of problems and tremendous unemployment and it will take a while to shake out.”