EDITORIAL
Banking Reform—Protecting the Profits of the Banks

Apr 26, 2010

The Obama administration has been pushing what it calls a big reform of the financial system. The House of Representatives has already passed their version of the bill, and it is now being considered in the Senate. Some Republicans seem ready to sign on.

The politicians promise that “financial reform” will reign in the banks and financial companies that caused the crisis; that it will regulate all the different shady forms of speculation that are so profitable to financial companies; that a consumer protection agency will regulate and oversee mortgages, credit cards and other loans. Finally, the politicians promise that there will be no more government bailouts of banks too big to fail.

In other words, it’s election time. In the midst of a worsening economic crisis, the politicians pretend they are now going to protect ordinary people.

These are the same politicians who have already turned over trillions of taxpayer dollars to the biggest banks and financial companies. They spent more than two trillion dollars in taxpayer money just to buy up these companies’ toxic mortgages and worthless speculative securities.

And their bailout continues. The Fed continues to lend trillions of taxpayer dollars free of charge to these big companies. The companies then lend the money right back to the consumer, or back to the government–at very high rates of interest. Great big profits are guaranteed.

Nobel economist Joseph Stiglitz recently wrote that this could be the biggest transfer of wealth from savers to the banks in history!

And the politicians don’t blink an eye when bank executives pay themselves huge bonuses and salaries, after they pretended that their banks had paid back some of the money the government gave them through the Troubled Asset Relief Program (TARP). These politicians know that the banks used money borrowed from the Fed to pay back the TARP. But the politicians said nothing.

So could anyone really believe these same politicians and government officials are ready to “reform” and “regulate” finance, really crack down?

Crack down on the banks? The Republicans? The Democrats? They gotta be kidding!

The politicians of both parties are linked tightly to the banks. In 2010 Wall Street companies have already given 32 million dollars to political candidates–and that was before the Supreme Court removed the ban on corporate campaign contributions in politics. And don’t forget that when he ran for president in 2008, Barack Obama collected a million dollars from one company, Goldman Sachs.

More than 125 former Congressional aides and lawmakers are now working for financial companies. And at least 70 former members of Congress are lobbying for Wall Street, including former House majority leaders Dick Gephardt, a Democrat, and Dick Armey, a Republican.

At the same time, former bankers and financiers have placed their people at the top levels of the government. Two recent treasury secretaries, Robert Rubin, a Democrat, and Henry Paulson, a Republican, came from Goldman Sachs. And today, Treasury Secretary Geithner’s chief of staff is a former lobbyist from Goldman Sachs.

If either of these two parties really wanted to control the banks, they would first remove all the bankers from their leading posts in the government. And they would start to take the Federal Reserve away from the ownership and control of the banks.

But they don’t. And that says it all: big government is nothing but an extension of big business. It exists in order to assure that big companies continue to make profits in good times and bad, under the Democrats and Republicans.