The Rally Against Obamacare for the Banks
The large number of people who protested against Barack Obama's health care plan in Washington last week drew an enormous amount of media attention. Clearly some of the leaders are certifiably crazy, questioning whether Obama is an American and likening him to Hitler. But many of the protesters had reasonable concerns about how the plan would affect the quality of care that they and their loved ones receive.
It was also striking how often the protesters complained about a government that was out of control and not responsive to ordinary people. One of the items that often came up in the interviews reported in the media was the bank bailout. Clearly this is an enduring and deeply felt cause of resentment.
It would be very hard to tell these people that their concerns on this topic are misplaced. At a time when tens of millions of people are facing unemployment or underemployment, when millions are at immediate risk of losing their homes, the banks seem to be doing better than ever. Goldman Sachs used its government-guaranteed loans to make risky bets that paid off big time. It now plans to distribute $9bn in bonuses to its executives and top traders at the end of the year. Why shouldn't the protesters be absolutely furious about an administration that used taxpayer dollars to make some of the richest people in the country even richer?
It would be great if the anger of these protesters could be turned in a productive direction. Instead of trying to prevent the government from extending health care coverage, how about going after the banks that pillaged the country?
The obvious place to start in this effort is the break-up of the "too big to fail" behemoths. It is now pretty much official policy that financial giants like Citigroup, Bank of America and Goldman Sachs will not be allowed to fail. If their bad investment decisions again bring them to the edge of bankruptcy, the federal government will again rush to the rescue, handing out whatever cash and loans are needed to keep the banks afloat.
This status gives these banks a clear edge in credit markets against their smaller competitors. If everyone knows that the government can be counted on to come to the rescue of these banks, then there is less risk in lending them money. Therefore, they pay lower interest rates than if they had to borrow in a free market.
The Obama administration has proposed to correct this inequity by having higher capital requirements and tighter restrictions on risk-taking that will make it undesirable for banks to be too big to fail. In principle, the government could impose restrictions that are sufficiently onerous to offset the advantages of the government safety net, but no one outside of the Obama administration believes this will happen.
The simpler course is to just break them up. We don't have to turn Citigroup and Bank of America into hundreds of small community banks, just large regional banks that can be safely put through a bankruptcy/resolution process if they mismanage their assets. My guess is that most of people protesting health care reform last weekend would support this idea.
A second issue likely to draw the support of the protesters is the democratization of the Federal Reserve. There is already a left-right coalition in the House of Representatives behind a bill calling for an audit of the Fed.
This is a case where the centrist elites have shown complete contempt for the American public. In fact, Federal Reserve Board chairman Ben Bernanke had the gall to argue against an audit of the Fed, warning that it would lead to increased instability.
Did Bernanke forget that less than a year ago he told Congress that the policies pursued by him and his predecessor had brought the economy to the brink of a complete collapse? How do you get less stable than that? This is the sort of nonsense that shows the contempt that the elites have for the masses on both the left and right.
This suggests a great opportunity for a joint effort by the left and right to democratize the Fed. It is absurd that the US has a central bank that is more accountable to the financial industry than to the public.
A joint effort has enormous potential. It will be hard for the elites to even understand such a joint effort of the left and right against the center. As an example, the New York Times actually asserted that the bill to audit the Fed has "250 Republican" co-sponsors in the House, ignoring the fact that the Republicans are a minority in the 435 seat chamber.
But the ignorance of the elite only increases the probability of success. And, if there is one thing this economic crisis demonstrates, the elite can be very very ignorant.
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Americans need to immediately unite in this domestic war against economic terrorism that the banks are waging against them. Do not expect any reasonable legislation from the Congress and do not expect the president to do anything to help the tens of millions of Americans whose lives have been destroyed by the greed and hateful behavior of the nations largest banks. Everyone who is upside down on their home or are facing escalating home mortgage payments because of adjustable rate mortgages should immediately stop paying your home mortgage until the lender adjusts your payments to a reasonable level and locks it in for the long term.
Likewise everyone should immediately stop paying all of their credit cards until the excessive interest rates and fees are reduced dramatically. Also, if you bank with Bank of America, yank every dime out of your accounts now! Bank of America and their subsidiary Countrywide Home Loans are the worst public offenders. Do not bank with Bank of America. In fact do not bank with any of the big three banks which includes Bank of America, J.P. Morgan and Chase Bank. Keep most of your cash on hand at home and only use smaller banks for the most absolutely necessary transactions. We are going to take back our country and our dignity from these racketeers masquerading as bankers and their greedy, sell-out partners in the Congress and the U.S. Treasury. Stop paying them.
