Bank Non-Reform
There wasn’t any.
There. That makes it easy to remember. After 2,200 pages of tightly worded legal jargon the law known as Dodd-Frank left our banking system remarkably untouched. Our big banks are still way too big. So big they are beyond the law. By which I mean they are fully aware that they cannot be allowed to fail, and so they can act with impunity. Which they do. Daily. Worse, they are bigger than before. The crisis saw the consolidation of the industry as big names like Merrill Lynch, Lehman, and Wachovia disappeared and their assets fused into the survivors balance sheets. So the percentage of total banks assets concentrated under the control of the lunatics who destroyed the economy in 2008 has increased rather than decreased. Next time the cost of bailing them out will be higher.
And there will be a next time.
Soon.
In fact with the roiling problems in the sovereign debt market, with countries like Greece and Portugal teetering on the brink of default, we can expect more of those “notable rare exceptions” Alan Greenspan so farcically mentioned in his ridiculous Financial Times Op-Ed article. Many more. Why? Think it through. Who holds all that Greek or Portuguese debt? The big banks. So if Greece defaults the big banks take a hit and come under the same kind of pressure they were when the fantasy of the real estate bubble burst.
As taxpayers our decision seems simple: which is cheaper? Bailing out Greece? Or bailing out the banks? Its the same problem. Frankly I would prefer to bail out Greece. At least its a nice place to visit.
What I find remarkable is how much griping emanates from the big banks even though they escaped real punishment. Even today Jamie Dimon is complaining about the negative effects of regulation. He needs to quieten down and clean out the people who pillaged the US economy before he attracts too much more attention. Then again the immunity he apparently feels encourages him to speak out. He is, after all, one of the more likable of the bunch. His roots are slightly more plebeian. Slightly.
Then there is the “threat” from Barclays to leave London and head to New York. Good. Go ahead. I am sure the British taxpayers would love to be rid of having to bail them out. Oh. And by the way perhaps you could take your families and so on with you. No more of this paperwork movement. If you’re going to threaten the taxpayers just remember who votes and who makes the law.
Oh. Damn. That’s right. You make the law.
This is odd. The bankers make the law and yet complain about it. Maybe they left something out of the draft. Maybe they weren’t explicit enough. They didn’t make it clear that the US Treasury and the Federal Reserve Board exist to do the bank’s bidding. Enough of this oversight. It cramps the banker’s style.
On a serious note: the financial system is not stable. The crisis did not engender sufficient fear in politicians that they throw off their paymasters and rise up to reclaim management of the economy. The banks withstood the challenge and now benefit from an even more explicit bail out protection. So much more explicit that the rating agencies – co-conspirators in the financial meltdown – make it clear that their current ratings for the banks depend in large measure on future government support.
That makes it clear.
We fixed nothing.
The big banks depend on our largesse and then insult us every time we beg for a little contrition. These men and women are contemptible. And they are enriching themselves at our expense. With their reputation for being smart, skilled in finance, and adept at managing risk totally exposed as a fraud they have fallen back to the safety of simple childlike disobedience and insult. Their petulance is awe inspiring. Their activities continue unabated. They maybe fools, as their ineptitude demonstrated so clearly.
But we are the clowns that allow them to persist and to corrupt our government with their political donations.
A famous judge in England once opined that income tax is a tax on income. Duh.
By the same logic: donations to politicians are a way to purchase legislation. In the US that’s called free speech. Elsewhere it called bribery and corruption.
The outcome of all that free speech? Zero change in our banking system. And a bigger bill for cleaning up their next party. Reform?
As I said: there wasn’t any. It would have cost the politicians too much at the next election.
