How the Oligarchs Took America: Part 3 of 4
Part 3:Tear Down This Law
Where rewriting the tax code proved too politically difficult, demolishing regulations worked almost as well. This has been especially true in the world of finance. There, a legacy of deregulation transformed banking from a relatively staid industry into a casino culture , ushering in an era of eye-popping profits, lavish bonuses , and the "financialization"  of the American economy.
April 6, 1998: it's a useful starting point in the story of financial deregulation. On that day, two well-known Wall Street denizens, Citicorp and Travelers Group, agreed to a historic $140 billion merger. The deal required much lobbying, but eventually the chiefs of these banks won an exemption from the Glass-Steagall Act, the New Deal-era law walling off commercial banks from riskier investment houses. The resulting institution, dubbed Citigroup, would be the largest supermarket bank in history, a marriage of teller windows and trading desks, customer banking and high-stakes investing—all suddenly under one deregulated roof. It would prove an explosive, if not disastrous, mix.
The merger stirred visions of a future in which the
In 1999, President Clinton signed the Gramm-Leach-Bliley Act, a bevy of deregulatory measures that obliterated Glass-Steagall. In December of the following year, Gramm quietly snuck  the 262-page Commodity Futures Modernization Act into a massive $384-billion spending bill. Gramm's bill blocked regulators like the Securities and Exchange Commission (SEC) from cracking down on the shadowy "over-the-counter derivatives" market, home to billions of dollars of opaque financial instruments that would, years later, nearly demolish the American economy.
As presidents, both Bill Clinton and George W. Bush wrapped their arms around financial deregulation. As a result, in a binge of financial gluttony, Wall Street grew fat in ways never previously seen. Between 1929, the year the Great Depression began, and 1988, Wall Street's profits averaged 1.2% of the nation's gross domestic product; in 2005, that figure peaked at 3.3% as industry bonuses soared  ever-higher. In 2009, bad times for most Americans, bonuses hit  $20 billion. So much wealth in so few hands. Nothing explains the rise of the new American oligarchy more starkly.
Of course, it's not just what politicians did that helped create today's oligarchy, but what they failed to do. A classic example: in the 1990s, the Financial Accounting Standards Board (FASB), a private American accounting regulator, set its sights on a loophole big enough to drive a financial Mack truck through. Until then, stock options included in executives' skyrocketing pay packages—potentially worth tens of millions of dollars when exercised—were valued at zero when issued. That's right: zero, zilch, nada. When FASB and the SEC tried to close the loophole, however, big business leapt to its defense. An avalanche of money went into the pockets of an army of