Back In The Saddle Again

I never knew Gene Autry was talking about bankers when he recorded this song.

Short recap:  The banking industry persuaded (bribed) lawmakers into relaxing rules and regulations that had kept them honest for the previous 50 years, allowing them to originate all kinds of highly profitable but also highly risky investments.  After massive profits were skimmed off the top the scheme collapsed, and taxpayers had to step in and take on massive debt to bail them out.

Lawmakers said "never again!" and drafted new rules that put curbs on big banks.  Of course the bankers fought back, wanting to keep their mega-profit machine up and running.  They won.  This was in the news this morning:

WASHINGTON-- Bank lobbyists are not leaving it to lawmakers to draft legislation that softens financial regulations.  Instead, the lobbyists are helping to write it themselves.

One bill that sailed through the House Financial Services Committee this month--over the objections of the Treasury Department--was essentially Citigroup's, according to e-mails reviewed by The New York Times.  The bill would exempt broad swaths of trades from new regulation.

In a sign of Wall Street's resurgent influence in Washington, Citigroup's recommendations were reflected in more than 70 lines of the House committee's 85-line bill.  Two crucial paragraphs, prepared by Citigroup in conjunction with other Wall Street banks, were copied nearly word for word.  (Lawmakers changed two words to make them plural.)

Remember last November when candidates told us if we would just vote for them, they'd get the government out of our lives?  They double-crossed us.  What they really meant was, "Vote for me and I'll give the bankers whatever they want."  And we bought it.  Sure, they'll let us fight over the social issues of the day, but if there's money involved, the bankers call the shots. 

I think George Carlin was right:

Face it....the bankers own us, lock, stock, and barrel.  We're trapped.

S

It's the BANKS, stupid!

Dateline NY, Sept, 7, 2012

"...after four years of studies, hearings, and round tables, the Securities and Exchange Commission late last month abandoned efforts to impose new regulations on money market funds intended to prevent another panic like the one that occurred in 2008 and eliminate the need for a taxpayer bailout of the multi-trillion-dollar funds."

It seems three of the five SEC Commissioners, two Republicans and one Democrat, indicated they would NOT support any new reform proposals.  Make that BANKERS, 1; all the rest of us, 0.  Game, set, match.

Here we are in the heat of another election year, our economy is still in the toilet, and the Democrats and the Republicans are both pointing fingers at each other saying, "It's all THEIR fault.  If you elect us WE'LL FIX THIS!"

Truth of the matter is, it's BOTH their faults, and until someone stands up to the bankers, NOTHING is going to get fixed!  Oh sure, they'll let us squabble over things like abortion and gay marriage and whether there should be prayer in public places, but when it comes to anything with a dollar sign attached, they (the bankers / financiers) call the shots.  And the outcome is pre-ordained:  They will win, and the rest of us will....well, they don't give a flip.

From 1999 (essentially the end of any meaningful banking regulations) until 2008, the bankers had things going exactly as they wanted, and they made BILLIONS along the way.  Then when their unrestrained speculation imploded in 2008, they (mostly) kept their winnings, hit the reset button (raided the taxpayer's piggy bank) and started over again.  (It's nice to know own the right people, huh?)

So which political party is most likely to get us out of this vicious financial cycle of boom (for them) and bust (for us)?  Let's review:

Mitt Romney is firmly in the banker's camp (he's actually one of them!) and his veep is their head cheerleader.  Now don't get to feeling too smug, Democrats, because Obama had his chance to stand up to them in March (?), 2009 and wimped out.  And the people he listens to most closely, such as Sec Treasury Geithner, are so far up the banker's asses all you can see are their shoelaces.

So who then?  There are a few brave, knowledgeable people out there such as former Fed Chmn. Paul Volcker and former Citibank CEO Sandy Weill who say publicly that our mega-banks all need to be reigned in and broken up into not-too-big-to-fail pieces.  Problem is they're older, retired, and not in policy-making positions.  They're non-factors.  (The premise is if the bankers know they won't be bailed out again....that they're not "too big to fail".... and know they're being watched over by regulators with teeth, they'll act more responsibly.)

We're gonna have to start from scratch.  I'll volunteer to stand out front, but I'll need about fifty million other uncorrupted citizens to stand up with me.  (Do we even have fifty million uncorrupted citizens?)  And we can't become fractured by other social issues.....we must stay focused on this one issue only.  So who's with me?

*que the music*

As John Belushi so eloquently said in the classic 1978 movie Animal House, "Our forefathers didn't back down when the Germans bombed Pearl Harbor, and we can't afford to back down now, either!"

Seriously, they're probably too rich / powerful to take on right now.  We'll have to catch them when they come calling again for a handout, and that day WILL happen.  Unfortunately I'm afraid the next crash could be even more devastating than it was in 2008.

S

Have we opened Pandora's Box?

