Wednesday, March 13, 2013

The Banks Call All the Shots, so Get Over it.

"Give me control of a nation's money and I care not who makes it's laws." Mayer Amschel Bauer Rothschild

* Editor's Note: This will be my very last post about the banks. Because of our corrupt election and campaign laws --- which only our Congress can change, but never will --- any meaningful reform will be impossible in the U.S. banking industry. It makes no sense to keep barking at the moon and drooling like a mad man. It's time for all of us to face the harsh reality --- that the banks govern our country. This post, and my related links below, thoroughly makes the case that the banks rule --- they always have, and they always will. So it's time to get over it already.

Legal scholars will tell you that corporations are just "legal entities" that exist only because governments (real people) permit them to exist. Corporations are just "artificial man-made vehicles" through which sales, wages and profits flow.

Unlike shareholders in a corporation, limited liability corporations (LLCs) are not taxed as a separate business entity. Instead, all profits and losses are "passed through" the business to each member of the LLC --- the corporate executives, such as the CEOs.

The limited liability these corporations enjoy (because of our Congress) absolve their executive officers (the LLC members) from any personal financial or criminal liability. Their mansions, jets, yachts, bank accounts, and tropical islands are all exempt from any civil and/or criminal liability that may have otherwise occurred from any decisions the corporate officers made on behalf of their corporation (excluding 1st degree murder).

In a corporation's cost / benefit / risk analysis, their executives also calculate the cost-to-profits for their bad behavior -- e.g. "How much can we personally profit after putting lives at risk from knowingly marketing a dangerous and defective product after the cost of all recalls, lawsuits, fines and attorney fees are calculated from the total gross revenues?" (If you don't believe me, just ask Ralph Nader about the auto industry; or familiarize yourself with the tobacco lawsuits.)

The biggest banks do this every single day while looking for more ways to ever increase their bank's profits, the value of their stock, and the amount of their annual executive compensation packages (their base salaries, stock-options, bonuses, etc.) and their other executive benefits --- such as corporate jets, which theoretically, they "collectively own" via the company, much like retirees share ownership in a time-share on a vacation home in Florida.

The bank's executives set aside (on paper) how much it will cost them (if they are ever caught and fined by the government) to profit from such" financial instruments" as derivatives (credit default swaps) --- the bundling of bad home mortgages and other loans and then selling them to unsuspecting investors, just like Goldman Sachs had once admitted. Its execs had been paraded in front of Congress and berated for literally "selling shit".

As delineated in a recent New York Times editorial, HSBC recently settled with state and federal authorities for $1.92 billion (a paltry sum, given their total assets) as a way to deflect prosecutorial actions. According to a congressional report issued in July of 2012, between 2001 and 2012 "HSBC knowingly exposed the American financial systems to money laundering and terrorist financing risks."

The Huffington Post remarked that "over a span of years, HSBC has moved tainted money from Mexican drug cartels and Saudi banks tied to terrorist groups, so it is fair to argue that blood spilled as a by-product of this greed and cupidity seeps from the very walls of this institution."

In a deal with the government earlier this year ten banks and mortgage lenders agreed to pay $8.5 billion in a settlement with federal regulators, while Bank of America agreed to a separate settlement of $10.3 billion with Fannie Mae over bad loans that its Countrywide subsidiary sold during the height of the housing bubble.

To date, Bank of America has set aside some $40 billion to settle claims of mortgage misconduct that occurred before it acquired the freewheeling lender. In 2011 Bank of America settled a similar complaint for $10 billion with Fannie Mae.

The $10.3 billion fine is only 0.45% of Bank of America's total assets. According to Forbes, Bank of America is the second largest U.S. bank, with assets of $2.2 trillion -- just behind JPMorgan Chase, who had a "reported" $2.3 trillion in assets. This minuscule fine was calculated into B of A's cost/risk analysis in the event if they ever got caught. And if not, well then, all the better for them. (continued below).

