Note:This is part three of a three-part series. In part one Nick Fillmore described how superbanks carry out illegal and unethical activities so that top executives can make millions of dollars a year. Part two looked at how the big "gangster bankers" are preventing governments from policing them.
International mega-banks, headed by unscrupulous executives and with the support of thousands of lobbyists and hundreds of high-paid lawyers, are defying efforts by authorities to stop them from engaging in often illegal and risky financial transactions that could lead to our next economic collapse.
These are the same institutions, banks such as Barclays, Goldman Sachs and JP Morgan Chase, that had to be rescued after playing such a central role in wiping out trillions of dollars in assets during the Long Recession.
They are working hard to keep as many as possible of the same weak laws in place that allowed them to make billions in profits for themselves and cause so much damage.
The Obamas, Camerons and Harpers can't -- or won't -- stop the banks
Amazingly, the biggest governments in the world are unable to tame the investment banks. The politicians pretend to be in charge, but they nearly always cave in to the banks.
In truth, despite Obama's tough-talk speeches about "fat cat" bankers, his actions paint a different picture. He accepted millions of dollars from Wall Street for his 2012 election campaign, and it's of symbolic interest that on his vacation after being elected, his first golf game was with his chief Wall Street fundraiser.
Top U.S. federal departments claim they lack the resources to prosecute, but it is just as likely that the government is afraid to go up against the bankers' high-powered, high priced lawyers. Moreover, the bank's aggressive lawyers are capable of dragging out a case for several years.
Banks winning battle so far
Meanwhile, governments are trying -- half-heartedly it seems -- to pass new laws that would bring the giant banks under control. So far, the banks are winning.
Three areas of serious contention:
- In both the U.S. and Europe, powerful, multi-million-dollar lobbying by the big banks has stopped government from enacting laws that would prevent banks from gaining access to taxpayer funds, like they did in 2008, if a super bank was on the verge of bankruptcy.
- The bankers have stalled the implementation of legislation that would prevent them from using the savings and investments of everyday people when they engage in highly risky ventures for their own profit. Interestingly - in a move that goes against the interest of the Canadian public - the international banks recruited Finance Minister Jim Flaherty and former Bank of Canada head Mark Carney to lobby Washington to go easy on the banks.
- They also are successfully fighting off proposed legislation that would demand that the banks put up more money to guarantee against losses on derivatives bets and other wagers they make.
The banks, which have the support of a number of high-ranking U.S. and European politicians, say the regulations would hurt them and slow economic growth. Independent economists say the proposed regulations do not go far enough.
Many of us are puzzled to figure out why so many people -- probably thousands of them -- have become so greedy and think nothing of carrying out corrupt bank transactions that destroy the livelihood of millions of people.
"I think they simply see themselves as being at the very top of the food chain," says Dr. Ulrich Thielemann, who has taught philosophy and business ethics at the University of St. Gallen, Switzerland. "They feel like they're able to trick others. That is the thinking of a caste of people who have been trained at business schools. . . . It's an economic theory that views the most rational action as what is to your own advantage. Its aim is to maximize its own income and will and - if it comes to that - walk over dead bodies to achieve this."
Some ways the public can take part
If another major financial collapse is to be prevented the general public needs to take action to help get the banks under control. Here are some of my thoughts:
Make government do the right thing
Perhaps the most disturbing thing I've had confirmed while working on this series is that governments take the side of the banks and business over ordinary people. Actually this should not be a surprise. The powerful corporations have controlled our lives for close to 40 years, and the banks are right at the top of that pyramid.
Citizens' groups and individuals must do as much as possible to pressure governments to do the right thing. If governments don't start doing the right thing very soon, I fear the worst.
In Canada, it is easy to spot how Harper and Flaherty allow banks and the super-wealthy to do pretty much as they wish. Obviously, these two men, both rabid neo-liberals, are not the right type of politicians to be in charge of our financial system, particularly at a time when it faces so many threats.
Dealing with Derivatives
My first order of business would be to ban gambling mechanisms that contribute absolutely nothing to society. This would include all derivatives. I'd also banish the heinous credit default swaps, which, believe it or not, are bets on whether a country or company will go broke.
I can hear the conversation at home in the evening: "Hello dear, what did you do at the office today?" "Aw, just the usual. I placed a $3-billion bet that Spain will go bankrupt by the end of the year."
Send crooks top jail: One of the main reasons that rampant, billion-dollar corruption continues in the financial sector is because not one executive at any of the dozen or so corrupt giant international investment banks has gone to jail, or even been prosecuted.
HSBC Bank was fined a record amount of $1.92-billion in connection with a money-laundering scheme involving Iran and Mexican drug cartels. No criminal charges were laid against company executives, and HSBC continues to operate as normal - with top executives hauling down millions-of-dollars in income every year.
Expand Co-ops and launch public banks: In both Canada and the U.S. we need to lobby governments so they will allow for the creation of more safe places where we can do our banking. Unfortunately, Credit Union membership in Canada is on the decline, and Finance Minister Flaherty tried to put a nail in the coffin of the system, by removing its tax exempt status in the 2013 budget. Credit Unions need more young families to join, and they need to have more freedom to serve the public.
Credit Unions in the U.S. serve close to 100-million members and more should be opened to give people an option to for-profit banks. The country has only one public-owned bank, in North Dakota, but it's a great one. With banks crashing all around it during the recession, it thrived. Every state should launch public-owned banks.
Which are the "Worst Banks?" Citizens' groups, individuals and Occupy supporters could pick a "Worst Bank" in both the U.S. and Canada, and carry out a series of protest actions, including having people move their accounts to credit unions.
Become personally involved: We all must find ways to be personally involved. This can mean keeping up-to-date concerning the dangers caused by irresponsible banks and spreading the word among our friends. We must at least occasionally take part in community protests and, if we can afford it, make regular donations to organizations that are campaigning for the banks to be brought under control.
Let's "Out" Our Worst Bank Executives: I'm in favour of exposing criminal and immoral bankers who are irresponsible and greedy. The men wearing Armani suits in the day, while they cheat from us, have the comfort at night of their social clubs, golf courses and families. These people receive a lot of attention and recognition they don't deserve. I think it's time we shunned them at the club and refused to attend their dinner parties. Let's bring back morality!
Read other articles by Nick Fillmore on his blog, A Different Point of View