As of December 2009 the Big Four is something you can search for and read about on Wikipedia. It’s still a stub article, but it’s there. I can’t go in and fill it out because I am worried about conflicts of interest now that I campaign on the issue. Someone reading this post should feel more than welcome to though.
If Wikipedia status means anything, it at least means an idea or word has been said enough times to become a meme. And so, after all my work with A New Way Forward and the work of thousands of people, normal and fancy, over the past year, the Big Four is at least a meme. (For full disclosure, we’re now asking people to break up with their banks at bankbreakup.org and canvass with BanksterUSA.)
What does the Big Four mean? It’s the big 4 banks — Wells Fargo, Citigroup, Bank of America, and Chase — who together are a dangerous entity in society. Together, they pose danger to society, the economy, and our politics. They each have past the size of a company that makes a company more efficient and have become giants that hold the strings to our country. They have gone into the territory of overpricing, dominating political debate, and taking down the country without remorse when they fail.
I talked about this on Danny Schechter’s radio show on the Progressive Radio Network today (archive will be posted on Media Channel as well).
How are the big 4 banks dangerous? When you’re a corporation you put more money into investing in your future to beat out the competition. These big 4 banks did this in the 90′s, and back in the 80′s, and back in the 20′s, and have won. They beat out all competition and now anything they want, including the dangerous stuff, is deemed okay.
Most likely, your wages haven’t gone up in the past 20 years, we have around 20% unemployment and underemployment, we have millions of foreclosures, we have $700 billion of household debt, young Americans spend 29% of their income on debt, we have lack of individual political power with the decline of unions and what they stand for and, our state and local budgets have just been bamboozled and taken away by the big banks.
“At first, Minneapolis janitor Rosalina Gomez said she didn’t realize she was cleaning up after the CEO of the bank that bought her foreclosed home in a September sheriff’s sale. “At the beginning I didn’t know he was the guy,” said Gomez through an interpreter in an interview with HuffPost.”
We have made-up rules and gouging prices created to make you trip up and make the big four more money: You can get on a blacklist for something you might do without thinking. “Disputing a credit card charge by asking for a “chargeback” can lead to being put on a blacklist that merchants can check for customers who might try to defraud them. Getting off the list costs $99, although the fee is waived if the customer didn’t know they were committing “friendly fraud,” said Brien Heideman, founder of BadCustomer.com, which keeps such a customer list for retailers that don’t want to get hit with costly credit chargebacks.”
We have Greece’s debt turned into a money-making insurance policy by a Big 4 and a Big 6. Bankster’s blog explains Greece, and here is a summary: “It’s “like selling a car with bad brakes and then taking out an insurance policy on the driver.” Greece is “too-big-to-fail”, is in heavy debt and can default. Goldman Sachs helped get them into debt by helping to hide the debt so they can loan even more money from others. Goldman, JP Morgan and others also sold “insurance policies” on Greece’s debt – their buyers will make a bunch of money if Greece goes totally bust.”
So, we’re at the beginning of realizing the answer to “Why are the Big 4 Banks dangerous to society and what’s a better way to do banking in this country?” Reuters knows why. They have a great graphic on the increase in size.
Simon Johnson beat me to it and layed out three reasons why “Big Banks are Bad”
“First, the economic advantages of bigness were not as great as claimed. In many cases big firms did well because they used unfair tactics to crush their competition. John D. Rockefeller became the poster child for these problems.
DESCRIPTION The original J.P. — that is, John Pierpont — Morgan.
Second, even well-run businesses became immensely powerful politically as they grew.
J.P. Morgan was without doubt the greatest financier of his day. But when he put together Northern Securities — a vast railroad monopoly — he became a menace to public welfare, and more generally his grip on corporations throughout the land was, by 1910, widely considered excessive.
Third, there was a blatant attempt to use the political power of big banks to shape the financial playing field in ways that would help them (and their close allies) and hurt the remainder of the private sector — including farmers, small businesses and everyone else.”
Any results-based, research-heavy, social-issues aware economist will tell you that they agree a level playing field is what all good things flow from. That’s all we’re asking for. I want a Democrat in Congress to show me how they aren’t keeping at bay the level playing field.
We’re at the beginning of the fight and wikipedia is showing that we can win over our collective hearts and minds.
Published on FireDogLake’s The Seminal here.
The UK Telegraph has an interesting article(tx pat) on the thoughts of Mr. Dimon of JP Morgan:
Mr Dimon told investors at the Wall Street bank’s annual meeting that “there could be contagion” if a state the size of California, the biggest of the United States, had problems making debt repayments. “Greece itself would not be an issue for this company, nor would any other country,” said Mr Dimon. “We don’t really foresee the European Union coming apart.” The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged.
Oh California! The state and local governments are going to soon run out of things to sell, what then? Of course, the more interesting note is Mr. Dimon says their risk on Europe is hedged. We saw how that worked over the past two years, you dear tax payer are the final hedge. Now Goldman has taken a lot flack, but Morgan is more culpable. They are the derivatives factory that helped pump the debt bubble to its greatest girth. I did like how a couple weeks ago at the Financial Commission, Mr Dimon sat back and let Mr. Blankfein do all the talking, “You tell em LLoyd!” Smart.
