July 20th, 2012
(PetalumaPatch) – Cities and residents are paying the price for big banks’ practices, writes Petaluma resident Tim Nonn. Instead, the mantra of “Too big to fail” should be applied to our country and not the banks, he says.
The banking scandals are coming fast and furious because the global banking system is rotten to the core.
It isn’t only radicals in the Occupy movement who are making this claim.
Federal Reserve Chairman Ben Bernanke recently testified before the Senate Banking Committee that the scandal over the rigging of the Libor interest rate— a benchmark rate for interest on financial products such as home mortgages, car loans and credit cards— reveals structural flaws that are undermining public confidence in the banks.
Bernanke added that he couldn’t testify that U.S. banks were not engaged in the same criminal activity that led British and American authorities to impose a $453 million fine on Barclay’s for its role in the Libor scandal.
In fact, the U.S. Justice Department, and several state Attorneys General, are investigating JP Morgan Chase, Bank of America, Citigroup and other U.S. banks for conspiring to defraud consumers through the manipulation of the Libor rate.
While Libor, which is an acronym for London Interbank Offered Rate, is set daily by a consortium of British banks, it’s also closely monitored by the Federal Reserve of New York, since the rate affects borrowing costs for businesses and consumers in the United States.
In other words, Libor affects all of us.
For this reason, Bob Diamond, the former CEO of Barclay’s who was forced to resign after the Libor scandal broke, may soon have to testify before Congress. The British government has already formed a committee to investigate the scandal. If Congress conducts a serious investigation of the banks, the American public will not like what they see.
William Black, a former bank regulator, said the Libor scandal reveals the existence of an illegal global banking cartel, calling Libor “the largest rigging of prices in the history of the world by many orders of magnitude.”
The manipulation of the Libor rate by a global banking cartel affects hundreds of trillions of dollars in debt every day. We are paying for the banks’ crimes. It is probably impossible to determine the exact amount of fraud committed by the banks, but if one bank in the cartel was fined half a billion dollars, I assume that the figure runs into the billions.
That money came out of the pockets of consumers, businesses and cities that carry trillions in debt. Is it surprising that four cities have already gone bankrupt in California due to banking shenanigans – or that Petaluma may be next?
The corrupt business practices of the banks will continue to adversely impact our economy. Dennis Kelleher, a banking industry analyst, said that the banking scandals will keep coming because the business model of the banks is based on greed and fraud.
“There’s going to be more [scandals] because their business model is corrupt and rotten to its core,” said Kelleher, CEO of Better Markets, a Washington, D.C. based organization that promotes the public interest in the U.S. and global financial markets.
Corruption among the banks will also continue to impact our government. It isn’t surprising that not a single banking executive has been prosecuted for the 2008 financial crash – even though hundreds of banking executives were prosecuted and convicted after the savings and loans scandal in the 1990s. The banks have too much power. They regulate the regulators. The mantra of “Too big to fail” should be applied to our country instead of the banks.
The banking cartels are going to destroy our cities one by one and turn everyone into debt slaves unless we demand accountability. Bob Diamond said it’s time to stop blaming the banks for the bad economy. I say it’s time to put banking executives, like him, in jail for their crimes.
Unfortunately, the political will to hold bankers accountable is sorely lacking. Former U.S. Secretary of Labor Robert Reich, who now teaches public policy at U.C. Berkeley, has said that the public is suffering from “outrage fatigue.”
How many scandals will it take to reign in the big banks’ greed and corruption? I don’t know. But I do know that we can hit the Lie-more banks hard by moving our home and car loans and credit cards to community-based banks and credit unions. We don’t need to wait for a timid government to act. We can hold the big banks accountable today.
Tim Nonn is a local writer who recently completed a new book called “Spirituality for Radicals: Meditations on Contemplative Activism.” He is also a member of Occupy Petaluma.
Source: Petaluma Patch