Brain Dropping #149 – Banking
An old protest song goes: “A weary Vermont farmer / plowing his field of loam / hears the auction hammer / knocking down his home. / The banks are made of marble / with a guard at every door. / The vaults are lined with silver / that the farmers sweated for.” The one and only time Jesus used physical violence was to drive the bankers from the temple. There’s a wonderful El Greco painting of the scene with Jesus, whip raised and about to strike, overturning the money changer’s tables and kicking ass. With widespread corruption and financial gangsterism, bankers are an easy target and, I think, deservedly despised. The lying, cheating and gambling with other people’s money is rampant, especially after the repeal of the New Deal’s Glass / Steagall Act which placed a so-called “firewall” between depository or commercial banks and investment banks more appropriately called gambling casinos.
Just the nomenclature of these risky financial machinations seem calculated to disguise the devious nature of these transactions: Hedging, Derivatives, Credit Default Swaps, Collateralized Debt Obligations etc. But while the banking scam artists walk away with millions in bonuses, even when the offending bank requires a taxpayer bail-out, in the final accounting the little investor or depositor gets the shaft. The “too-big-to-fail” private banking system is rotten to the core. Their political power allows them to evade any regulatory restraints to keep them honest. The evisceration of the Volker Rule designed to over-see derivatives is a case-in-point. And that is precisely why publicly owned and administered banks are an idea whose time has come if the hardworking depositor is to be fairly treated.
A publicly owned bank is not a new idea. North Dakota’s State Bank goes back one hundred years. In Germany public-owned banking goes back to the late eighteenth century, established to help the poor and low income folks to save small sums of money and to support business start-ups. The Swiss have a network of provincially owned banks more profitable than their private counterparts. Public banks are true non-profits recycling earnings back into the community rather than into off-shore tax havens.
In November 2014 The Wall Street Journal reported that the Bank of North Dakota(BND), the nation’s only state owned bank is more profitable than Goldman Sachs and has a better credit rating than JP Morgan Chase. The BND turns a profit year after year because of lower costs and risks than private commercial banks. The BND pays no exorbitant executive salaries, no bonuses, no fees, no commissions and no private shareholders. The bank does not gamble in the derivatives market and therefore has no losses from trades gone wrong. It engages in old fashioned community banking.
What’s wrong with the status quo? Well, the problem is getting bigger: The sub-prime mortgage crisis showed clearly that the private banking industry is motivated largely by the money-grubbing accumulation of wealth using illegal and ethically questionable methods at the expense of the middle and working classes – and to hell with the well-being of the community. With the country’s leadership bought and paid for, the bankers wheel, deal and steal with impunity. Not a single sleazy banker has been indicted by the, misnamed, Justice Department under the directorship of the morally challenged Eric Holder. So, it is not surprising that the billionaire members of the banking establishment support the infamous TPP – the Trans Pacific Partnership trade agreement being secretly negotiated among 12 Pacific Rim States – US, Singapore, Japan, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, and Vietnam. If the TPP becomes law, a private corporate tribunal, could have the power to override the sovereign laws of the signatories regarding environmental laws, clean water regulations, pure food regulations, public banking systems under the rubric of unfair trading practices. The TPP has the potential of being the ultimate step toward the time when corporations and big banks rule the world!