Meanwhile, Bill Gross has his latest financial outlook up and he writes:
Twenty years of accelerated globalization incrementally undermined the real incomes of most developed countries’ workers/citizens, forcing governments to promote leverage and asset price appreciation in order to fill in what is known as an “aggregate demand” gap – making sure that consumers keep buying things. When the private sector assumed too much debt and asset prices bubbled (think subprimes and houses, or dotcoms/NASDAQ 5000), American-style capitalism with its leverage, deregulation, and religious belief in lower and lower taxes reached a dead end.
People like Bill Greider and others have been writing this for twenty years, while people the debt peddlers have been advocating the win, win, win situation of corporate globalization. Now the writing is on the wall and PIMCO and the rest of the debt aristocracy want all the debt they sit on and they no business peddling in the first place made good.
Mr Gross’ piece does a good job in laying out the parameters of the current debate on debt. Simply, one side says its time for the profligates to meet austerity and repent by spending the next twenty years working to pay their debt down, good for our financial aristocracy anyway. The other side says simply more debt will allow the economy to grow again and eventually make good on the debt. Neither side is very palatable.
Right now we are spiraling down to an ever more simplistic debate on this
that will in the end serve no one well. The debt reveals imbalances in the global economy that must be addressed. Mr. Gross is right that the American and global economy of the last several decades is unsustainable, it makes no sense to pile up more debt continuing the status quo. The pro-debt folks are also correct that it makes no sense to simply cut off the blood supply and lose a few limbs to save the body.
We need to split the difference. Call it the new centrism. We need to destruct a great deal of the debt created in the past ten years, we can start with all the derivatives sitting at JP Morgan and write down mortgages, lowering payments to keep people in their houses. Secondly we can create more debt, but it needs to go in transforming the economy down a sustainable path, for example not more money to buy cars, but to build public transportation. The debate right now is about cutting or spending to sustain an unsustainable status quo.
Cross-posted from Archein: as the debt world turns
Bloomberg reports that the biggest banks haven’t signed onto the program to modify mortgages like they said they would and like they need to do in order to make up for their predatory loans.
Numbers are showing that “Bank of America, Wells Fargo, JPMorgan Chase & Co. and Citigroup Inc. carry such mortgages at about $150 billion more than their value”.
The U.S. Treasury Department has failed to win agreements to get struggling borrowers’ home- equity debt reworked, among the biggest roadblocks to reducing foreclosures that may reach a record 3 million this year.
None of the lenders holding a combined $1.05 trillion of the debt has signed contracts requiring participation in the second-mortgage modification plan announced eight months ago. The largest banks remain “committed” to joining, Meg Reilly, a department spokeswoman, said in an e-mail.
President Barack Obama in February announced a $75 billion program to cut first-mortgage payments. The Treasury detailed a plan on April 28 in which second-mortgage owners modify or retire debt when the first lien is changed, saying it would be running in a month. The near-record level of home-equity debt held by lenders including Bank of America Corp. and Wells Fargo & Co. may lead to foreclosures that threaten housing stability after the worst slump since the 1930s.
As a reigning bank-focused Senator is about to retire, a financial industry lobbysist said that the reigning Senator Dodd will now be free to “dance with the special interests that brought him to the dance in the first place. Us, his loyal donors in the banking community.” But, we pay his salary now and what will he do as financial regulatory reform comes up and the next couple of months is considered the last dance of his stay in Congress?
Now that he is retiring, the corrupt, liberal, head honcho senator, Chris Dodd is most likely going to concede even more to the big banks in his signature reform bill going through Congress. Some say he would fight harder for the public to leave a legacy, but no one yet knows. The Consumer Financial Protection Agency is a measure included in the bill and is credited the most with protecting consumers against predatory and usurious products, yet its survival is in question because the big banks want it out of the bill. Ridiculous, right?
Dodd and the rest of Congress need to stop their shenanigans and tell the big banks NO for once!
The big banks are probably right that Dodd wants to dance with them because they brought him to the dance in the first place. It’s a weird thing for them to say, but if it’s true, say hello to the next economic crisis coming up and even larger banks sucking up more public money.
BanksterUSA made a video asking Dodd who he will be taking to the last dance of his career — Jamie Dimon of J.P. Morgan Chase or Elizabeth Warren of the fight for consumer protection. You can help fill out Dodd’s dance card and tell him to not flirt with the idea of dancing with the big banks. He can do some good and leave a legacy or he can just get super rich and gut the country at the same time.
It’s pretty clear that he will become a big bank lobbyist himself when he retires –he has been a recipient of some of the highest amounts of lobbyist cash and big bank political contributions, he also got a deal on his mortgage for his political power. What else is a man like that going to do because he can’t get elected again in 2010 and is forced to retire and loves the silent ring of A LOT of money in the bank?
Well, we can’t stop him from doing what he desires after he is out of office, but what about not helping the big banks on taxpayer dollars? Dodd, we pay for your pitifully small $200,000 salary. Do what we say. Sign the petition here.