- Personal Finance
Banks can't be trusted
Banking is Supposed to be Boring, dammit!
The leading sign that our economy is struggling is the news, and what's in the news. I don't mean the dire reports of unemployment at new highs. I mean the news is all about banks. It's hard to escape the news about banks in crises, banks behaving badly, or banks firing chairmen for investing money badly. What's worst of all is the rampant corruption and bid-rigging that is festering like a wound across all the cash-strapped municipalities that have been quietly stolen from for decades. Seriously, banks are some evil stuff right now. How can our global economy produce the economic viability our communities desperately need when every step of the way we are hampered by bad behavior of the highest order by these legalized cartels?
Ask yourself this: Do these huge banks provide better service than a local community credit union? For the mast majority of banking consumers, the answer is no. Credit Unions are the only financial institution most of us require. The only real advantage to a nationalized bank I can see is the ATM fees saved by folks who have to criss-cross the country for their work. But, even then there are credit unions that reimburse ATM fees that would be better for qualifying people.
And, one thing that sticks out in my mind: Banks are all over the news. Credit unions are not.
Did you hear about the Barclay's Scandal?
The entire eurozone crises could be an artificial construct of the Barclay's rigging of the Libor interest rate. The Libor rate is a big deal, and it is possible that this whole mess is not due to Greek taxpayers, or austerity measures, or any other measure. How important is this index? Consider how much money was removed from the European economy as a result of rigging this figure. After a 500 billion pound bailout by the Scottish government, the CEO was concerned his private, for-profit bank would be nationalized. As part of making his bank look good, he and his top men rigged the LIBOR interest rate, low-balling it to artificially reduce the amount of interest the banks had to pay out, and increasing their revenues. Where does the money go when it is paid out? That should be pretty obvious. By rigging the interest rate low, hundreds of billions more dollars were removed from the economy. The Eurozone crisis, as it currently stands, is likely being pushed downward in part from the corrupt extrication of dollars that people and governments didn't even know they were owed due to the low-balled Libor rate. A perfect crime, stealing what people don't even know they are owed, if you can get away with it. Fortunately, Barclays was caught red-handed. The CEO's ousting is only the beginning. Personally, I hope there will be criminal prosecution at the highest levels. I have family in Europe. They deserve justice.
Bidrigging, you say? They do that in America, too. Banks have been shorting municipalities out of trillions of dollars for decades!
The biggest news in America should, by all rights, be the massive, staggering, jaw-dropping theft that occurred at the highest levels of the banking sector. It boggles me that a crime of this magnitude, with such far-reaching effects, is crowded out by the non-news of things like Anderson Cooper's private life, or the latest gaffe from politicians.
Here's the thing: The true cost of bidrigging will never be known, and can never be known. We never knew what we, as a nation, did not have. Our municipalities lost funds that they never knew they were owed. The massive fines paid by the banks involved in the scandal are a speck compared to the true cost to the taxpayers and general public that these illegal actions generated. And, unfortunately, heads are not rolling. A few minor players are going to prison, but they won't be there long, and ultimately, the true directors of this mess will walk away unhindered, untouched, and rich as thieves.
When the defining line between banking and organized crime is that mobsters are Italians, and bankers are not, there's a real problem in the banking industry.
The Mortgage Crisis Was Just the Beginning
The crisis that spawned all these implosions was the mortgage disaster that nearly brought the world economy to its knees. There are still fallouts and problems. Bank of America owes millions for robo-signing. This was old news, but it is frightening how common this thing is. Recently, J. P. Morgan's loss of billions of dollars inexplicably, and unexplained, hints at a level of corruption that is beyond the pale. Where did this money go? How could anyone overseeing this not be more involved and more aware of what was happening? What really happened inside J. P. Morgan to let such a huge loss happen? Investigators are investigating, but ultimately the corruption runs too deep. High-level bankers become regulators as a way to get to be higher level bankers. There is a revolving door between business and regulation such that no one has any vested interest in allowing these behemoths to fail.
Let them die. Tear them down. The world needs more credit unions, not more financial derivatives traders.
I am a card-carrying Republican
Look, I don't like the idea of government regulation any more than the next Republican. In fact, I hate it. I hate the idea that we have to pay to oversee adults engaged in free market enterprise.
I don't see why corporations with money and power get a free pass to operate a cartel skimming the global economy and bribing politicians through SuperPACs. The "Too-Big-to-Fail" banks are a mess. I agree with the former CEO of Barclay's, that he feared nationalization. It would be just as bad to nationalize the banks, and make this corruption even harder to locate inside the bureaucracy of government power.
The solution is simple: credit unions for consumers, and businesses. As a consumer I would never trust my business and money with anyone but a reputable credit union. Businesses should form their own credit unions. Different market sectors have different credit unions, and there's a limit to how big they can get. The credit unions hand back profits to their shareholders who also happen to be their customers. It's a proven business model, and a proven way to prevent the corruption and greed that can take over large institutions, turning them into shadow governments no better than a DnD thieves' guild.
If I don't trust big government, why would I trust a big shadow government?