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If Government Won't Break Up the Giant Banks, Let's Do It Ourselves
As everyone knows, the economy cannot permanently recover
and truly stabilize until the giant banks are broken up. The top
independent experts agree that the "too big to fails" are a drain on the economy and put the entire system at risk.
The giant banks aren't lending much to the people who need it. Fortune pointed out
in February that smaller banks are stepping in to fill the lending void
left by the giant banks' current hesitancy to make loans. Indeed, the
article points out that the only reason that smaller banks haven't been
able to expand and thrive is that the too-big-to-fails have decreased
competition.
Federal Reserve Governor Daniel K. Tarullo said in June:
The
importance of traditional financial intermediation services, and hence
of the smaller banks that typically specialize in providing those
services, tends to increase during times of financial stress. Indeed,
the crisis has highlighted the important continuing role of community
banks...For example, while the number of credit unions has
declined by 42 percent since 1989, credit union deposits have more than
quadrupled, and credit unions have increased their share of national
deposits from 4.7 percent to 8.5 percent. In addition, some credit
unions have shifted from the traditional membership based on a common
interest to membership that encompasses anyone who lives or works
within one or more local banking markets. In the last few years, some
credit unions have also moved beyond their traditional focus on
consumer services to provide services to small businesses, increasing
the extent to which they compete with community banks.
But
the government - instead of breaking up the giant banks who aren't
lending to the people who need loans - is trying to prop them up using permanent bailouts. See this, this, this and this.
And
- instead of separating different business activities (such as
depository banking functions and speculative investments) - the
government is actually allowing companies to get involved in a wider variety of business activities.
For example, economist Simon Johnson points out
that Goldman Sachs recently converted to a "financial holding company",
allowing Goldman to borrow money from the Fed at essentially no cost,
and then invest it in any thing it wants. Johnson gives an example:
Goldman bought a large share of the stock of a Chinese automaker. If
the investment succeeds, Goldman will reap the profits. If it fails,
the American taxpayers are on the hook.
And Goldman is apparently
profiting from its combination of roles as both an investment brokerage
house for other investors and as a large speculative investor itself.
Specifically, Goldman apparently delays trades it makes for its clients
long enough to use that inside knowledge of who is buying or selling what to make speculative investments for itself, oftentimes taking the exact opposite position for itself and its largest clients as the position it is recommending to its Mom and Pop investor clients.
Why are politicians letting this happen?
Could it be because the giant banks have bought and paid for Congress and the White House? See this, this and this.
We'll Have to Do It Ourselves
If the government isn't doing anything to fix this dangerous situation, we'll have to do it ourselves.
As
a start, if Congress won't reimplement the Glass-Steagall Act (the
Depression-era law which previously separated depository functions from
speculative investing), let's manually separate these two types of businesses.
How?
Simple: let's pull our money out of the too big to fails and put it into small community banks and credit unions.
The giant banks may still make bucketloads of cash on their casino style speculative gambling
(for now, at least), but after we've moved our deposits to more
responsible, smaller banks which don't gamble as much, then we will
have manually separated depository banking functions from the giant
banks' speculative investing.
Get it?
The government isn't
doing the job and fixing the problems which have led to the economic
crisis ... so we'll have to do it ourselves.
Note:
Some people say that moving our money out of the too big to fails will
just mean that the government will give them more bailouts. But this
misses 3 points:
- If the deposits
are withdrawn, the giant banks will only be speculative gamblers, and
at least our deposits will be safe and won't be mixed with their toxic
assets - The
giant banks and their enablers in Washington will look even worse if
they are bailing out companies that are solely and obviously gambling
casinos - The head of the International Monetary Fund, Dominique Strauss-Kahn, has warned:
The
public will not bail out the financial services sector for a second
time if another global crisis blows up in four or five years time, the
managing-director of the International Monetary Fund warned this
morning.Dominique Strauss-Kahn told the CBI annual conference of business leaders that another
huge call on public finances by the financial services sector would not
be tolerated by the “man in the street” and could even threaten
democracy."Most
advanced economies will not accept any more [bailouts]...The political
reaction will be very strong, putting some democracies at risk," he told delegates.
In other words, the government - fearing revolt - might be more hesitant to give another round of bailouts than people assume.
I'm
not looking at this with rose-colored glasses, and I realize that the
TBTFs will act like the kid who killed his parents and then cries for
pity since he's an orphan.
But I think that if the government is
not doing its job, we should do it ourselves, and that a focused
gesture of taking things into our own hands can only help.
- advertisements -
I really don't think so. Madoff didn't give a damn right up till the night his ponzi blew up, he just kept enjoying the fruit of his scam. So will these guys. You think they'll feel a sense of shame or social stigma when they can live like kings compared to the rest of us? Their social circles are full of other elite thieves & shysters just like themselves, and none of them could care any less what we think.
