Thomas Friedman's editorial in the Sunday N.Y. Times, discusses a recent $285 million fine imposed on Citigroup, and the relationship between the financial services industry and Congress. He concludes with some free advice for the industry, "Stick to being bulls. Stop being pigs." Here is an excerpt:
Our financial industry has grown so large and rich it has corrupted our real institutions through political donations. As Senator Richard Durbin, an Illinois Democrat, bluntly said in a 2009 radio interview, despite having caused this crisis, these same financial firms “are still the most powerful lobby on Capitol Hill. And they, frankly, own the place.”
Our Congress today is a forum for legalized bribery. One consumer group using information from Opensecrets.org calculates that the financial services industry, including real estate, spent $2.3 billion on federal campaign contributions from 1990 to 2010, which was more than the health care, energy, defense, agriculture and transportation industries combined. Why are there 61 members on the House Committee on Financial Services? So many congressmen want to be in a position to sell votes to Wall Street.
We can’t afford this any longer. We need to focus on four reforms that don’t require new bureaucracies to implement. 1) If a bank is too big to fail, it is too big and needs to be broken up. We can’t risk another trillion-dollar bailout. 2) If your bank’s deposits are federally insured by U.S. taxpayers, you can’t do any proprietary trading with those deposits — period. 3) Derivatives have to be traded on transparent exchanges where we can see if another A.I.G. is building up enormous risk. 4) Finally, an idea from the blogosphere: U.S. congressmen should have to dress like Nascar drivers and wear the logos of all the banks, investment banks, insurance companies and real estate firms that they’re taking money from. The public needs to know.
Professor Alderman and Mr. Friedman bring forward a critical point. "Banks" exist to serve the citizens. Of late the "sevice" has been the same as Will Rogers described when he took his cow to visit his neighbor's bull. But before seeking the measure of redress that President Andrew Jackson sought when he pulled U.S. deposits fron the Second National Bank and its head Nicholas Biddle, this writer hopes that some of the keen minds who make this blog so useful and enjoyable might speak to a more global banking issue. This writer's understanding is that some of the European banks dwarf our biggest. If we cut down our grizzlies to the size of black bears, is there a danger that the giant European "short faced bears" will take over? In other words, do our big banks represent countervailing power that must be carefully studied before exercise of government countervailing power over US banks?
Posted by: Mike Gilmore | Monday, November 07, 2011 at 07:00 PM