The current tsunami of revelations of misbehavior, if not outright criminality, by the banking industry in their pursuit of mortgages gone bad, is further evidence of how fundamentally corrupt and cynical this industry continues to be. On the front end of this global economic disaster the financial system engaged in misleading sales tactics using financial products that were baroque in their complexities. Aided by governments seduced by the siren songs of free market religion and floods of money to grease the ways, the industry expanded spreading its load of debt everywhere. Finally the whole Ponzi scheme collapsed under the weight of its own lust.
Now, in a further display that the people running these institutions have learned nothing, nor been disciplined by either market forces or governments, we are suffering through another round of their arrogance.
Time to call again for these institutions to be broken up. They are not serving the basic purpose of a banking system to supply credit. And, even after being bailed out at enormous expense, directly and indirectly to the general populace, they are again displaying utter disdain for the very laws and procedures that make it possible for the system of capitalism to function at all. Time to put some of these bank managers in jail for organizing and directing this massive fraud against the legal system and homeowners. Time to break them up to form a banking system that will both serve the needs of the economy for credit while not allowing any of them to be so large as to threaten the system as a whole.
But, who will do this? Obama’s administration seems strangely silent. But, given the continuing prevalence of Wall St. executives and their supporters in the Federal Reserve and academics in the administration this is not surprising. Similarly, the Congress, both houses, are still amazingly in thrall of the gods of the “free market” religion and money.
President Obama’s proposals to break up the “too large to fail” mega banks and otherwise reapply the Glass Steagall Act to the financial sector has predictably brought loud complaints that this is populist and anti-business. Even the rhetoric of the reporters and expert talking heads reflects a general bias that anything that we might do to prevent a re-occurrence of last year’s global financial meltdown is anti-business.
How Is It Anti-Business To…. or
Is the New Rule of Banking, “Privatize profits, but socialize losses (risk)”?
As a business person and a citizen I have to point out that having a sector of our economy that caused so much damage to the rest of the economy and citizens continue to conduct themselves in a fashion that is likely to cause a repeat breakdown is not a good state of affairs. How is it anti-business to want to control the gambling addictions of the financial services sector? How is it anti-business to prevent banks and other financial firms to become so large that they can place another call on the the nation’s treasury to bail them out because they indulge another round of gambling with other people’s money through dangerous leveraging? How is it anti-business to want the banking system to perform their primary function that is necessary to make the economy run, that is to take in deposits and make loans? Or, to capture this in a current diddy, we have an economy where for the financial services sector they follow this unique rule of crony capitalism, “Privatize profits, but socialize losses (risk)”.