Democrats & Liberals Archives

Bank Potentates

Bailout! The monster banks, which produced the major forces causing the depression, are being bailed out so they may continue their pursuit of privileged lives the rest of us can only dream about. And we, the individuals battered by the depression are paying the price. The super-rich bank potentates do as they please and we, the sufferers, help them!

I have heard lots of discussion about the cause of this depression. So have you. The papers and cable chatterers talk about it incessantly. Everybody puts the blame on a different person or force. But almost all agree that excessively risky debt - home loans, car loans, credit cards, business loans - is the immediate culprit.

This puts the blame on the poor consumers. Consumers were not careful. Consumers borrowed too much. They put everything on their credit cards. They bought more goods and sought the so-called good life.

Some good-government types (I use this term to avoid political battle) claim that our government borrowed more than it should. And of course, this is true. And it did contribute to the general borrowing binge.

Let's look at this situation carefully. Where did all this borrowed money come from? The banks. It's pointless, however, to lump all banks in the same box. Many banks were and are conservative in their lending practices. For the most part, these healthy banks are small. They do not need bailouts.

Bailouts are being offered to big banks because they say these banks are "too big to fail." How did these banks get this way? They indulged in riskier and risker behavior. They managed to reduce the margin requirements - ratio of borrowed money to real money - needed to buy investment instruments. Then they took these investment instruments and made them so complicated nobody could understand them. They got their fingers into every aspect of finance, not merely banking. They hired brilliant people and gave them outrageous bonuses to come up with new ways of making money.

They bid up the income of financial people and especially their executives, these finance guys came to the conclusion that they could do no wrong, that they were indispensable and that they deserve the huge incomes they were receiving. So much so, that they wasted money on bonuses, fancy retreats, jets and other perks AFTER they received bailout money from the government!

There are many examples of this. Here is but one example:

While the bank executives were testifying on Capitol Hill, New York Attorney General Andew Cuomo disclosed new details about how Merrill Lynch paid out over three billion dollars in bonuses last year just before the company was sold to Bank of America. 700 Merrill Lynch employees received bonuses of one million dollars or more in 2008 even though the brokerage firm lost $27 billion. The top four bonus recipients received a total of $121 million in bonuses.

During a Congressional hearing, several bank potentates complained about the government controlling compensation. They did not mind taking the hand-out but did want anyone telling them what to do. To which Barney Frank answered:

Frank told the bankers if they don’t like the restrictions on the government aid, they should return the funds. “We will take it,” Frank said. “If there are any obstacles to you giving it back, we will undo those obstacles.”

We must be tough with these super-banks. We must place restrictions on their actions to reduce their ability to be "too big to fail." Congress imposed some restrictions. Too mild. We must be tough and put bank potentates in their place.

Posted by Paul Siegel at February 13, 2009 5:17 PM
Comment #275496

Nationlize the bastards!Its not the usual way Americans think but what we are doing now is socializing the losses and not the potential gains. The gains still go to the fat-cats. Theres enough Americans POed to maybe change our thinking about bank takovers, at least temporarily.

Posted by: bills at February 13, 2009 11:47 PM
Comment #275497

I agree, nationalize them, fire the execs, and break them up into regional banks, and outlaw entities “too big to fail”. Then once there is stability in the financial sector, sell them to private entities and use proceeds to pay down national debt.

Posted by: gergle at February 14, 2009 8:22 AM
Comment #275499


Gee, there’s nothing like engineering total failure into a system to get the people mad enough to make tyrants of the engineers of total failure.

But, alas, that is what comes of thinking the government is somehow “different” from a corporation (or, rather, from any other sort of corporation).

Posted by: Lee Jamison at February 14, 2009 9:15 AM
Comment #275500

Lee total failure has happened already. Yes the free market to big to fail yet failed anyway thing has cost us much. If we are going to keep using the Reagan method of socialization whereby only the loss is socialized one of these days it will be shame on us wouldn’t you think.

BTW what kind of corporation would continue on in a socialize the loss privatize the profit to others business plan?

Posted by: j2t2 at February 14, 2009 9:59 AM
Comment #275502


It’s ‘trickle-down’, damn-it, don’t you understand ANYTHING???

Posted by: Marysdude at February 14, 2009 10:20 AM
Comment #275519

It’s all about lack of regulation and oversight.

“There must be a strict supervision of all banking and credits and investments. There must be an end to speculation with other people’s money. And there must be provision for an adequate but sound currency.”

Obviously, this never happened. But it became worse the past few years with Bush’s lack of oversight, and Obama doesn’t seem to want to address this.

The Democrat’s response to this crisis (both the bailouts and stimulus) gos against everything the Dems have claimed to stand for. It’s the epitome of trickle-down economics, and since there will be little oversight of the bailout money, it’ll be a slow drip indeed.

The idea of using all this money to help the middle class and the banks by paying off outstanding mortgages has been discussed over the past few months by both Liberals and Conservatives. Yet, Obama the Dems in Congress don’t want to touch it.

