Guest post by Better Markets
Originally published at Better Markets
It’s always amazing how the 99% of banks put up with the 1% of biggest banks, their oligopoly, their subsidies, and their favored treatment. It’s clear and visible everywhere and it directly hurts the other 99% of banks, yet the 99% just takes it. For example, 99% of banks aren’t too big to fail so, if they fail, they get taken over, lose their jobs and, often, their wealth.
Not the 1%ers on Wall Street: they get to fall into the comforting arms of the Federal government, which prevents their failures with taxpayer bailouts and special programs from the Fed. No penalties and no accountability is alive and well on Wall Street, but no where else in America.
What financial reform is really all about is reintroducing the favored 1% of the biggest banks on Wall Street to capitalism and the free market. They don’t like to admit it, but Wall Street is the home of socialism in the United States.
It’s the only place where companies
1. aren’t allowed to fail even if they are bankrupt and their management runs them into the ground;
2. pay their executives obscene amounts of money, mostly in bonuses, during the good times, but pay no penalty in the bad times and, of course, no matter what they all get to keep all the cash they stuffed in their pockets while bankrupting the company;
3. get to keep the upside of their bets no matter how reckless, but get to stick others, mostly the taxpayers, with the downside of any losses;
4. get to run an oligopoly with the government ignoring it: 95% to 98%% of derivatives are controlled by just the 5 biggest banks (according to the Comptroller of the Currency);
5. get to operate without transparency, exercise market power and control, engage in predatory conduct, create and maintain an unlevel and unfair playing field; and
6. get massive government subsidies that allows them to unfairly compete against other banks (i.e., deposit insurance/sticky assets to subsidize their other high risk businesses; access to the full range of Fed programs and cash; borrow at zero interest rates from the Fed; etc.).
Better Markets and financial reform are all about changing all these special benefits that are showered on Wall Street’s biggest too big to fail banks. That special 1% with their claim on taxpayer money and the treasury of the US has to end and the 99% of other banks should join forces and make it happen.
After all, that’s just capitalism and a free market, which the 99% are already subject to.