Are You In The 1%?

Why Financial Services Love The Recovery


Somewhere people are smiling. The Recovery from The Great Recession has been remarkably good, if not widely re-distributed. An IRS study shows 95% of the growth between 2009-12 has gone to the top 1% of earners in America. The rest went to the remaining 99%, a kind of let them eat what’s left of the cake moment.


So were you smiling this past Friday the 13th? It was the 5th anniversary of the collapse of Lehman Brothers, which ushered in The Great Recession. Plenty were smiling in the financial services industry. They once worried that tough regulations would follow from revelations about how they how they do business. Stuff like legalized money laundering, phony bond ratings, slipping bad mortgages into packages of good mortgages, and dangerous derivatives were being fully disclosed.


But with each passing day, the industry breathes easier. The danger of significant regulation about mixing banking with investing is receding. A few tough regulations got through—but do not go into effect until 2019. Investments in lobbying efforts are paying off. Smiles all around.


But don’t take my word for any of the above, check my sources:


1% got 95%: Christine DiGangi, The Great Recession Didn’t Derail the Top 1%,” Yahoo Finance, TALKING NUMBERS, September 19, 2013. Based on recent September IRS report.


Regulations still needed: Gretchen Morgenstern’s “After a Financial Flood, Pipes Are Still Broken” in The New York Times, September 15, 2013.


How and why excessive risks are still in play: The Bankers’ New Clothes, new book by Anat Admati and Martin Hellwig, (Princeton University Press).




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