Robxweb
Your post actually is very similar to comments I have been making about this crisis over the past year. Yes, your solutions are very appealing. But you need to add one more to the equation. The government needs to be shrunken considerably. Without this tool of control and the ability to pillage it for taxpayer money, none of these corporations would ever have been allowed to grow to this monstrous size. The government is the protection for these companies. Only then will we not-repeat our recent history.
Obama really does need to stay ahead of this issue. Populist outrage is real and bipartisan.
Although seemingly well intentioned, I find your comments incredibly naive. Obama, like Clinton, has handed the Treasury department to the people most sympathetic to Wall Street. Not only will they never "hurt" the banks by breaking them up, but they happily do their bidding. The people in Congress who deal with the matter (Schummer, Frank, Dodd, etc.) are even more biased as they see the bankers as their constituents.
Consider the more egregious situation of the declared zombie companies supported by the US Government: AIG, Fannie Mae and Freddie Mac. As anyone with knowledge of basic accounting can tell you, they do not have any chance of repaying the government. Yet, not only are they allowed to exist, distorting the marketplace for their healthier competitors, but their executives are paid millions. Worse yet, they are allowed to manipulate their intrinsically worthless securities by propagating false, yet legal, information to the ever hopeful public.
I am afraid of the backlash once this fraud is discovered by those healthcare protesters. Many of them own guns.
Wall St and the large banks have won.
The US dollar is collapsing, we are so deeply in debt that it may be close to mathematically impossible to get out of it, the trillions given to the banks by the Fed is being used to game the markets, soon which will collapse and the little guy will lose his/her money just like last year and early this year.
history mirrors. this is the old wall st pump and dump.
just watch the stock market crash again, real soon.
Yeah, Dean, you leave out one important fact. These demonstrators are the base, and are base, that voted for these Republicans and supported their policies that created this mess; thus, they bear direct responsibility for these policy failures.
In other words, they have No credibility and their concerns should be summarily dismissed.
Are you listening Frank Rich?
After the US allowed vested interests to practice on preventing the Africans from using international agreed flexibilities to make cheaper medicines available to their people, it is no surprise when these dogs now turn on ordinary Americans. Even at the World Health Organisation, the mantra is in effect somehow the private sector is better and the public sector is inefficient. The role of the state is steer, dont row. But what has this done - it has led to lack of health care for the majority in poor countries and inflated costs in the US. The US is one of the most inefficient health care systems in the world. It is about time America woke up to its export of tsunamis around the world - the financial one is just one in an array of these impossibly large tidal waves.... health is another...
This is absurd - we have the elite too ignorant to realize the horrors caused by their greed and the extreme anti-government group that is too ignorant to realize who caused all of these problems in the first place. Lets blame obama for everything except what he should be blamed for - i know you said above that people were concerned about the bailouts but I didn't hear much talk of the bailouts in interviewers with the teabaggers. It was all misplaced, FOX-directed hate for the obama administration. Maybe they do deserve some of the blame but not for what the teabaggers were blaming them for. I watched a clip yesterday of glen beck during bush's call for a bailout and after obama initiated a bailout and the contrast is sickening. While bush was president, he equated the disaster to a plane crash of the country's population and the bailout to an emergency landing. Not even half a year later, beck is destroying Obama's plan. This is the perfect representation of what is wrong with this country - partisan politics supersede the general public good. We must be above this ridiculous pettiness. Obama can and did do wrong and will continue unless we call out his bank bailouts and his baucus medical reform. These are kicks to our face, they are travesties. I would not tolerate these elitist policies from Bush and I WILL NOT TOLERATE THEM FROM OBAMA. Where is the change that we can believe in?
So they(to big banks) can't go bankrupt! Instead they can BANKRUPT the ENTIRE COUNTRY.
With Global Capitalism Exposed as a Sham, All the Global Elite Have Left Is Pure Force
By Chris Hedges, Truthdig. Posted September 22, 2009.
http://www
I have a suggestion: withdraw your savings from banks and deposit into credit unions, thrifts, community banks. This is legal and also safer: because they've behaved responsibly, your community savings group is financially better off, and in any case they are also insured by FDIC.
Sometimes a little direct action works wonders.
I agree that we should break up the banks in to smaller institutions. Unfortunately, we have no legal background on which to pursue such a course. Ma Bell was a monopoly. One could argue that these banks with their entwined ownership, are, in effect, a monopoly, but that would set an undesirable legal precedent.
Just prosecute them for possession of marijuana. That's how the government has been keeping the "dangerous" in line for decades,
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