There are two things every American needs to know about Bank of America.
The first is that it’s corrupt. This bank has systematically defrauded almost everyone with whom it has a significant business relationship, cheating investors, insurers, homeowners, shareholders, depositors, and the state. It is a giant, raging hurricane of theft and fraud, spinning its way through America and leaving a massive trail of wiped-out retirees and foreclosed-upon families in its wake.
The second is that all of us, as taxpayers, are keeping that hurricane raging. Bank of America is not just a private company that systematically steals from American citizens: it’s a de facto ward of the state that depends heavily upon public support to stay in business. In fact, without the continued generosity of us taxpayers, and the extraordinary indulgence of our regulators and elected officials, this company long ago would have been swallowed up by scandal, mismanagement, prosecution and litigation, and gone out of business. It would have been liquidated and its component parts sold off, perhaps into a series of smaller regional businesses that would have more respect for the law, and be more responsive to their customers.
I can easily argue all that’s true.
So why did this happen? And is it limited to one firm?
Let’s dispose of the latter first — it most-certainly is not!
Let’s refer back to Citi’s former chief risk officer who testified under oath before the FCIC that the firm knew that by 2007 80% of the loans they were writing on houses did not meet their published quality guidelines. They sold them to investors anyway, much like a meat-packing house knowingly selling tainted meat to consumers.
The outrageous behavior of these institutions is not really much of a surprise when one looks at history. Glass-Steagall’s eviscertation by Greedscam and then it’s ultimate repeal (and ex-post-facto legalization of the Traveler’s merger at the same time) made clear that if you were a large financial institution you could do literally anything and not go to prison. This has been reinforced since in that virtually every one of the large financial institutions has committed for more than instances of chargable fraud; under “three strikes” laws were you or I to do the same thing we’d be cooling our heels serving a life sentence in prison.
The fraud and deception starts with our youth. A few years ago I was a chaperone for the local school (including my kid) on a “field trip” to a number of important everyday local institutions. One was the post office where the kids saw the process that mail goes through to get from the big truck to your local carrier’s bin on its way to your mailbox.
The other was a local bank in which they proudly showed off their vault and stated that they took deposits and made loans, leaving the impression that when you deposited money it was “safe” and when loans were made it was with money the bank actually had.
Both statements were lies, of course.
In truth lending out money you never received unbacked by anything is nothing more than counterfeiting — a naked short, if you will, on the currency. Yet this is the model we have today.
“One Dollar of Capital” solves this problem but makes the bubble-blowing games impossible. It also makes asset-stripping really, really difficult. Both of those salutary changes to our economic posture for the 99% would, of course, make the 1% earn their money instead of stealing it and thus are found unacceptable.
The real question is why we, the people, tolerate this crap. The game thus far since 2007 has been to run fear — claims of “tanks in the streets” and similar, all of which were you to do it would constitute a serious felony known as “terroristic threats.” So how is it that a Treasury Secretary gets away with it?
Well, again, because we the people allow it.
In short the screwings will continue until the people rise and demand it be stopped. Unfortunately the imbalances that the “powers that be” are trying to continue in an futile attempt to fake a “recovery” are simply digging a deeper and deeper hole when it comes to federal deficits and thus the inevitable size of the contraction that must come in government as a whole.