America: The Bank-Owned State
The Obama administration said no to downsizing and re-structuring the banks. They balked at firing incompetent CEOs. Under attack from Republicans and Wall Street they held back on controlling financial institutions that, post bail-out, are in reality 'State-Owned Banks'.
As a result, the US administration has itself been hijacked, and America is now, effectively, a Bank-Owned State. Democracy has been usurped by what Abraham Lincoln called 'the Money Power'.
Why would bankers stage a hold-up of the administration you ask? Because, to echo the words of an old bank robber: "That's where the money is".
As millions in the real economy suffer bankruptcy or unemployment, bank profits and bank share prices have soared.
Bankers are barely able to conceal their glee. Their triumphalism is justified. Thanks to the 2008 heist, $700 billion of 'Troubled Asset Relief Funds' (TARP) was siphoned out of taxpayers' pockets and into bank coffers. The heist was pulled off in classic 'Shock and Awe' style, with virtually no questions asked.
The Fed bowed to the threat the bankers posed to us all. Chairman Ben lowered borrowing costs to zero, and meekly took the banks' toxic assets onto the Fed's books. The bullies behind the heist weeded out the competition, and the government allowed big banks to become more dominant in lucrative markets.
Goldman Sachs took Secretary Geithner hostage, and drained down $12.9 billion of AIG bailout funds; Merrill Lynch tapped $6.8 billion, the Bank of America $5.2 billion, Citigroup $2.3 billion and Wachovia $1.5 billion. Regulators (The Financial Accounting Standards Board) surrendered, ignored the lack of provision for loan defaults, and then weakly agreed that banks could inflate the value of their assets.
In the meantime, blindfolded Treasury Secretary Tim Geithner promised to hand over $500 bn -- $1 trillion in the form of a 'Public-Private Investment Program.' This would create a new gambling casino for hedge-fund outlaws -- one in which the hedge funds win, and the FDIC loses. To pay for this effective give-away Geithner had to raid (tax) small and medium healthy banks to subsidize the gambling of their larger, more reckless -- and too-big-to-fail -- competition.
While the banking outlaws were roaming around administration buildings, the US Treasury Secretary timidly suggested they test for fitness by jumping hurdles. They weren't putting up with that, and so, it is rumored, Geithner has backed down, and set the bar very low. We are still waiting to know more about the stress tests, but it seems the Treasury Secretary has been silenced. (See Elizabeth Warren here)
Citizens went along with the bankers as they plotted their raid. There was little outcry when the Depository Institutions Deregulation and Monetary Control Act of 1980 was repealed, or when the Glass-Steagall Act -- which prohibited a bank holding company from owning other financial companies -- was repealed in 1999 by the Gramm-Leach-Bliley Act. Voters were asleep at the wheel.
So, it's no wonder that bankers are triumphant. No wonder the San Francisco Chronicle has crowned John Stumf -- CEO of Wells Fargo -- CEO of the year. Thanks to the success of the heist, bankers were able to announce remarkable profits for what was -- in the real economy in which you and I live -- a terrible quarter.
So what lies ahead for the bank-owned state?
Well, my view is that the triumphalism of the bankers is a little overdone, and may not last. Why? Because they can't get away with cooking the books forever. As with Enron, some day the sheriff will walk through the door.
Second, bankers do not deal in the real economy. You and I do that, by working, caring for others and producing goods and services. They need us to keep that up, if they are to keep their grip on government, and siphon off our hard-earned surplus. But by raiding government coffers and squeezing the economy dry, the bankers may be cutting the ground that is the real economy from underneath them.
Third, the bank outlaws have failed to spot a big cloud on the horizon -- Climate Change -- and are not prepared for the shocks that extreme weather events will cause to their business and the economy as a whole.
So we, the people, should face reality, end our collusion with the finance sector, recognize our power, and begin to organize -- politically.
To succeed there must be an alliance between Labor, Industry (i.e. all those engaged in productive activity by hand or brain) and the Greens -- to challenge the bankers.
For too long Labor and Industry have bickered, over wages and conditions -- allowing the bankers to win on the big issues -- control over tax revenue, regulation and government. In other words, while Labor and Industry were bickering -- Finance usurped American democracy.
For too long, Labor, Industry and the Greens have been talking over each other's heads -- or at each other -- from their deeply entrenched positions. Now they must settle differences, unite and organise -- to tackle the really big issues.
It means uniting -- as communities -- to defend families and businesses from foreclosures. It means standing together and challenging the bankers -- holding demonstrations outside banks, educating ourselves and our communities about what has happened.
It means holding elected representatives to account for their record on this issue; and throwing them out if they collude with the outlaws.
And it also means changes to our lifestyles -- less borrowing, less dependence on the banks, and less consumption, to make the world more sustainable -- and to remove the power of money over the way we live.
If Americans don't organise politically to transform the bank-owned state to make it accountable to the people -- then God help American democracy. But if Americans do once again organize to defend hard-won democratic gains, then in the words of Abraham Lincoln "Money will cease to be master and become servant of humanity. Democracy will rise superior to the money power."
