It used to be that the basic purpose of banks was to play a major role in the economy by investing in new businesses. Today, only about 15 percent of the money invested by the huge guys does that kind of investing. It's the little guys that invest in small business; they have only 13 percent of all banking assets, but do nearly half of all lending to small businesses.
What do the huge guys sped most of their time and money doing? They make deals. They buy and sell stocks, bonds, real estate and other assets that mainly enriches the 20 percent of the population that owns 80 percent of that asset base. It's interesting, although sickening, that the biggest banks provide only 4 percent of all jobs in the country, yet take about a quarter of the corporate profit pie.
As Rana Foroohar writes in the NY Times, "Finance has become the tail that wags the dog. Until we start talking about how to create a financial system that really serves society, rather than just trying to stay ahead of the misdeeds of one that doesn’t, we’ll struggle in vain to bridge the gap between Wall Street and Main Street."
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