It's the power & access to people & things which that kind of money brings with it that gives these assholes a woody or wet panties. The only thing that will work is prosecution and jail time. If that fails, then perhaps the guillotine?
I think the word you are looking for is "SHUNNING". Yes, this is fair......
If enough people do it, they will notice!
Okay I have to ask, what's to stop them? Sure lets imagine that every American pulled their money out of the giant banks and into smaller local institutions, then what? These companies are to big to fail, they will just get money right from the Fed if they lose their depositors. Hell the only thing that will happen is the comedy of watching the Fed Reserve and Fed Gov tap-dance to get the depositors their money and keep the TBTF running. Might be a blessing for the banks, after all then they can close all their retail service and focus on getting free money from the Fed Reserve and loaning it to the treasury at interest. Besides GS to my knowledge doesn't even have depositors, or report as a proper commercial bank, they did it to get the money and no one is holding them to the rules.
I'm not trying to poo-poo your idea, I just don't see how it can work. I think it would be funny as hell to watch however, and I'm banking with a local credit union already :)
"...whats to stop them?"
Unemployment? A heavily armed, desperate, pissed-off population with nothing to lose?
Shooting Bankers, NOW THAT actually WOULD STOP them.
Move along, nothing to see here. rubberneckers will be fined... Why the outrage? this is the same thing on wall street thats always happened just on a much bigger scale. They're a legal bookie who can do whatever they want because no one can stop them. The sad thing is when the populace gets angry and eventually lead to an incident, the big wigs will be safe, meanwhile the populists will kill a poor temp making 10/hr who just wanted to work there to pay his student loans off.
Simply people refusing to do business with them.
And simply droves of citizens calling their representatives and senators on daily basis and preempting any future bailouts or access to taxpayer funds.
If Geithner says today that the government does not guarantee their loan books, these banks are gone tomorrow, Goldman included. That is reality.
The government allows them to cook their books, so that their bankrupt state is less apparent. Just like Japan did. However, instead of hunkering down as the banks did during Volcker's reign, these banks pay out record bonuses.
Hello, America, anybody there? Anybody at home? Anybody willing to step up?
Everybody can do something. Pick a time of the day and give your senator a call. Every day. And move your money to a serious bank, away from the TBTF goofballs.
Treatment for the 6 biggest banks:
No more checking and savings accounts. No more credit cards there. No more loans from them. No more brokerage accounts with them. No more CDs. No more of anything.
Sorry, we are moving our banking business away from businesses and people who make a farce out of our capitalistic system.
To thank us for being complacent about their dishonest business practices, they take our money and then go to the Treasury and take our money again. Only to fund their efforts to totally corrupt our political system to get even more money the dishonest way (and transferring it to themselves via "bonuses") by paying lobbyists who act against us, but who are ironically paid with our money.
(Don't get me wrong, I am for bonuses, but they have to be EARNED, by being good at doing something useful for someone else who pays for it VOLUNTARILY.)
Especially the crooks at Bank of America should be first.
They charge $35 for every (!) overdraft item. If you cry loud, they may reimburse one, but not more.
Let's say you use your debit card four times a day, for coffee in the morning, lunch etc. You are accidentally overdrawn for whatever reason for a two-day period. You should be charged interest for the amount and time you are overdrawn. If it's an accident, the two days should cost you less than $1 depending on the interest rate. (If it's a rate below 10% per year, this should cost you a few cents.)
That's how it used to be in a sane banking environment. But not anymore, now we are in the age of graft and usury, and it is exists only thanks to your tax dollars and your complacency as to what happens with it. A credit union or local bank would never charge you such fantasy fees, they would be too ashamed of it in your local community. Maybe they would never even think about such an absurd scheme.
So here is BOA's equation: 2 x 4 x $35 = $280
Dring! Dring! Bank of America has just stolen $280 from you. They just take it from your account without your consent. (... for your convenience)
Heed Warren Buffett's advice: never do business with dishonest people.
Here is the solution: http://moveyourmoney.info/
I will like to go a step further and ask the people to transfer their credit cards also.
The simple answer is that the banks need a base cash from which their leverage is determined. That cash comes from deposits.
if the deposits are let's just say (0) zero, the only money that they will have is what they borrow from the FED at 0%. They put this money into treasuries for let's just say 3.5%. Why lend money out and take a risk.
That is a de facto way for the government to give them operating cash (Illegal).
Once the FED realizes that the depository cash base is erroding, they have a very serious decision to make. Loan them money ad infinitum or abandon them. The answer will be the latter.