Economic Bullies

We know who bullies are from childhood on. They are those who pick on others they can pick on. Usually they are bigger and stronger and can beat up smaller folk. Or, sometimes they band together with other folk so they can all pick on individuals who lack support to fight back. We hear quite a bit about bullying these days. It is seems prevalent in our schools and responsible school boards and teachers and parents are searching for ways to stop it. It also happens in the workplace, and to fight that type of bullying generally involves some type of legal response. There is bullying on the internet that literally scares children and adults to death. Bullying is violent and harmful to more than just the bullied. But bullies can be stopped and even rehabilitated with time and effort and people who get involved.

Now how about big banks and big business? Banks used to do a simple thing; they kept people money in checking and saving accounts and then loaned money to people for a variety of reasons and made a fee on those loans. Good system. Then banks became bettors; investors is the word they prefer. We even found a lot of bankers during the mortgage crisis gave people loans they knew they could not afford then bet that they would fold and so they made out like bandits. That seems like bullying to me. And the bigger the banks the more them seem to bully.

Last Monday, Bob Diamond who is the CEO of Barclays, one the world’s largest banks, a very high mucky mucky who they believed was indispensible resigned his position. Guess he wasn’t that essential as the market went up .3% that day. Diamond was a bully. He and his staff reported to Libor (pronounced Lie-Bore) deceptive information ~ they lied. You can read lots of articles on this on the internet and maybe even some in the popular news, so, I won’t bother with the details. Just this: Mervyn King, governor of the Bank of England said, “the ideas that my word is that Libor is dead” Which the Baseline Scenario translated as  No one will believe large banks again when their executives claim they could have borrowed at a particular interest rate – we will need to see actual transaction data, i.e., what they actually paid.  Presumably there should be similar skepticism about other claims made by global megabanks, including whenever they plead that this or that financial reform – limiting their ability to take excessive risk and impose inordinate costs on society – will bring the economy to its knees.  It is all special pleading of one or another, mostly intended to rip off customers or taxpayers or, ideally perhaps, both.

As Mr. Kelleher puts it on his blog,

“They like to call themselves “banks,” but they aren’t banks in any traditional sense. They are global behemoths that are not just too-big-to-fail, but also too-big-to-regulate and too-big-to-manage. Take JP Morgan Chase for example. It has a $2.35 trillion balance sheet, more than 270,000 employees worldwide, thousands of legal entities, 554 subsidiaries and, as proved by the recent trading losses in London, a CEO, CFO and management team that has no idea what is going on in their own bank.”

“Let’s hope for the sake of the global financial system, the global economy and taxpayers worldwide that Mr. Diamond’s resignation is the first of many. What is needed is a clean sweep of the executive offices of these too-big-to-fail banks, which are still being governed by the same business model as before the crisis: do whatever they can get away with to get the biggest paychecks as possible. (Remember, CEO Diamond paid himself 20 million pounds last year and was the UK banking leader insisting that everyone stop picking on the banks.)

Lie-more is just the latest example of why that all has to change and the sooner the better”

The point is the major banks just seem to me like big playground bullies and they generally get away with it. Big corporations also seem like bullies and get away with it (see prvevious article on the pharmaceutical companies.

I don’t like bullies, they need to be stopped. That is a function of government regulations; to stop bullying.

But in spite of all the rather obvious bullying a lot of folk run around blaming the victims of economic bullies. The poor, unions, teachers, government workers. I’ve already chopped this article in about half, so I think maybe I’ll hold on this until next time.

A P.S. to the article; go to Robert Reichs report on this