Trump’s revolutionary presidential win and promise of business friendly acumen has emboldened the big banks and Wall Street to lobby to push back the shackles that were placed on them at the onset of the “Great Recession.”
Their lobbyists have already ventured to Washington to plot and scheme toward a repeal or at least a loosening of the bank’s abilities to speculate with their shareholder’s money.
Instead of giving all the details, like how much more profit the banks can earn, lobbyists plan to focus on the fact that Volcker is reducing market liquidity, thereby hurting companies, investors and the economy.
What did the big banks do when they were bailed out by the stimulus, “TARP” money?
Did they use the windfall to cancel unsecured credit card debt and make short term business loans? NO.
Did they voluntarily offer lower, fixed interest loans on ARMs and other predatory loans that caused homeowners to lose their homes? NO
Let’s look at only two examples of why big banks cannot be trusted.
The scandals of mishandling and abuse of the deposit holders in Wells Fargo and JP Morgan Chase have resulted in large fines by the Banking Commission. Two of the incidents and fines are listed below.
In September and October of 2013, JP Morgan paid 920 million and 100 million dollar fines respectively and ADMITTED to “reckless conduct and market manipulation” in connection with the 2012 “London whale” trading debacle which caused 6 billion in losses. These are only two examples of the fines the banking institution had to pay for its reckless conduct with shareholder’s investments. There are eleven other infractions mentioned in the article below that involve fines of both millions and billions, not to mention the amounts that investors lost because of their recklessness.
However, the CEO, Jamie Dimon received a 7.4-million-dollar cash incentive bonus this year. His salary has been consistent since 2014, of 1.5 million in base salary plus large stock options.
Not bad work, when you can get it.
Wells Fargo is no stranger to fines and penalties for abuses of financial trust.
Recently, it was discovered that Wells Fargo put so much pressure on its employees to open new accounts that they were forced to do so without many of their client’s knowledge.
The bank has now been fined 185 million for their “outrageous sales culture.”
But wait, there’s more, as if destroying the trust of their investors and depositors was not enough. Wells Fargo had to pay 1.2 billion for improper mortgage lending practices, admitting that they certified loans that were not eligible for FHA mortgage insurance and the bank did not disclose thousands of faulty mortgage loans to HUD, according to the Department of Justice. Ordinary people would go directly to jail if caught doing either one of these things or even just lying or misrepresenting themselves on an application for a FHA loan.
Yet in 2013, Wells Fargo’s CEO, John Stumpf, won the dubious title of winner for the most salary in the banking business. His yearly wages are 22.87 million. The company reported that the huge amount was justified due to the strong showing in 2012, earning 18.9 billion.
Un-huh, sure, it did, it is easy to see how that profit margin came into play.
Apart from the all the big bank’s illegal didoes, the Federal Government has been practicing Quantative Easing for the last eight years, a policy where a central bank (The Federal Bank) creates new electronic money in order to buy government bonds or other financial assets to stimulate the economy. This is put into play when standard monetary policy cannot uphold a failing currency.
This artificially inflates the stock market, causing the economy to appear much healthier than it actually is, meaning the rich do beyond great and the rest of the working people not so much.
It appears that both Wall Street and the Big Banks are guilty as charged in their destructive role in the “Great Recession”.
No easing of regulation is warranted here.
If allowed a free rein, these two groups will not only NOT help the economy, (except their own,) they will put the US and the world RIGHT BACK to the crash in 2008!
Stand up, and write or call your elected representatives in Washington letting them know that no easing or repealing of the Frank Dodd/Volcker Act will be forthcoming!!!
photo credit: Boston Public Library The pious Mr. All-Bone, taking leave of his directors previous to his departure for Europe via photopin (license)