Did you ever notice that the big banks almost always have the tallest buildings and skyscrapers in the downtown areas of all the major metropolitan cities around the world? Polished granite, chiseled glass, tiled floors, shiny brass, and expensive art. The presidents and CEOs, gazing down from their expansive boardrooms, slitted eyes upon their fiefdoms, inspecting their servants far below them, toiling to make mortgage, auto, and credit card payments amid the millions of foreclosed homes all around them. The banksters are the first to witness the sunrises, and the last to see the sunsets. The Money Masters, the kings, our masters, the Republican's gods...the major players in the documentary Inside Job.
I'll bet that you thought the $700 billion bank bail-out (TARP) in October 2008 was a public outrage. But that was only peanuts compared to what you've been giving the banks all these years. $700 billion was just a drop in the bucket. But to the peasants that were slaving among the sweating humanity at their puny low-paying jobs, far below those ivory towers, it sounded like all the money in the world to them. But $700 billion was just the tip of a gigantic iceberg.
What do you think of the banking system: a boon or a bane for society? Well, in economics 101 you must have learned that the banks serve us by providing financial inter-mediation and share in pooling investment risks, and hence, are good entities for a modern and civilized society. And that legalized usury was a good thing for us. That the bankers were our friends, and were our respectable and responsible community leaders.
What is the magic-trick behind the billions in profits and the multi-million-dollar salaries and bonuses that the investment bankers give themselves? How can the banks afford to give you those nice credit cards with competing credit limits offering 0% APR? The first answer that may come to you is: the banks charge interest and fees (some legal, some not). But you would only be partially right.
Despite all sorts of interest and fees, the government (our Central Bank, the Federal Reserve, the "Fed") has had to inject huge sums of money to keep the banks running and solvent. The reason they probably didn’t tell you this in your macro-economics class is, you would have probably lost all confidence in our banking system.
Since 2008 we've learned about their greedy sub-prime loan practices, the
unfair reverse red-lining, all the illegal home foreclosures, how they
swindled investors, and their reckless gambling with derivatives (credit default
swaps). And we've learned about the Republican
de-regulation of these financial markets, insurance companies, hedge funds,
And now we're learning that the first-ever Government Accountability Office audit of the Federal Reserve, which was recently completed, found that our American Central Bank (the Fed) has had to inject trillions of taxpayer's dollars into the banking system to keep these monsters alive. From December 2007 through June 2010, the Fed had secretly bailed out many of the world’s biggest banks, corporations, and governments. The combined bailout amount in U.S. dollars to 15 different banks (including some foreign banks) aggregates to a whopping $16 trillion! (Go here to see what this would look like as a stack of raw cash compared to a football field).
The largest chunk was received by Citigroup: $2.5 trillion, followed by Morgan Stanley: $2.04 trillion. Merrill Lynch pocketed $1.949
trillion while Bank of America grabbed $1.344 trillion. Among the foreign banks, at $868 billion Barclays PLC (UK) got the largest slice
of the dole, followed by the Royal Bank of Scotland (UK): $541 billion. Bear Sterns sucked $853 billion.
Other financial institutions receiving major bailouts are as follows. Goldman Sachs received $814 billion, JP Morgan Chase $391 billion, Deutsche Bank (Germany) $354 billion, UBS (Switzerland) $287 billion, Credit Suisse (Switzerland) $262 billion, Lehman Brothers $183 billion, Bank of Scotland (United Kingdom) $181 billion, and BNP Paribas (France) $175 billion.
And they say it was WE who have been living above out means, must
tighten our belts, and make a shared sacrifice by allowing the Republicans to
decimate Social Security and Medicare.
It’s no wonder then that the banks have the tallest buildings, and why the banking execs live in the most elitist neighborhoods, and why you often receive pre-approved credit cards with promised credit lines. After all, the banks aren’t really creating any money, they are just spending it. And if the banks write an overdraft, then the Fed (us) is there to bail them out. Of course, you are the one who will actually have to bear the ultimate burden through taxes and the national debt. But the Republicans keep saying that this is what YOU want when they refer to balancing the budget, capping spending, and reducing the national debt.
They want you to give up your Social Security so that the Federal Reserve
can give the big banks more money.
But then again, you already knew all this...didn't you? But yet the Republicans still refuse to reform the banking system and they rejected Elizabeth Warren's nomination to head the new consumer protection agency. I wonder why? Hmmmmm?
(The video I edited with the Pink Floyd sound track "MONEY" is perfect for this post.)
(And do we really still have gold in Fort Knox, or did we give it all to the Chinese to pay down some of the banker's debt? Maybe Fort Knox should be the next audit.)
Source: Government Accountability Office