It took until 1999 for Rubin to finish the job, but after he did, he went on to earn tens of millions at Citigroup, an institution that benefitted from his activities and had to be bailed out three times by taxpayers in 2008.”

These Are the Plunderers
Gretchen Morgenson & Joshua Rosner
#bookstodon #Nonfiction #privateEquity #predatoryCapitalism #glassSteagall #billClinton #robertRubin

@RichardJMurphy

Why do we tolerate government guarantees that they don't charge for? I think because the fee would be passed through to depositors. Better to limit or tax the profits of banks if it's government funding that's needed.

What we really want, I'd say, are banks that operate in the interest of depositors, not in the interest of shareholders, at least for small banks that hold regular people's money.

I agree that banks that want to play wheeling & dealing antics ought have no such protection, but I'm not sure the government has an interest in selling protection to anyone willing to ante up the fee. Let private enterprise offer that kind of insurance.

As a US citizen (with no special monetary credential), I would think it adequate "payment" for banks that got state guarantees had to have to play by strong rules on rates and fees, and possibly even control of the right to call themselves banks (or some particular kind of bank) so that people placing money in them would understand what they were about.

My understanding was that this important distinction was carried in the US by the Glass-Steagall Act (1933-1999). I see no material good that has come from the repeal of this act. It seems a shame it was repealed.

I recall at some point a decade or two ago watching C-SPAN (public television) coverage of US Congress interviewing principals (CEOs perhaps?) of major banks to ask them about excessive fees. The response of one of them floored me. (I'll use quote marks, but it's not exact, just a paraphrase from a seared-in memory of my shock.)

The exec went on about what great "products" (let that use of the terms ink in) things like overdraft fees were and said "If I had another few products like this, I wouldn't have to offer consumer loans." (!!!) That people can get so lost in the profit-making that they lose sight of the idea that banks are ABOUT lending and NOT about overdraft fees helps establish context for who does and doesn't deserve FDIC.

I've heard it suggested "tax what you don't want people to do", and I think this applies to excess fees. So when the cost of just putting your money somewhere gets to be excessive because of monthly fees, etc., I have to wonder "Is this my bank's way of saying I'd rather not have your business?" Because banks used to be happy to pay me to put my money in them, not charge me for the privilege.

I honestly think many banks lately would rather not be dealing with consumers at all and rather than just say so are just trying to monetize the idea of kicking people out. I suggest the government put it in stark terms and say "If you're not going to care about regular people, you don't get the protections offered by the government representing all of those people".

The point of government is not money. Money can speak for itself. It needs no representation in government. The point of government is to be a counterbalance to money, to be the thing that pushes back and says individual human dignity matters independent of how much money each such soul has.

Governments should give us a framework in which banks and other business can exist, as opposed to businesses and banks giving us a framework that is so economically powerful it controls governments.

#Bank #Banks #FDIC #Government #Banking #Regulation #GlassSteagall #Money #Society #Politics