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The banks may own the state now, and if we don't slap some regulations on them, and fast, then they may own the state indefinitely. The good news: there are good ideas out there. And my favorite, so far, is the idea of a financial products safety commission (http://hbr.harvardbusiness.org/web/2009/hbr-list/consumer-safety-for-consumer-credit). This is a way for the government to stop pandering to the banks, and start protecting consumers — just like we did in the '70s, when we stopped pandering to industry and started protected consumers with the creation of the consumer products safety commission.
$3trillion (the money being stolen by the banks with help from Geitner/Summers/Obama/Paulson) employs every unemployed American for the next 3 years AND provides healthcare to every uninsured AND fixes all our schools.
Are there any lawyers reading this great post ? Can we roadblock through the legal system?
Is any politician near you going to be seeking election? Tell him/her to take tangible action against this robbery before you will vote for him/her. Public displays of anger at the banks will not get your vote. They must DO something to stop the theft. This is not a republican/democratic issue. California has some elections soon, so this is an opportunity. Do you feel outraged? THEN, DO SOMETHING TO STOP THIS. WE CAN AND WILL STOP THIS.
Collect actionable ideas ... I see lots of good ones already. If you have some good actionable ideas, do your bit and post.
Tell your congressman that the $3 trillion that Obama/Geitner/Summers/Paulson/Bush are stealing from us (through PPIP) and giving to the big 5 banks can employ 20 million people for 3 years!!!! Kill their business by taking it to the regional banks and credit unions. Organize/support rallies. We can and will stop the theft. I support the presidency, voted for Obama and know that he Obama administration is doing everything for the banks and very very little for ordinary Americans. This is not a Democratic vs. Republican issue. Politicians from both parties are helping the banks behind closed doors while publicly faking anger at wall st.
Ann,
Once again, I MUST start out asking.
When the labor-green-industrialists get together, what do they propose as a means of controlling the money power?
I really appreciate your prescient observations - to a point.
That point is - what the hell do we do now?
I again criticize your observations for falling short of that earlier labor-farmer-populist economic democracy coalition known as the Greenback Party.
Why are you not coming out and identifying the way forward?
Why do you deign to propose the New Economics Foundation's position on Creating New Money?
We don't need more information on how stupid Geithner, Summers, Rubin and Obama are and how they are ripping off the American people.
We already know that.
We need alternatives.
Like the Greenback Party.
Like the Greenback-Labor party.
Like the revolutionary Colonists who DEMANDED a right to their own money system, or else we go to war !
Why are you and all the pther progressive writers afraid to confront that MONEY POWER that Lincoln and his cohorts were not afraid to confront in the name of national sovereignty and economic democracy? They didn't just complain in an informed manner. They acted.
Why, Ann?
When, Ann?
How, Ann?
Who, Ann?
If not you?
If not now?
If not the Treasury-system of money creation?
If not Greenbacks?
respectfully.
I feel your pain Joe. I too am scanning the horizon for leadership. I don't know where it will come from but I do know this. Only Labor has the mussel to end corporate rule. I'm not talking about unionism. By "Labor" I mean the entire American working class. The way forward, when it is found, will rely on the power of solidarity.
In the 40s, we had a war against Fascism, we defeated it. We can do it again, just say the word.
Thanks.
What should I fax to Congressmen?
A few thousand at the bottom costs millions at the top.
1. Someone misses a few $1000 mortgage payments.
2. This puts his $160,000 mortgage in default. His mortgage is part of a pool, a CDO. A few defaults trigger the "default event" for the CDO.
3. The "default event" triggers massive payments from the insurance, the CDS, covering the pool. Some of the recipients are parties who have money invested in the pool. Others have no investment in the pool and just bought CDS insurance as a wager. (derivatives)
The problems in the banking sector are like an inverted pyramid in terms of money and time.
We could provide aid at the small end.
We could decouple the default events (moratorium).
The fact that our financial saviors are not dealing with the problem efficiently but instead are funding their buddies at the top implies that the system is corrupt.
Plans for the Issuing of a Global Currency
http://www.globalresearch.ca/index.php?context=va&aid=13239
In Tragedy and Hope: A History of the World in Our Time (1966), Dr. Carroll Quigley revealed the key role played in global finance by the BIS behind the scenes. Dr. Quigley was Professor of History at Georgetown University, where he was President Bill Clinton"s mentor. He was also an insider, groomed by the powerful clique he called "the international bankers."
Quigley wrote of this international banking network:
"[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world"s central banks which were themselves private corporations."
The key to their success, said Quigley, was that the international bankers would control and manipulate the money system of a nation while letting it appear to be controlled by the government.
Great article. Spot on in my view.
I have watched the response of the governments to the crisis and wondered how on earth the banks managed to swing it. It is so loaded in their favour at the expenses of everyone living in the real world. Taking our money and filling their coffers. It makes me so mad. It makes me even madder that so many people think it is ok and can't see the issue, so thank the Lord for Ann
One thing we can do immediately is stop doing business with the big banks. Especially with credit cards. They need us more than we need them.
