by Pam Martens and Russ Martens, Wall Street On Parade:

Back in 2014 New York Times columnist Paul Krugman embarked on a mission to defend President Obama’s reform of Wall Street’s biggest banks that had brought the country to the brink of financial collapse just six years earlier. In August of 2014 Krugman wrote that the Dodd-Frank financial reform legislation that Obama had signed into law in 2010 “is a success story.”

Krugman’s rubber stamp of Dodd-Frank came despite the fact that JPMorgan Chase, the country’s largest bank, had just two years earlier – long after the passage of Dodd-Frank – used hundreds of billions of dollars of its depositors’ money in its commercial bank, Chase, to make wild gambles in derivatives in London, losing at least $6.2 billion along the way. This so-called “London Whale” debacle correctly convinced millions of Americans that the only way to truly reform Wall Street was to remove the taxpayer-backstopped, insured deposits from the grasp of Wall Street by restoring the Glass-Steagall Act of 1933. That legislation barred commercial banks holding insured deposits from merging with their casino cousins – the investment banks and brokerage firms on Wall Street.

The Glass-Steagall legislation had kept America’s financial system safe for 66 years. After its repeal in 1999 under the Clinton administration, it took just nine years for Wall Street to blow up the U.S. economy in the greatest collapse since the 1929 Wall Street crash and ensuing Great Depression.

On December 15, 2014, Krugman was back on his soapbox after Citigroup used its lobbying muscle to effectively repeal a critical component of the Dodd-Frank legislation, with the result that trillions of dollars of dangerous derivatives were left on the books of the insured commercial banks which were now housed under the same roof as Wall Street’s high risk investment banks.

On December 15, 2014, Krugman wrote: “I’d argue that regulating insured banks is something of a sideshow, since the 2008 crisis was brought on mainly by uninsured institutions like Lehman Brothers and A.I.G.”

So many writers at the New York Times are repeating this false narrative that it’s beginning to sound like a scripted story line that has some invisible, but powerful, public relations firm behind it.

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