35W Bridge vs. Wall St. Collapse:
A Study in 2 Relief(?) Efforts
This August, the Twin Cities will observe the second anniversary of the 35W Bridge collapse. Summer, ’09 will also mark (approximately) the second anniversary of Wall Street’s housing-triggered melt-down.
So how have the two relief efforts been conducted? What are the results to date? Herewith is a comparison:
35W Bridge: Authorities immediately erect roadblocks and barricades, and route traffic away from the disaster area. Victims are evacuated to area hospitals for emergency treatment.
Wall Street: Authorities hurriedly direct hundreds of billions of taxpayers’ money to the epicenter of the disaster: a handful of heavily-leveraged, “too-big-to-fail” banks and financial institutions whose political clout effectively let them write their own rules.
Meanwhile, the disaster’s principal victims — the 3 million people (and counting) who have lost their homes to foreclosure — are essentially ignored. So are the disaster’s secondary victims: tens of millions of savers whose returns are decimated by near-zero interest rates designed to support the afflicted financial giants.
Runners-up candidates: investors with money in the stock market, especially retirees; the newly unemployed; and taxpayers — likely several generations of them — saddled with the clean-up bill, and the monster inflation it risks.
35W Bridge: A federal-state blue ribbon commission, headed by the National Transportation Safety Board (“NTSB”), immediately opens an investigation into the cause(s) of the bridge collapse. Within three months, a consensus emerges that a combination of original design flaws, poor maintenance, and excess weight on the bridge at the time of collapse were to blame.
Wall Street: No formal investigation to date.
35W Bridge: Within six days of the collapse, Congress earmarks emergency funds to build a replacement bridge. Rescue crews continue combing the debris for victims for three weeks, then demolition crews move in to clear the site.
Meanwhile, authorities solicit bids from contractors seeking to build the replacement bridge. A winning bid is selected within six weeks; “fast-track” construction begins a month later. Authorities establish a multi-million dollar fund to aid victims and survivors, and affected businesses.
Wall Street: When the initial bailout funds prove inadequate, the Federal Reserve and U.S. Treasury orchestrate repeat bailouts — and commit a multiple of the original funds — to the same beleaguered financial institutions.
A single entity, AIG, receives three infusions (so far) of taxpayer funds totaling $200 billion. Citigroup, Goldman Sachs, Fannie Mae, Freddie Mac, Bank of America, Merrill Lynch and numerous others receive multiple bailouts, federal guaranties, etc. totaling tens of billions apiece.
An unknown percentage of these funds go toward paying management “bonuses” at the aforementioned companies. For that matter, none of the recipient companies provide — or are required to provide — a detailed public accounting of how they’ve used bailout funds.
35W Bridge: The 35W replacement bridge is completed — under budget and ahead of schedule — in September, ’08, barely 13 months after the original bridge collapse. At 189 feet across, the new bridge is two-thirds wider, and carries two more lanes of traffic, than the original bridge. Total direct cost: approximately $250 million. Total indirect cost to the Twin Cities’ economy resulting from the bridge collapse: approximately $150 million.
Wall Street: None yet — the crisis is ongoing. Here’s where things stand currently:
Notwithstanding federal aid now totaling in the trillions, several of the nation’s biggest financial institutions are feared to be “zombie’s”: in business, but technically insolvent and unable to originate new loans.
The U.S. economy enters its 16th month of recession — the longest since WWII. Unemployment approaches 9%. Home mortgage delinquencies and defaults continue to set records, and stress spreads to commercial real estate loans, consumer installment debt, etc.
Total indirect cost (so far) of the Wall Street collapse to the U.S. and world economy: tens(?) of trillions.
All of which prompts the rather obvious thought: if you want to end the financial crisis . . . put the people who fixed the 35W bridge in charge. Really.
Instead of letting Wall Street fix Wall Street — which in practice feels a lot like letting Wall Street [your verb here] the rest of the country, it’s high time for the rest of the country to “fix” Wall Street.
Certainly, it’s qualified.