The Libertarians among us....heck, pretty much everyone I know of any political party....are aghast at the move begun in NYC and now spreading to ban sales of "super-sized" soft drinks or to impose an additional tax on sugar-sweetened drinks.  "The government is butting into my life!  It's none of their business what I eat or drink!"  Add to this government rules mandating motorcyclists and bike riders wear helmets, motorists wear seat belts, kids be in car seats, etc. and they seem to have a valid concern.


Here's where things get tricky.  As long as we as a society agree to treat anyone who walks into a hospital emergency room with an ailment or injury, regardless of whether they can pay or not, lifestyle regulation IS the government's business.  How can you ask the taxpayers to foot the bill for treatment of obesity, reckless behavior, etc, and not put some requirements on people to do their part in exchange for potentially free (to them individually at least) medical care?


This isn't an Obamacare issue.  This is something that has been going on for decades, ever since our national sense of decency and compassion dictated that we not let people suffer.  The idea of putting demands on people to eat and drink and act responsibly in exchange for agreeing to foot the medical bills for those who can't/won't pay for it themselves suddenly doesn't sound so intrusive.  We just can't go around giving out blank checks.  If we do, where is the incentive for those of us who CAN afford it to keep paying our insurance premiums?


Much as my knee-jerk reaction is to condemn even more government intervention in our lives, it does make sense in this case.  Problem is, where is it going to stop?  Do we want to be compassionate, or do we want to "live free"?  Is there a third option?  I sometimes feel like we've opened Pandora's Box.


S

Remember when bankers were honorable people?

What's my bitch with the banks?  The banks have a choke hold on this country.  The world, even. They sneeze, we get a cold.  They devise a new way to squeeze a few more bucks out of us, they drop a few $$$ on the right congressional committee chair, and the rules are changed.  The regulators go blind.  


Banks have never directly screwed me.  When the economy went down the toilet in '08 I only had a couple of lots financed and I was able to get out from under those.  All the contract homes I've built since 9/11 have been financed with the loans in the customer's name, not mine.  I won't sign a (business) loan agreement with a bank because they're 100% loaded in the banks favor.  For example, they have the right to call the note due, at any time, for any reason, even if I'm current with all provisions of the loan.  Doesn't matter.  And yes, I know people they've pulled the rug out from under.  "He who has the gold makes the rules."  Personally I deal only with member-owned USAA for all my banking and insurance needs.  My credit record is spotless.


Indirectly the banks have screwed all of us. Beginning roughly 20 years ago they legally rigged "the system", enabling them to do whatever they wanted.  "Financial engineering" it's called.  All the unregulated "derivatives" and "credit default swaps" that made the news when the world went over the edge....those were HUGE profit makers for the banks (to the tune of hundreds of billions of dollars), yet they added nothing of value to the economy.   When the dust settled they still had their money, and individually they still had their hundreds of millions in bonuses, while we were left with the bail-out tab.  Yet I know very well-off people (doctors) who today still find it difficult to secure financing to build a new home.  As a builder that hurts me and my family.


And it gets worse.  On paper the banks were broke in '09, so the Treasury "loaned" them billions of dollars, supposedly to "prime the pump" and get lending to businesses and hiring going again.  But that's not what the banks did with the money.  Instead they took the 0% interest "loans" (free money) and bought Treasury bonds paying 3%.*  It was simply a money transfer from the taxpayers to the banks.  Our government was either in bed with the bankers, or stupid.  Think you or I could get a deal like that?  HA!  Never heard of that, did you?  It was just a scam to re-capitalize the banks at taxpayer expense, without the taxpayers knowing it.  All we were told was "the deficit grew".  


And nothing has changed.  All the "banking reforms" that have been legislated recently to "correct past wrongs" are a farce.  They were gutted by the bank's lobbyists before what was left ever became law.  A little hand slap here and there, but always with a wink, too.   The number of banksters prosecuted for committing fraud?  You can count them on one hand.  Obama's recently announced effort to go after those responsible and bring them to justice?....I'll believe it when I see it!  And why did it take him 3 years to decide to go after the crooks?  Could the upcoming elections have anything to do with his newly discovered indignation?  "It plays good in Peoria." Again, I'll believe it when I see it.


We need to reign the bankers back in.  While I generally don't like excessive regulation in our lives, the banks have proven without a shadow of a doubt that left alone and without regulations (with teeth), they will act like drunken sailors on shore leave.  Trust a banker**?  I'd rather trust a crack whore with my bank account and PIN number.


S


*  Suggest you read Confidence Men:  Wall Street, Washington, and the Education of a President by WSJ writer Ron Suskind.  He names names, lists dates, places, directly quotes conversations....very informative.


** I'm talking about the Ivory Tower bankers at the BIG institutions, NOT the little loan officer or teller at the corner branch bank.