The Banks: Capitalism's Own Worst Enemy

By Sandy Prisant

This morning I closed all my bank accounts at  J P Morgan Chase. It was where my father opened my very first account when I was 16. I remember Mr. Marty, the branch manager in Great Neck, NY. Nice smile. Nice man. 

How things have changed.  I had opened additional accounts with the guarantee of no-fee checking for life a few years ago, but this month Chase has swooped in and arrogantly broken that guarantee for all customers. No apologies. No explanations. This hardly caused a ripple, because we all now expect banks to abuse us to an extraordinary degree.

In recent days, Goldman Sachs has announced bonuses of SIXTEEN BILLION TWO HUNDRED MILLION DOLLARS for results in the same year that 1.2 million American families lost their homes .  And now we learn that US taxpayers will be picking up tens of millions in legal fees for some of our public bankers at Fannie and Freddie Mae, whom are millionaires in their own right, but with the ethics of bag ladies (New York Times/Jan 24).  In the same  week, two other financial institutions are petitioning the courts to burn their sub prime loan records.

The questions abound:

• What has happened to the re-establishment of banking regulation that was so vital in ending the last Depression? The stripping of Glass-Steiglitz regulation is a primary cause of this Depression. What is Washington waiting for?
• We created TARP to keep the banks and the economy liquid. The banks, on their own, decided to take the money, but not pass it on.Single-handedly they have made America illiquid. Can neither the Fed nor the Comptroller of the Currency oblige banks to make sound loans--as has been required in the United Kingdom?
• In short, if the Banks were a foreign enemy or terrorist organization, could they do any greater harm, more effectively, to the United States?
• And could they do it with greater disdain? 

The root of the word "capitalism" is "capital".  It is our understanding that in a free enterprise system, capital is the core element in economic development and that it comes through institutions called banks.  In this  Post-Prosperity Era, banks have decided they are not here to provide capital, but to charge fees for everything imaginable, pay out little or no interest but demand huge credit card fees and interest, while simultaneously repossess our homes. That's their entire business model.

Except for those bank shareholders who receive dividends, there is in fact no "Capitalism" being conducted by these institutions. 

Recently people were fascinated to see Goldman "invest" a large sum in Facebook, suggesting that website was worth billions, but Goldman was proving nothing of the sort. In fact the investment bank was simply doing what it does best:  (1)Acquiring equity that could be re-sold to existing or new clients at a profit and with commissions and (2) Putting itself in an almost unassailable position to earn hundreds of millions more for handling Facebook's IPO in the next five years.

Any corporation has the right to make a profit. But only banks have as their raison d'etre facilitating not just a nation's profits, but its economic survival through Main Street liquidity.

The banks are quite clearly telling us that is not their role and they want nothing to do with it.  In the words of  Nobel Laureate in Economics, Joseph Stieglitz: "If bankers win, they walk off with the proceeds, and if they lose, taxpayers pick up the tab."

Which leaves us with the greatest question of all:  If banks no longer will provide capital, what is the future of Capitalism? A recent study shows almost half of all Americans believe our nation's best days are behind us. With banks like ours, we can't blame this one on China.