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The Banks Want More

stack of money

I know it is hard to fathom, but for some reason the big banks don’t believe they have enough power or influence in Washington. They’ve even taken out a SuperPAC so they can throw more money around. The whole thing is depressing. The fact that we went into the biggest recession since the Great Depression because the big banks were playing roulette with our money doesn’t seem to phase them. They have no pity. They have no shame. The fact that they treat us like small piles of money instead of as individuals doesn’t phase them either.

From Alter-Net:

Friends Of Traditional Banking is a new super-PAC formed by “traditional” banks that can raise unlimited amounts, and can direct unlimited money to races without restrictions.

One banker calls this “a big stick” with which to punish lawmakers who vote with the public interest instead of the banking industry’s interest. Another banker says the purpose is to make lawmakers “afraid of bankers” instead of having them respond to the public. Another says, “… if you say the bankers are going to put in $100,000 or $500,000 or $1 million into your opponent’s campaign, that starts to draw some attention.” Another makes it all clear, it is about raising “a lot of money” to “hammer” lawmakers who are in the way of bank profits.

The story from American Banker, Bankers Form SuperPac for ‘Surgical’ Strike at Industry’s Enemies, explains,

Frustrated by a lack of political power and fed up with blindly donating to politicians who consistently vote against the industry’s interests, a handful of leaders are determined to shake things up.

They have formed the industry’s first SuperPAC — dubbed Friends of Traditional Banking —  that is designed to target the industry’s enemies and support its friends in Congress.

“It comes back to the old philosophy of walking softly and carrying a big stick,” says Howard Headlee, the president and chief executive officer of the Utah Bankers Association. “But we’ve got no big stick. And we should. We have the capacity to have one, we just aren’t organized.”

… “Congress isn’t afraid of bankers,” adds Roger Beverage, the president and CEO of the Oklahoma Bankers Association. “They don’t think we’ll do anything to kick them out of office. We are trying to change that perception.”

The arrogance of these guys is killing me. The power the United States lies with the people. It is that simple. It doesn’t lie with the politicians. It doesn’t lie with the political friends of the politicians. The power does not lie in the rich or the well-to-do. The power in the United States lies in the people. It is time for us to rise up and take back the power that is rightfully ours. Politicians should be listening to us and not to special interests like gun lobbies or bank lobbies or anyone else.

By |2012-04-09T20:24:31-04:00April 9th, 2012|Congress|Comments Off on The Banks Want More

This guy gets it

This was a very thoughtful comment to a very nice Vanity Fair article

WW2 spending and debt brought us out of the Great Depression and won WW2. Spending increased to ~35% of the economy and the federal debt was ~122% of the economy at the end of the war.

The debt had been reduced to 33% when Reagan was inaugurated; the debt doubled as a percentage of the economy under Reagan and Bush I as federal spending was between 22 and 25% of the economy, after being under 20% from 1946 to 1980.

Reagan also started the deregulation of the banking industry and the dismantling of the New Deal that has resulted in trillions in job and home value losses. Reagan’s tax cuts for the rich and doubling of military spending led the U.S. from the world’s leading creditor nation to the world’s leading debtor and “blowing an extraordinary economic lead” (Sen Pat Moynihan, 12/10/90 Newsweek), [ed. note – I can’t verify this quote. I looked and the internet isn’t good finding some data. this is one of those things.] as poor intelligence greatly overestimated Soviet economic and military power. Under Clinton, the debt went down to 60% of the
economy, then back up to 81% under Bush II.

Though the Constitution encourages inactivity and gridlock with its division of powers and numerous veto points to hinder decisive action, Obama was able to get health care reform and a much too small, much too short-term and much too non-structural stimulus, which was larded with tax cuts. Not sufficient. Most democracies have a parliamentary system, in which it is easier to pass necessary legislation.

This recession is much deeper than the one Reagan faced when the federal debt that was much less as a percentage of the economy. Vice President Dick Cheney declared in 2002,
‘Reagan proved deficits don’t matter’ –unless a Democrat is in the White House during a deep recession, when deficit pump priming is necessary to get out of a deep ditch.

By |2011-10-28T15:40:29-04:00October 28th, 2011|Economy|Comments Off on This guy gets it

Phil Gramm Freed the Banks

Gramm-Leach-Bliley Act was passed as recently as 1999, but I don’t remember hearing anything about this. Anyway, I did some research.

This Act was a huge coup by the banking industry. This bill allowed banks to things that they never could before, like leverage. investment because of decreased requirement on ow much capital they had to keep on hand. Why this bill zoomed through Congress and was signed by President Clinton is a mystery to me. All of the Republicans in Congress supported this bill. I think that all of the Democrats opposed it. (It passed on a party line vote, 55 to44.)

Below is a brief summary of the bill.

FACILITATING AFFILIATION AMONG BANKS, SECURITIES FIRMS, AND INSURANCE COMPANIES

  • Repeals the restrictions on banks affiliating with securities firms contained in sections 20 and 32 of the Glass-Steagall Act.
  • Creates a new “financial holding company” under section 4 of the Bank Holding Company Act. Such holding company can engage in a statutorily provided list of financial activities, including insurance and securities underwriting and agency activities, merchant banking and insurance company portfolio investment activities. Activities that are “complementary” to financial activities also are authorized. The nonfinancial activities of firms predominantly engaged in financial activities (at least 85% financial) are grandfathered for at least 10 years, with a possibility for a five year extension.
  • The Federal Reserve may not permit a company to form a financial holding company if any of its insured depository institution subsidiaries are not well capitalized and well managed, or did not receive at least a satisfactory rating in their most recent CRA exam.
  • If any insured depository institution or insured depository institution affiliate of a financial holding company received less than a satisfactory rating in its most recent CRA exam, the appropriate Federal banking agency may not approve any additional new activities or acquisitions under the authorities granted under the Act.
  • Provides for State regulation of insurance, subject to a standard that no State may discriminate against persons affiliated with a bank.
  • Provides that bank holding companies organized as a mutual holding companies will be regulated on terms comparable to other bank holding companies.
  • Lifts some restrictions governing nonbank banks.
  • Provides for a study of the use of subordinated debt to protect the financial system and deposit funds from “too big to fail” institutions and a study on the effect of financial modernization on the accessibility of small business and farm loans.
  • Streamlines bank holding company supervision by clarifying the regulatory roles of the Federal Reserve as the umbrella holding company supervisor, and the State and other Federal financial regulators which ‘functionally’ regulate various affiliates.
  • Provides for Federal bank regulators to prescribe prudential safeguards for bank organizations engaging in new financial activities.
  • Prohibits FDIC assistance to affiliates and subsidiaries of banks and thrifts.
  • Allows a national bank to engage in new financial activities in a financial subsidiary, except for insurance underwriting, merchant banking, insurance company portfolio investments, real estate development and real estate investment, so long as the aggregate assets of all financial subsidiaries do not exceed 45% of the parent bank’s assets or $50 billion, whichever is less. To take advantage of the new activities through a financial subsidiary, the national bank must be well capitalized and well managed. In addition, the top 100 banks are required to have an issue of outstanding subordinated debt. Merchant banking activities may be approved as a permissible activity beginning 5 years after the date of enactment of the Act.
  • Ensures that appropriate anti-trust review is conducted for new financial combinations allowed under the Act.
  • Provides for national treatment for foreign banks wanting to engage in the new financial activities authorized under the Act.
  • Allows national banks to underwrite municipal revenue bonds (more… )
By |2008-09-19T12:21:32-04:00September 19th, 2008|Economy|Comments Off on Phil Gramm Freed the Banks
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