Fannie Mae headquarters/Credit: Flickr/FutureAtlas
It’s been a year since both Freddie Mac and Fannie Mae were taken over by the federal government (here’s a look at why), followed by the fall of Lehman Brothers. While the recession may have deeper roots, the banking collapse got the media looking at how we got here, and now – how to get out. Planet Money’s first podcast, a year ago this week, looks at how investments in China may have contributed to banking insecurity.
Fast forwarding to this week, NPR’s Tell Me More spoke with Wall Street experts Marcus Mabry of the New York Times.
“You already had a recession, and recessions happen. That’s a normal part of life in a capitalistic system… The financial crisis took what was already a recession that was well underway and just amplified its effects,” Mabry said on the program. “I mean, the fear here – and we saw this with the recovery under George W. Bush. We saw jobless recovery for the majority of that recovery, which meant that the economy was growing, but companies were exacting so much from their current workers that they actually -as far as work and productivity – that they were actually not hiring new workers….Ironically, those banks that we talked about, the ones that survived the economic cataclysm of a year ago, are actually many of them wealthier and richer – Goldman Sachs comes to mind – than ever.”
Has the stimulus package had an effect yet on helping average Americans survive the crisis that started with the banking system? On the 200th day since the Recovery Act was passed, Vice President Joe Biden argued that the bill was an overall plan, not a single “silver bullet” for bringing back jobs and helping those in need. ProPublica’s Shovelwatch blog fact-checked some of Biden’s claims:
“According to Biden, one of the main goals of the Recovery Act was to “bring relief to those hardest hit by the recession.” But as ProPublica reported last month, a county-by-county breakdown of contracts, grants and loans showed no relationship between where the stimulus money is going and either unemployment or poverty.”
Recovery.gov has a new chart plotting tax relief so far from the Recovery Act
But while most economists agree that the worst is over, even many major banks aren’t out of the woods yet. NewsHour reported just this week that more banks may be on the road to failure, having not recovered from bad loans and the mortgage crisis.