The next time you hear a libertarian tell you that the free market should be left untouched by the Federal government — free to police themselves as it were — you are hereby given express permission to a) laugh in their face b) laugh really hard in their face or c) blow a huge raspberry in their face, then laugh in it, then set fire to the copy of “Atlas Shrugged” they’ve got tucked away in their vest pocket.
Bank of America has just had the cover blown completely off some of their most repugnant practices by internal whistle-blowers, and if one of the biggest banks in the world was or is doing these things, it’s a safe bet their competitors are too. The list of atrocities perpetrated on borrowers is so long there’s not room here to enumerate them all, but suffice to say it includes abusing a Federal bailout program aimed at helping struggling borrowers, fraudulently denying loan applications, destroying paper trails and even giving bonuses to their employees for forcing people into foreclosure; pretty much everything we figured banks were doing, but now thanks to sworn testimony from former Bank Of America employees, we have the evidence to back up all our suspicions.
Mark it down — this Bank of America story is huge, absolutely huge. Not that it’ll change anything; bank scandals aren’t sexy enough apparently. If they were, then we’d be seeing a string of financiers and Wall Streeters being perp-walked right into Federal courthouses to answer for oh, I don’t know, simultaneously blowing up and melting down the world economy not more than five years ago. The big media outlets will certainly give the story the cursory glance-over, but will they run stories on it in their A, B and C blocks like they do with Benghazi, the IRS scandal or the NSA leak? Of course they won’t, even though what Bank of America and tons of other banks are doing impacts people in the real world far more and on a much more devastating level.
We live in a world that has seen so many of the vital regulations — safeguards if you will — that FDR helped oversee being put into place to try and mitigate another disaster like the Great Depression have been stripped away. Hell, it was President Clinton of all people who repealed Glass-Steagall, which essentially gave the bankers carte blanche, as they were able to self-regulate. We were told “Oh, come now, surely Wall Street has learned in the fifty years since The Great Depression not to be too greedy, and how to separate risky investments from less risky investments.” Well, we were told lies, because what happened next we all know; we lived through it.
Banks went on lending sprees that remind me of Hunter Thompson barreling through another all-nighter. They gave away shitty loans on overpriced homes that were ticking time bombs and didn’t even think to bring along wire cutters just in case things got too crazy. They made massive derivative loans to sovereign nations that tied the economy to these massive lead weights; once the interest rates rose payments couldn’t be made…and they knew this. Moreover, they profited from this sick game of playing both sides, the borrower and the lender.
It should be fairly obvious by now that banks really cannot be left to regulate themselves. If the 2009 and 2009 economic collapse wasn’t evidence enough, now we have direct evidence that no one in the banking industry learned their lesson, and who could blame them when even the person who was elected to turn back the tide of Wall Street’s abuse of the middle class hasn’t had his Department of Justice ruthlessly root out the abusers and punish them? This Bank Of America story shows the chickens have indeed once again come home to roost, and that we have a substantial need for lawmakers like Senator Elizabeth Warren (D-MA) in Washington. She’s been steadfast for years on the side of the working class, and now that she’s in a position to do something about it, she’s been quietly going about the process of holding bankers accountable.
The right-wing in this country has a very naive opinion of how businesses and banks operate. They’ll tell us we don’t need social safety net programs because the rich and private charities can more than adequately provide. They think, and probably rightfully so, that all bankers are at their nature good people who would never hurt anyone intentionally. The problem is that while bankers and “job creators” may very well be decent people, business — and specifically the business of capitalism — isn’t altruistic. Our free market society encourages cutting corners, and encourages being “creative” with laws and rules so as to maximize profit. This is both the strength and the undeniable weakness of capitalism itself, and to pretend that banks that are in the business of squeezing literally every penny out of their patrons as they possibly can will operate out of anything but self-preservation and self-importance first is just being naive for naiveté’s sake.
No one in their right mind will argue that the government needs to be watching every single transaction every single minute of every single day. It would be cumbersome and frankly a stupid use of resources to do such a thing. However, none of that means that bankers should be allowed to police themselves. The financial markets and industry are not like other businesses. There is a distinct possibility to absolutely ruin people’s lives and as the economic crisis of 2008 and 2009 showed, the world’s economy is at stake too. For those reasons Glass-Steagall on steroids is what’s needed, as are full congressional investigations that lead to grand jury indictments for lenders who serially abuse their borrowers. Clearly, as Bank of America’s heroic whistle blowers have shown, the only thing the banks should be policing, is their vaults…and even then we may want some government oversight of their security guards too.