The bailout money should go to pay off mortgage for people making under, say, $75,000 per year.
Any money left over can go to bailouts of business that have a chance of surviving unaided in the future, providing there is massive oversight by the government.

The stimulus money should go small business that are failing because of the economy. The party must stop automatically thinking that small business owners are rich, when many of them can’t afford to pay their employees. Keeping the small business afloat will keep many from loosing their jobs. The current random pork projects plan will do little but throw some extra work to companies that are already rich enough to afford political contacts.

I’m sorry now that I voted for Obama, because he’s turned into Bush III. He and the Dems have turned their backs on the middle class they have always claimed to stand for. If the Democrats are going to give away massive amounts of money to their big business buddies and accrue massive debt to fund their pork projects, why should I see them as anything different than the Republicans?

I listened to Obama’s press conference the other night on the radio. It’s amazing how much he sounded just like Bush! Not only was he giving Bush-like non-answers, he paused and stuttered in the in the same places Bush used to. If it wasn’t for the accent, you could swear it was the same guy. It’s almost as if setting foot in the White House turns you into a gibbering wreak! This is NOT the same Obama we saw during the campaign.

Posted by: XDem at February 14, 2009 1:35 PM
Comment #275521


So in a matter of days, Obama hasn’t fixed what it took Republicans 6 years to create? Damn shame that.

Posted by: womanmarine at February 14, 2009 2:53 PM
Comment #275524

So in a matter of days, Obama hasn’t fixed what it took Republicans 6 years to create? Damn shame that.

Don’t obfuscate. I just want Obama and the Democrats to practice what they’ve preached, instead of acting like Republicans did under Bush.

Posted by: XDem at February 14, 2009 3:11 PM
Comment #275526

X, and you’re willing to give them time to accomplish this monumental task……as long as it’s within days.

Posted by: jane doe at February 14, 2009 4:15 PM
Comment #275537

Credit Unions are the regulated non-profit financial institutions of choice. I highly recommend them for consumers.

Unfortunately, they are limited in what they can offer at the mega commercial level, or else, I would recommend avoiding for profit financial institutions altogether.

Posted by: David R. Remer at February 14, 2009 6:12 PM
Comment #275538

X, and you’re willing to give them time to accomplish this monumental task……as long as it’s within days.

Wow, is that the generic answer to any criticism now?
Did you and womanmarine even read what I posted?

Time isn’t an issue. It’s just an obfuscation on your part, so you can dismiss what I wrote out of hand. I didn’t even bring it up.

Posted by: XDem at February 14, 2009 7:28 PM
Comment #275542

X, Obama is less than a month into the quagmire left by Bush, et al, bucking a headwind, and you’re bitching because he hasn’t fulfilled campaign promises yet.
I’d say you’re the one alluding to a passage of time without your idea of achievement having been accomplished.

Posted by: jane doe at February 14, 2009 11:13 PM
Comment #275543

X, Obama is less than a month into the quagmire left by Bush, et al, bucking a headwind, and you’re bitching because he hasn’t fulfilled campaign promises yet.

No I’m bitching about the bailouts and the stimulus package. Also, the lack of oversight inherent therein. Also, Obama’s press conference. This stuff is going on right now! Don’t you have any reading comprehension whatsoever? You’ve tried twice to respond to stuff I didn’t even write!

Posted by: XDem at February 15, 2009 12:00 AM
Comment #275544

I think that the bailout itself and the money we’re spending on it are ridiculous. Were made to believe that if we let these institutions reap their richly deserved failure, the earth will stop turning, the seas will dry up, and life will cease to exist.

In truth we’d learn the hard lessons which are now postponed inevitabilities and come out with a better system.

I wish that everytime I failed miserably I could be rewarded for it. Apparently that rule only applies when you destroy 1000’s of lives but not just your own.

Posted by: O'guitar at February 15, 2009 1:24 AM
Comment #275555

X, you’ve gotten responses from two of us who seem to get the same thing from your rants. Nobody else is even paying attention to your comments.
In any case, beware the WatchBlog cops…

Posted by: jane doe at February 15, 2009 1:43 PM
Comment #275571

Credit Unions are good, but we need to rebuild a strong local banking system so that everyone isn’t doing exactly the same thing, looking to lend money to the same alpha consumers. Why should a bank based in Los Angeles control lending in North Carolina, much less banks in NY taking over everything? There are actually banks out there that are in good shape. Citicorp has been a disaster for decades. Those responsible for that disaster should be permanently unemployed, but they will probably end up working for the Fed instead, continuing to authorise rolling over the same bad debts at ever larger numbers into the quadrillions.

Posted by: ohrealy at February 15, 2009 5:00 PM
Comment #275602

The one thing that can’t be argued is that there is a difference between the Republican and Democratic Parties when it comes to the corporations. Both are owned.

Posted by: jlw at February 16, 2009 1:34 PM
Comment #275604

Reducing banking CEO pay means that the lobbyists will be the highest paid.

Posted by: jlw at February 16, 2009 1:41 PM
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