Bank locally.
Switch your banking to a local credit union.
In the article, Ann, you seem to consider Bernanke and Geithner to be captives of the banking industry instead of what they really are, which is members of the same club.
See excerpts below:
*CHAIRMAN BEN . . . MEEKLY took the banks' toxic assets onto the
Fed's books.
*Goldman Sachs TOOK SECRETARY GEITHNER HOSTAGE . . . .
*In the meantime, BLINDFOLDED TREASURY SECRETARY TIM GEITHNER promised . . .
*US TREASURY SECRETARY TIMIDLY SUGGESTED they test for fitness by jumping hurdles.
*We are still waiting to know more about the stress tests, but IT SEEMS THE TREASURY SECRETARY HAS BEEN SILENCED
W.J. Wait
Hey you! Stop that talk!
Being easily manipulated is one of Geithner's strong points!
To everyone who claims that Obama is not a Socialist, have you considered that step number 5 in Karl Marks Communist Manifesto is the Nationalization of banks?
10 Conditions For Transition To Communism
1. Abolition of property in land and application of all rents of land to public purposes.
2. A heavy progressive or graduated income tax.
3. Abolition of all right of inheritance.
4. Confiscation of the property of all emigrants and rebels.
5. Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.
6. Centralisation of the means of communication and transport in the hands of the State.
7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.
8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.
9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equal distribution of the population over the country.
10. Free education for all children in public schools. Abolition of children's factory labour in its present form. Combination of education with industrial production, &c., &c.[7]
According to the Communist Manifesto, all these were prior conditions for a transition from capitalism to communism, but Marx and Engels later expressed a desire to modernize this passage.[8]
Not sure if this post is for or against. Also not sure that any rational argument would work, so... To begin with, there is a difference between private enterprise and capitalism. Capitalism is about finance, supply-side economics which is monetarism. The other side, the demand side, is manufacturers, merchants, and labor. Who according to monetarism don't count. Which is of course the way it should be. What about the other points? Like a graduated income tax? I guess working people should bear most of the load like we do in sales tax states. To relieve our betters of their burdens. And worst of all: free education in public schools and the abolition of child labor.! No doubt that teaching the little blighters to read causes them to question the social order, act disrespectfully to their masters, and (gasp!) vote! And form unions! Get them back in the factories where they belong. Labor costs will come way down. At long last, we can return to the happy days of the 19th century.
"There will be no more coal burned in this office today, is that quite clear, Mr. Cratchit?"
See here Watson. I am a socialist. If Obama were a socialist (I wish) I would know it. Obama is not a socialist.
Where would Jesus bank?
Remember: "Jesus Saves, but Moses Invests!"
In order to break the banks stranglehold over our government, we need to change the Congressional terms, establish strict rules and regulations on lobbying, and change the election process to eliminate the need for campaign financing.
As long as 400 of our representatives are constantly running for re-election due to two-year terms, their attention will always be on posturing for the next election, and on securing campaign financing. As a result, our Representatives are heavily dependent on the banks, special interests, corporations and lobbyists for campaign financing and have sold their services to the highest bidder. All this posturing for the next election has set up a situation where party one-upmanship rules the day. Both parties constantly bash each other’s proposals in order to gain advantage in the next election. Yet the one thing they have in common is how they endorsed just about anything the banking industry wanted. As a result, our economy is in the trash and we have only balanced a budget in 4 years out of the last 32, no matter which party was in control. We elect these people to govern and solve our nation’s problems, not to sell us out to their sponsors. So we need to change the rules under which they govern. Our founding fathers wisely gave us this right and we should act on it responsibly.
right... term limits... one term only, 52 months is a term... each state holding an election every 52 months - in successive months... so every month one state would have an election, this solves the continuity issue... and no one is running for re-election. senators and congressmen, one term only.
not a bad idea.
what else do you have, william?
and. do we need fifty-two states for that to work?
or, did I miss something?
First time I heard that one. I like it William. I also like public financing of elections and especially instant run off elections.
freshnotbitter. What you say about President Truman is absolutely false. The sordid accusations of a corrupt administration were debunked as soon as they appeared. Yet his policies were so fair and protective of the forgotten American that powerful interests such as bankers, speculators, free traders and so on did everything possible to tarnish one of the greatest leaders in the history of human governance. I beg of you to read some honest biographers of his life and positions in American governance. You will surely be startled and pleased to recognize such an honorable, prescient, selfless, and competent leader.
If I'm not mistaken, Lincoln w/Congress authorized printing Greenbacks, taking that "privilege" from the Bankers. How ingenious - US Congress prints US money!
Today, however, the FED is in charge, and for those who don't know, the Fed is:
A) Charged with overseeing the Banks
B) is OWNED by the member Banks.
OK, so what's your point?
What are you proposing?
Abolish the FED?
The Chicago Plan?
Government-issue of debt-free money?
Banks on full reserves to prevent deposit speculation?
That kind of stuff?
Just wondering.
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