Public Ownership of Banks is the Solution

What happens when the powerful become so powerful making regulation ineffective?

Or, what happens when the rich and powerful know the difference between right and wrong, and still choose badly because there are no consequences?

We are inundated with a continuing procession of financial scandals — MF Global’s bankruptcy, JP Morgan Chase’s “London Whale” and his trading losses, Barclay’s rate fixing (LIBORgate), Peregrine Financial’s fraud,  — HSBC money laundering scandal.

They weren’t one time mistakes – they were blatant acts committed over long periods of time showing disregard for rules, regulations, and conscience.

The Dodd-Frank Wall Street Reform Act, the landmark law enacted on July 21, 2010, was designed to end the kind of risk taking, greed, and avarice that brought us the financial crisis of 2008. Yet, inspite of thousands of pages of proposed and final rules to carry out this important law, nothing has changed.

Our elected bodies of government created regulations to prevent another financial crisis and the Banksters just bought politicians to get around the regulations so they could go right back into the high risk investments which caused their collapse and required taxpayers to bail them out.

And still, nobody is in jail. What’s worse, the Banksters gave themselves bonuses with taxpayer money, and are still playing the deceitful and risky games that led to the crisis.

Pouring more salt into the wound is the recent LIBOR scandal which is quickly spreading across the globe as Banksters have been price-fixing lending rates for years to help line their pockets and cook up their balance sheets.

The outcome of this scandal was captured in a short Tweet by Matt Stoler:

What is more fascinating is the Tea Party faction of the new republican party who originally claimed to be against Big Business is doing nothing. In fact, their departure from the original patriotic mission of fighting Big Corporations is just another example of an institution selling out to corporate interests (Koch Brothers).

The Tea Party’s goal of less government regulation to allow for free markets to work more freely actually defies logic and is a mockery of its stances on principle and patriotism. Now, they are letting lobbyists for banks write legislation. The Tea Party has become complicit in the demise of America and guaranteeing another financial crisis since the Banksters have become too large to control, and the invisible hand supposedly prevalent in “free-market” capitalism is non-existent.

What will work?

Public ownership.

The far right will now make claims about “socialism” and “communism” in trying to dismiss the obvious solution, but this solution was born in the conservative school of Chicago economics. If you can’t regulate something, and breaking them up only creates a short-term fix, then convert them to a public utility and stabilize them. We should have done this during the last financial crisis, but the elected officials lack the political will to make the tough decisions.

In a recent interview with Gar Alperovitz:

Public ownership in certain sectors of the economy is the only way to solve some of America’s most pressing problems. Take the financial arena, where the current recession was hatched. Today, five giant banks control more than one-third of all deposits. Wall Street claims this makes it more efficient; but even if the Big Five banks were efficient (which is open to question—how “efficient” are institutions that didn’t know they were carrying a huge backlog of underwater loans?), they were all deeply involved in creating the meltdown that cost taxpayers billions in bailouts, and the overall economy trillions. Numerous economists, left and right, believe that these unbridled operations will inevitably lead to another crisis. JPMorgan Chase’s recent speculative loss of at least $2 billion should be fair warning.

Here is a the interview with Real News Network and Gar explaining the simple solution which our elected officials need to begin implementing to overt another bank crisis at a time when we cannot afford it:

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Todd Smekens

Journalist, consultant, publisher, and servant-leader with a passion for truth-seeking. Enjoy motorcycling, meditation, and spending quality time with my daughter and rescue hound. Spiritually-centered first and foremost. Lived in multiple states within the USA and frequent traveler to the mountains.
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