Democrats & Liberals Archives

We, the People, Are Too Big to Fail

All Americans that are not fat-cat bankers are upset, frustrated and furious against the Mega Banks that have taken our savings and used securities that nobody understands to make themselves super-rich and to produce the second Great Depression for the rest of us. We bailed them out because they were “too big to fail.” In response, they are continuing the wild behavior that has ruined our economy. What can we, the people, do?

We can't depend on Congress. The big banks have bought most of our representatives and senators. Whatever bill is proposed, lobbyists are running all over Washington and getting them diluted so much that they are useless.

If we can't depend on Congress, we can depend on ourselves. Arianna Huffington has an excellent article in which she details America's beef with the Big Banks:

The big banks on Wall Street, propped up by taxpayer money and government guarantees, have had a record year, making record profits while returning to the highly leveraged activities that brought our economy to the brink of disaster. In a slap in the face to taxpayers, they have also cut back on the money they are lending, even though the need to get credit flowing again was one of the main points used in selling the public the bank bailout. But since April, the Big Four banks -- JP Morgan/Chase, Citibank, Bank of America, and Wells Fargo -- all of which took billions in taxpayer money, have cut lending to businesses by $100 billion.

What's Huffington's brilliant answer:

MOVE YOUR MONEY FROM MEGA BANK TO COMMUNITY BANK

Very simple. If you have a savings or checking account with one of the Big Four Banks, switch it to a Community Bank in your area. Community Banks behaved properly and did not undertake wild risks. Americans switching from Mega Banks to Community Banks will be the big slap - the wake-up call - that big banks need.

To find out more about this effort and to check on Community Banks in your area, go to MOVE YOUR MONEY.

Let's show the Mega Banks who is charge in our democracy. Let them know that

WE, THE PEOPLE, ARE TOO BIG TO FAIL!
Posted by Paul Siegel at December 30, 2009 3:12 PM
Comments
Comment #293183

The policy of our government seems to be, since they get the big banks to take over failing banks, they allow them to take over successful smaller banks as well. I’m seeing Citi and Chase all over the place here. These banks now need to be split back up into smaller banks that will be more responsive to the needs of the communitites where they are located, instead of Wall Street.

Posted by: ohrealy at December 30, 2009 6:28 PM
Comment #293191

Well now Gosh, Paul, that smacks of socialism! Move our funds from a great big moneymaking bulldozer to a local community organization? You been reading Karl Marx or something?

Dammit man, this is brilliant! We need to get this out! Seriously, a brilliant idea - banks lie, cheat, steal and essentially screw you over every day of your life, and yet we just shrug and say, whatever. Well let’s not! Let’s put our money where our conscience is and actually make a change!

I’m doing it. It’s a wonderfully simple yet elegant idea. I’m doing it. Dang, if this went viral… I mean, what a fantastic idea. Who cares who holds your money, so long as they’re honest? And they AREN’T!!!

I’m doing it. I hope you will too.

Posted by: Jonathan Rice at December 30, 2009 9:07 PM
Comment #293202

A word of caution. Community banks may well be holding a lot of bad morgage paper also and without the government much willing to bail them out. They may well be “zombie” banks on paper, being kept alive by hope. Sometimes that hope arrives in the form of a mega-bank ,with their backing,taking the smaller bank over.
I feel sorry for the BHO political team. The administration has to what works and works quickly. Than means bailing out the big players. Politically that ceeds the populist position to the dumb bastards that got us in this mess to start with. The good news is that BHO will most likely recieve a second term anyway as the Reps seem bent on putting forth the most repulsive wing nut they can come up with to run against him.

Posted by: bills at December 31, 2009 6:30 AM
Comment #293207

Bills is correct in expressing caution about community banks. As of early December, according to the FDIC, over 130 community banks have failed and many more are poorly capitalized teetering on bankruptcy. In Georgia alone, 24 community banks have failed. In addition, a significant portion of commercial property loans are held by medium sized and community banks. The defaults on commercial property loans are expected to hit those banks hard in 2010.

Posted by: Rich at December 31, 2009 10:20 AM
Comment #293212

That’s why you do research and ask your local bank about their history before you commit.

In my experience, they’re just as good, if not better than BoFA, etc.

There’s always a good, stable bank in most localities, it just takes some looking around, so generalizing that “take caution about community banks” is false, when you obviously need to do that anyway with any financial decision.

Plus, after talking with a manager at a local bank, yes, smaller banks do get bought out, but if they’re stable and serve the community well, they have no reason to bow to a bigger and unstable mega-bank.

Posted by: Jon at December 31, 2009 11:58 AM
Comment #293213

As long as the bank is FDIC insured or equivalent, not really an issue.

My issue would be access to the bank either through the internet, or via ATMS.

Reinstate Depression era reforms. Allow branches, but wall them off. The main issue was and is risky investment. Banks should not be risk investors. Investment banks…fine. Second issue is usury. Place reasonable limits on it, or expose it by requiring large notification billboards. I personally think it will be self limiting. Most people, once burned, will move out of the bank anyway. The FDIC should not insure investment banks. Whenever hedge funds, investment banks and the like become too large, close scrutiny is called for. The game has been skewed when this happens. Someone is hiding risk.

Posted by: gergle at December 31, 2009 12:21 PM
Comment #293227

I live in Georgia. This state has closed more local banks than almost any other, but the idea is so good I’m going to switch anyway. I’m currently with Wachovia/Wells Fargo, and think I’ll select a Credit Union to do my banking. Most of them can do all that a bank can, and not many are failing. This is a great concept, and it might very well send the right message.

Posted by: Marysdude at December 31, 2009 7:22 PM
Comment #293506

i remember when interstate banking was allowed after decades of banks being restricted to each individual state. The Great Depression era convinced people that banking needed to be spread over many smaller entities to prevent the failure of one or two huge banks from destroying the entire system. Once again those who think they are to smart to learn the lessons of history are doomed to repeat it.

Posted by: jim at January 8, 2010 9:42 PM
Comment #294346

The local community banks don’t offer as high of an interest rate. And helping big companies fail will do a lot more harm than good.

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