by Jamar Phillips
After the financial fiasco on Wall Street known among many as the Crisis of Credit, people are still worried about the moral hazard of the Too Big to Fail mentality in government. Many other people on Wall Street worry about growing support to break up huge banks to prevent having to bail them out again. No matter how many bailouts banks get, are they really “vital” to our economy? When 60% of the US GDP is wrapped up in 6 financial institutions on Wall Street, why are we even thinking about leaving this anymore? BREAK’EM UP!
As long as you have so much wealth and so much of your resources in these 6 places, then whenever they screw up, WE ALL DO. There’s no way that the banking system is nothing short of a monopoly known as the financial sector. There’s no competition that occurs here. Who’s competing with you when 5% of your bank’s overall annual earnings dwarfs the size of Haiti’s entire annual economic output? When your bank fails and Sweden, Denmark, and Iceland are one minute from filing for bankruptcy, explain to me how the free market will fix that. These banks are not comprised of bad people. Don’t get it twisted. These are people that work hard and efficiently. They have no bad intentions. But what’s that saying again?
With all of government knowing this, they continue to be lobbied and I’ve learned enough in the past year to realize that politics has something to do with it. You know, if politics could rule everything, I bet Republicans would filibuster a bill to “End the World” and Democrats would argue that this isn’t fair to the dead people. Big Banks lobby so hard on their issues that its hard to tell if Senators have constituents that make less than $4 billion quarterly anymore. And then still have the gall to ask for tax breaks to create jobs. (Nobody hires people because they have extra money. They hire because the salary you pay someone should, in theory, dwarf the value of help they are to you.)
I say break these banks up. Reinstate the Glass-Steagall Act and force the banks to hold more capital to stop them from running gambling arenas. There’s no way they’ll be able to say anything. What are they going to do? Never make a loan again? Then Great! Go out of business and get replaced by 3 other banks. Sounds fine to me. Free markets work when there’s a level playing field anyways. Funny thing is, the government won’t do it. The “Re-election Priority Act” is the 1st bill that passes every Congress and President at the beginning of every term. (Not a real bill.)