Forum Post: How did BANKS RUIN economy?
Posted 12 years ago on Oct. 25, 2011, 5:53 p.m. EST by CHANGEisHere
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I'm thinking about closing my bank account, but im really familiar with the reasons on how banks ruined the economy. Will someone care to explain why I should close my checkings account?
Thanks
I think this gives a good overview. This is Professor MIchael Thomas speaking at a University of New Mexico "teach in" earlier this month.
The overview is from about 33:20 to 59:20 on the video.
http://www.livestream.com/occupyalbuquerque/video?clipId=pla_62c9a9ab-6a4c-4068-9cb9-d4f9b0c832fc&utm_source=lslibrary&utm_medium=ui-thumb
It was really the investment banks, but most commercial banks (the kind you are talking about) are in larger entities that include investment banks. The investment banks committed massive fraud in blowing up the housing bubble, entrapped unwary borrowers in mortgages that would explode, sold trillions of dollars worth of derivative contracts (that should be written off as unenforceable gambling debts, they are in fact side bets (by nonplayers) on future outcomes), got the government to bail them out on worthless assets at face value (when they should have gone bankrupt or settled for 15-25 cents on the dollar), etc.
Glass-Steagall absolutely must be reinstated to separate the commercial banks that serve consumers and businesses from the speculative/gambling investment banks. That would do more than anything else to get the ball rolling in creating jobs and getting the economy moving again, imo. Commercial banks, that serve the real economy, need to be protected from the shenanigans of the speculative investment banks. The latter can't be allowed to bring down the former.
Max Keiser does great job of covering bank fraud, http://rt.com/programs/keiser-report/. I recommend episodes 173 & 180 in particular.
I wouldn't go that far yet. let's try this first:
Here's how we can easily Reform Wall Street: Take away their powers "Once Again." And the best way to get it done is a Million People March to Capitol Hill!
For example, "We are here Congress because we want you to REINSTATE the Glass-Steagall Act of 1933 http://www.investopedia.com/articles/03/071603.asp#axzz1aPEc3wX which was created to help save our country from the Great Depression by preventing investment companies, banks, and insurance companies from merging and becoming large brokerage firms; instead of just being Banks and Insurance companies -- Congress why can't you learn a history lesson from 1929? The current system doesn't work, once again, except for the 1%. Btw, why did most of you vote for the major repeal of G-S Act in 1999? Shattering The Glass-Steagall Act: http://www.counterpunch.org/2008/09/19/shattering-the-glass-steagall-act (2nd story here)
Think about where we are now, it all started in 1999 with lawmakers like Senator Phil Gramm who helped create legal gambling casinos for our banks: CNN's The Ten Most Responsible for Economy Collapse: http://www.youtube.com/watch?v=gKQOxr2wBZQ&feature=related
Furthermore Congress, we also want you to CHANGE the Commodities Future Modernization Act of 2000 http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000 BACK to where it was before 2000, which since has deregulated energy markets and consequently allowed for such scams as The Enron Loophole; whereas in the early 2000's Enron Corp. was charging 250 bucks plus for a kilowatt hour...They all when to jail for this. But, the Enron loophole is still not closed, for example, allowing speculators to resell barrels of oil over and over again before it reaches the gas station owner. It's basically legal gambling at our expense. What were those lawmakers thinking then? What are you thinking now? Either do the right thing, or you're part of the 1%."
So why are oil prices high? The Enron Loophole. Former Head of U.S. Commodity Futures Trading Commission speaks to Congress on the high price of oil--and he's not happy about energy deregulations:
http://www.youtube.com/watch?v=zbdtTGYQBMU&feature=related
http://www.youtube.com/watch?v=PNp0y0SjOkY&feature=related
Rolling Stones Reporter: Truth about Goldman Sachs--how they have cornered the markets--basically, The Enron Loophole and the shattering of Glass-Steagall Act in 1999. http://www.youtube.com/watch?v=waL5UxScgUw
Let's get focused and bring back The Glass-Steagall Act of 1933, they got it right 1933, we don't need to REINVENT the wheel because bringing this Act back will help create an even playing field once again....and let's finally Close the Enron Loophole, which allowed Enron to charge what they wanted for energy; they went to jail for this; but no one closed the loophole, why? Re-election Monies from the big brokerage firms and oil companies! The writing is on the wall.
Let's get organized and reinstate these critical financial reforms with a Million People March to Capitol Hill!
There are many misguided efforts, and it seems that the OWS movement has become a platform for just about any concern. A movement needs to focus and be very clear on what it seeks to accomplish.
First let me say that this problem is not liberal or conservative, democrat or republican but it is a common problem we all share. One key point must be stressed we are all affected by the issue at hand.
The basis of the problem is the laws that have enabled and perpetuated the problem. If you look at the fall of the exchange in 1929, its cause and the reaction by the government you will find most of the problem. In 1929 only ~10% of all businesses were public and the remainder was private. ~2% of the population were involved in trading stocks and most of the individuals we very heavily leveraged (They bought on credit).
Next the market dropped, individuals lost their ability to pay off their margin accounts and wiped out the capital overnight in the banking system, Couple that with the hysteria of the people running on the banks to get there gold out and you have a recipe for disaster.
For most they were not initially affected by the falls of the exchange in 1929 but when banks failed they felt it. Businesses lost credit to operate, accounts were wiped out and small private business failed. No fault of their own but the fault of the overzealous banks. Individuals found there savings wiped out alongside the private businesses and the world plunged into the abyss.
The reaction to this was FDR and the 1933 securities act and the 1934 securities and exchange act. What these two pieces of legislation did was strip the ability of the small private business (who did not cause the market collapse) to raise capital in a traditional form, Bonds. Direct investment was for many years the mainstay of the entrepreneur. It put the restrictions on who could invest (Qualified institutional investor) and how the investments could be sold. It stripped the ability of the individual to invest and make the high returns they became accustomed to and placed all of it into the hands of the very few 1%.
Today if you are a business owner there is a glass ceiling of about $3 million dollars where a business could potentially get debt to expand, retool, or modernize. The Wall Street and Banks prefer an Equity offering. How often do small business owners sell the majority share of the company they own under a public offering or private sale (sale to high net worth’s) to raise the capital they need. The horror stories of this arrangement are very clear. They give up control, get voted out of the company and the new share holders shut them down move the product manufacture to China to maximize the return to the High Net Worth investor (new owner).
The laws perpetuate the problem. Now remove the Glass-Steagall Act and it becomes a high net worth orgy.
Focus, access the laws, and fix the system that perpetuates the behavior.
FIX THE LAWS
this does a pretty good job breaking it down. http://www.youtube.com/watch?v=m376mkdacKc
The video does not answer the question. Good information but that is all.