Thursday, October 20, 2011

10 Banks Own 77% of America

In the real-life game of "Monopoly", the banks have won. According to the official Monopoly® game rules, the object of the game is to become the wealthiest player through the buying, renting and selling of property. The first player to go bankrupt retires from play. (That happened a long time ago.)

When the second bankruptcy occurs, the game ends. Play immediately ceases, the game is over, with the bankrupt players turning over to there creditor all that they have of value, including buildings and any other properties. This happens whether the creditor is a rival player or The Bank.

I think this has happened already. 10 CEOs, 10 board-of-directors, 10 corporations own 77% of our collective asses...their tentacles are inside every nook and cranny of our lives.

In 2002, the top ten banks controlled 55% of all U.S. banking assets. Now in 2011 ten Banks own 77% of all banking assets*. The “big six” U.S. banks (Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo) now possess assets equivalent to approximately 60% of America’s gross national product.

* What a bank owns, including loans, reserves, investment securities, and physical assets. The largest asset category of most bank is loans, which generates interest revenue. A critical asset category used to maintain the safety of deposits is reserves (vault cash and Federal Reserve deposits).

Sadly, smaller banks continue to fail in large numbers and the big banks just keep growing and getting more power.

What makes things even worse is that these big banks often pay next to nothing in taxes. For example, between 2008 and 2010, Wells Fargo made a total profit of 49.37 billion dollars. Over that same time period, their tax bill was negative 681 million dollars. Wells Fargo actually got 681 million dollars back from the U.S. government.

It's no wonder the we're "occupying" Wall Street (and now the world) because the bankers are so disconnected from the average American...and they fail to see (or care about) our struggles and suffering.

A recent study shows that over 70% of Americans derive their monthly income from an actual W-2 job while 42% of America's financial wealth is controlled by the top 1 percent. If we break the data down further we will find that 93% of all financial wealth is controlled by the top 10% of the country.

We ended up bailing out the worst performing and troubled companies, thus keeping alive companies that should have completely failed. Did we bail out Google? Or Proctor and Gamble? Of course not. These companies actually produce something that people want...not the banks.

The bottom 90% of the population have been saddled like slaves with 73% of all debt, but of investment assets, the bottom 90% of Americans only owned 12.2%. We would need to go back to the Great Depression to see such lopsided data.

We now have 21 million unemployed Americans and 30 million Americans that are under-employed, struggling with part-time and low-paying jobs to earn a living wage to support themselves and their families.

Last year in 2010, about 48 million people, ages 18 to 64, did not work even one week out of the year.. We also have 46 million Americans who need food stamps just to eat, and Medicaid for healthcare. And 50 million Americans are still living without any healthcare insurance at all.

We have 46 million Americans living below the ridiculously low "official" poverty line. This is the highest number in 52 years. The government defines poverty as a single person earning below $10,890 a year (that's $907 a month for rent, heat, clothing, medical, and food) or a family of 4 trying to survive on $22,350 a year.

Imagine how the elderly struggle on a fixed Social Security incomes (who've had no cost-of-living increases for 3 years) must feel - - - because the government doesn't include housing, energy, and food in the cost-of-living inflation index. The very three basic necessities that people actually need to "live"

And congress is harping about cuts to Social Security and Medicare too. Meanwhile Bank of America is again reporting meg-profits this quarter, but yet is still charging their customers $5 a month to use their ATM card.

I think the game is over. The banks have already won. It's time to move our money. Soon it will be time to nationalize the banks too...then we can start a whole new game all over again.

CNBC has an article > about "Bank Transfer Day" > 

Bank Run > Under fractional-reserve banking, the type of banking currently used in developed countries, banks retain only a fraction of their demand deposits as cash. The remainder is invested in securities and loans, whose terms are typically longer than the demand deposits, resulting in an asset liability mismatch. No bank has enough reserves on hand to cope with all deposits being taken out at once.

If many depositors withdraw all at once, the bank itself (as opposed to individual investors) may run short of liquidity, and depositors will rush to withdraw their money, forcing the bank to liquidate many of its assets at a loss, and eventually to fail.

A bank can temporarily suspend withdrawals to stop a run; this is called suspension of convertibility. In many cases the threat of suspension prevents the run, which means the threat need not be carried out.

Banking panics began in October 1930, one year after the stock market crash. Much of the Depression's economic damage was caused directly by bank runs, and institutions that were put into place after the Depression have prevented runs on U.S. commercial banks since the 1930s, even under conditions such as the U.S. savings and loan crisis of the 1980s and 1990s.

The global financial crisis that began in 2007 was centered around market-liquidity failures that were comparable to a bank run. The crisis contained a wave of bank nationalizations, including those associated with Northern Rock of the UK and IndyMac of the U.S. This crisis was caused by low real interest rates stimulating an asset price bubble fueled by new financial products that were not stress tested and that failed in the downturn. 

IndyMac Bank's parent corporation was IndyMac Bancorp. IndyMac Bank was founded as Countrywide Mortgage Investment in 1985 as a means of collateralizing Countrywide Financial loans too big to be sold to Freddie Mac and Fannie Mae. In 1997, Countrywide spun off IndyMac as an independent company run by Mike Perry, who remained its CEO until the downfall of the bank in July of 2008. With $32 billion in assets, IndyMac Bank is one of the largest bank failures in American history. The F.B.I. accurately described what happened as early as 2004 as "an epidemic of mortgage fraud.” 

Charles Keating Jr. was most known for his role in the savings and loan scandal. In the 1980s, Keating ran American Continental Corporation and the Lincoln Savings and Loan Association, and took advantage of loosened restrictions on banking investments. His enterprises began to suffer financial problems and were investigated by federal regulators. His association with, and financial contributions to, five U.S. senators to argue for preferential treatment from the regulators led to them being dubbed the Keating Five. In the early 1990s, Keating was convicted in both federal and state courts of many counts of fraud, racketeering, and conspiracy. He served four and a half years in prison before those convictions were overturned in 1996. In 1999, he pleaded guilty to a more limited set of wire fraud and bankruptcy fraud counts, and was sentenced to the time he had already served. 

Other articles I've written:

How B of A Made Mega-Profits Again
Phil Gramm: From US Senator to UBS Banker 
Elizabeth Warren - Consumer Financial Protection
I Want to be a Banker
George Clooney - New Spin Doctor for Goldman Sachs?
GOP Won't Reform Banks or Cut Oil Subsidies
Republicans Support Crooked Bankers
A Company of One Verses Big Banks
Some Bankers Must #Occupy Jail
B of A CEO Gets $9M Bonus-You Get $5 ATM Fee

Disclaimer: I believe in democracy and capitalism, but our system of government and our economy is flawed, and needs some serious tweaking, so that it might work more fairly for the other 99%.

1 comment:

  1. To Be With the 99%, President Obama Must Fire Tim Geithner.