the Voice of
The Communist League of Revolutionary Workers–Internationalist
“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx
Nov 3, 2008
A reporter for the New York Times managed to listen in on a conversation inside JP Morgan Chase bank four days after it had received 25 billion dollars from the government, as part of the 700 billion dollar giveaway to aid the American banking system.
The objective of this plan is supposedly to restore confidence and the capacity of the banks to issue loans. But when a JPMorgan employee naively raised the question, “How will this loan aid effect our lending policies,” a director of the bank revealed that claim to be a lie.
He explained: “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.” And he added, “We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side.”
Thus, the banks are not going to give new loans at reasonable rates – which was the government’s pretext for giving the banks the money. No, they are going to use government money to buy up one another. And, in fact, the government is encouraging them to do that – it has even given a new tax break to those banks that buy up another bank.
The role of economic crises has always been to allow the biggest companies to gobble up the smaller ones. This example shows that they are doing it today with the help of the government. The government pretends this is necessary, so the banks can carry out their function – which supposedly is to loan money so companies can operate in the interest of us all – a lie, pure and simple.