This new deal with the banks is separate from the $25 billion mortgage settlement to which five large banks agreed to earlier, though many of the allegations of misconduct are the same. The new settlement replaces a deal struck in April 2011 that established the Independent Foreclosure Review.

There have been 7,732 Occupy Wall Street protesters arrested in 122 different cities across the U.S. since the bank-caused financial meltdown. How many bankers were arrested nationwide since that time? ZERO.

Attorney General Holder has publicly made the stunning admission that the Department of Justice considers big banks too big to jail: “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy. I think that is a function of the fact that some of these institutions have become too large.”

But for the past 4,000 years, human beings have known that the bankers, not governments, rule the world. The bankers own bribe lobby members of Congress for special tax breaks. It was a banker that got special tax rates for capital gains, from income that mostly benefited the rich. It was the bankers who got Congress to de-regulate the banks. And now some members of Congress are trying to overturn important aspects of the Dodd-Frank bill.

Rep. Jim Himes, a Democrat and former Wall Street executive at Goldman Sachs, is joining Rep. Randy Hultgren (a Republican) to introduce legislation that would de-regulate derivatives (again), undercutting one of the most meaningful elements of the 2010 Dodd-Frank Wall Street Reform Act --- Warren Buffett has referred to derivatives as "financial weapons of mass destruction", and they are viewed as a key trigger of the 2008 economic crisis.

The Dodd-Frank bill also requires the publishing of CEO compensation and CEO-to-worker pay ratios, but the Securities and Exchange Committee (SEC) has been sitting on that provision for nearly three years.

The Senate Banking Committee will now begin review of the nomination of Mary Jo White to be chair of the SEC. She made millions defending top Wall Street banks and major corporations --- isn't this the fox watching the hen house?

Mary Jo White's recent clients included JPMorgan Chase on cases arising form the financial crisis, Rupert Murdoch's News Corp over its phone hacking, and former Bank of America CEO Ken Lewis on the shady parts of the bank's takeover of Merrill Lynch.

Not surprisingly, Jamie Dimon, the head of JP Morgan Chase, has hailed Mary Jo White as the "perfect choice" to head the SEC. Exactly the kind of endorsement that should rouse the suspicions of the citizens and senators alike.

Regarding the new deal for the bank settlements? Citigroup is glad to move on: “We are pleased to have the matter resolved and believe this agreement is a positive development that will provide benefits for homeowners,” the company said in a statement (bla, bla, bla...)

But some members in Congress said that this settlement will end the investigation too soon and hoped the agencies would have pushed for more answers. (Yeah, sure. We heard that story before!) Congress also won't reform the unfair tax code or properly fund the I.R.S. to go after wealthy tax cheats. Congress and banks have been in bed together ever since our central bank, the U.S. Federal Reserve, was first established.

There is a false belief that some Americans got into economic turmoil because they were "living beyond their means". Robert Reich explains why this a myth. He also notes that the richest 400 Americans' wealth is greater than the poorest 150,000,000 --- and that the 6 Wal-Mart heirs have more wealth than the bottom 33,000,000 Americans.

Al Gore recently said that "despite being the richest country in the world, the United States also suffers from one of the highest levels of income inequality in the world. The wealthiest one percent of Americans now have more wealth than the bottom 90 percent. The gap continues to widen as the top one percent receives almost 25 percent of annual U.S. income, up from 12 percent just 25 years ago."

And the bankers still continue to break the law --- and they and the largest corporations continue to extract and hoard the bulk of the nation's wealth. (Read: Inside Job: The Film that Cost Over $20 Trillion to make!)

The bankers are above the law, and they hold most of the shares in the largest corporations, and they sit on each others' board-of-directors, and they pay retired members of Congress to lobby for them.

The game is rigged from the top down, and it always has been, and always will be. The big banks call all the shots, so get over it already. I finally have.

My Other Bank-Related Posts

1 comment:

  1. The fines these banks pay are less than the money they earned with the taxpayer bailouts!