Group urges moving money out of "too large to fail" banks
Too large to fail?
The taxpayers of the U.S. have been told that there are institutions which are, simply put, too large to fail. Thus, the taxpaying public must bail out these institutions when they blunder, bilk, and otherwise pilfer from their shareholders, investors, and the general public. Meanwhile, the executives of these companies make hundreds of millions of dollars, with which they stockpile mansions, yachts, and small personal islands in the Carribean. Of course, many of these same corporations balk at paying their fair share of taxes, as they move their corporate offices to off-shore tax havens, lobby for special tax loopholes, and other assorted chicanery.
Just how did we get into this mess?!
One might ask how our regulatory agencies allowed institutions which are "too large to fail" to exist in the first place. Well, there's a good story there, of course. Some of it involves the repeal of the 1933 Glass-Steagall Act, which was passed in the aftermath of the Great Depression. The Glass-Steagall Act, among other things, was enacted to prevent banks and financial services companies from joining forces and growing too large. As the years after the passage of Glass-Steagall wore on, large banks and financial companies, not satisfied with merely big profits but wanting even larger opportunities, oiled the gears by lobbying congress (with campaign cash), and finally got Glass-Steagall repealed in 1999 with the passage of the Gramm-Leach-Bliley Act, billed at the time by Republicans as "The Financial Services Modernization Act".
A "bright idea" from the Republicans (with an assist by House Democrats)
The bill that ultimately repealed the Act was introduced in the Senate by Phil Gramm (Republican of Texas) and in the House of Representatives by Jim Leach (R-Iowa) in 1999. The bills were passed by a Republican majority, basically following party lines by a 54–44 vote in the Senate, and by a bi-partisan 343–86 vote in the House of Representatives. While Republicans were the driving force behind the repeal of the Glass-Steagall Act, it is worth noting that without the help of Democrats in the House of Representatives, the repeal might have failed. As is often the case, Republicans can take the 'honors' for the most corporation-friendly (and citizenry-unfriendly) party, but Democrats love campaign contributions as well, and are easily influenced by the deep pockets on Wall Street. Wall Street knows how to play the influence game and knows that "money talks."
Mergers and consolidation
With the repeal of Glass-Steagall, banks and financial institutions were allowed to merge into increasingly large entities, with much less regulatory oversight. Thus, the next 10 or so years, 1999 to 2009, gave rise to the behemoths now known as "institutions too large to fail." That's where the taxpayers got on the hook for multiple-billion dollar bailouts. Had our governmental regulatory agencies and oversight not been eviscerated by the repeal of Glass-Steagall, things might have been different. But remember, the free market ideology espoused by big business interests (and the politicians who do their bidding) purports, with an almost religious zeal, that markets will self-regulate, and that unfettered greed (the basis of free markets) will guide the "invisible hand" of the market to solve all problems. Umm... yeah, right.
Where do we go from here?
With that as background, it's not surprising that there's a new movement urging folks to "vote with their pocketbooks" by moving money out of the 6 or 7 largest financial institutions into smaller local banks or financial cooperatives such as credit unions. The 6 or 7 largest institutions - which hold sway over more than 90 percent of money invested - include Bank of America, Wells Fargo, J.P. Morgan/Chase, Citibank, Morgan Stanley, Chase, and Goldman Sachs. By divesting from these institutions, not only will these entities be down-sized - perhaps to the point where they are no longer "too large to fail" and in need of taxpayer bailouts, money will also be infused into local communities for local lending. It sounds like a win-win scenario. Oh, and when you go to bed at night you won't have to wonder how the CEO of your bank has spent his multiple millions of dollars in bonus money subsidized by your tax dollars.
For more information
For more information on the movement, check out the move your money site.