To break the stranglehold the big banks have on our economy (the top handful of banks account for sixty-five per cent of our gross domestic product), and threats to our democracy, a variety of measures should be taken immediately:
1.Finish the regulations of the Wall Street and Financial Reform Act that provide a workable method to take control over the assets of a “too big to fail financial institution”, and unwind it should it become insolvent. Smaller banks should not be held to the same standards of capitalization as the megabanks, and many of the burdensome requirements of federal regulations. If smaller banks go under because of the economy or speculative investments, the FDIC or other governmental entities can close them down on Friday, fire management, and reopen on Monday.
2.It should be made clear, by way of legislation and a resolution by members of Congress that it will never again bail out these “too big to fail banks”. This will reduce what is effectively a government subsidy to the big banks and gives them an unfair advantage over smaller banks. The Federal Reserve Bank just released a new study that confirms the de facto subsidy from investors’ belief that the Washington politicians would again bail out their Wall Street cronies when their greed gets them insolvent. Let the market choose where to invest or to commercially bank.
3.Reenact certain sections of Glass Steagall law and prohibit banks from performing both commercial lending and securities trading, and thus exposing customer’s deposits to attachment by creditors, or tempting our politicians to again bail out the big banks because of their campaign contributions to them.
4.Immediately prosecute all CEO’s of suspected securities fraud and fine the Wall Street firms to the full extent of the law. Continue to force big banks to repurchase bad loans they sold to the government. In the various states, make sure these banks adhere to the settlement agreements they entered into with the various states’ Attorneys General regarding the criminal acts of signing fraudulent declarations of default. When they violate the settlements they entered into with government agencies, criminally prosecute all bank officials involved. Banks should be held to the same standards of everyone else. Also, if the banks cannot show they own the loan through chain of title analysis, they should not be allowed to foreclose. This will have the practical effect (it is hoped) of encouraging the big banks to keep their promises when the taxpayers bailed them out to provide loan modifications when homeowners meet the HAMP standards. The legal solutions are rooted in the most fundamental principle of our democracy which is that everyone is treated equally under the law and no one is above it.
5.States may want to experiment with the setting up of a public bank run by the state. This would siphon money from the big banks and give them and our politicians in Washington, less financial and political power. I do not believe this is an ideal solution because state governments will abuse their power, but it does put more power in the states and away from Washington, which is of vital importance to our democracy. Power corrupts and absolute power corrupts, absolutely, it has been said.
6.Prohibit the Federal Reserve Board from bailing out the big banks by buying their bad loans in the amount of trillions of dollars. This will only encourage the big banks to continue to write bad loans, which was a significant cause of our current deplorable economy. Also, prohibit them from borrowing money at twenty- five to one hundred-fifty basis points.
7.As outlined in Larry Doyle’s book, “In Bed with Wall Street”, we should appoint a citizen watchdog group to oversee the Securities Exchange Commission (SEC) to make sure it is doing its job of prosecuting securities fraud cases. These individuals appointed to this watchdog group would be men and women of utmost integrity. Mr. Doyle lists a group of individuals in his book he believes has the necessary integrity and knowledge to make sure SEC is performing its mission effectively.
8.Do not vote for a congressman if he accepts campaign contributions from Wall Street. Or at the very least let your congressman know you will be less likely to vote for him or her if campaign contributions are received from Wall Street.
These steps are my thoughts regarding breaking up the incestuous relationship of Wall Street and our federal government.
We currently have an oligarchy in our country between a few CEO’s of Wall Street and a small number of politicians in Capitol Hill. God help us gain back our country. Both the Democratic and Republican parties are corrupt in letting the banks get away with criminal activity and in fact encouraging the whole housing bubble from which we are still trying to recover. As my favorite line in all of rock in roll goes, “Then I get on my knees and pray we don’t get fooled again”.
The above is a work in progress and I appreciate any comments and criticism. If I am on the right track, I will offend both those on the left, and the right.
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