Last week's news that the State of Massachussetts is suing the four major US banks - Bank of America,, JPMorgan, Chase, Wells Fargo & Citigroup.- and one financial company, GMAC for "unfair and deceptive practices" (including 'robot signing' - see our post) is great news and a good sign that some things are finally about to change for many Americans. (NYTimes)As the Attorney General, Ms. Coakley said in her statement:
“This is the first comprehensive lawsuit seeking to obtain accountability.(…/…) The banks may think they are too big to fail or too big to care about the impact of their actions, but we believe they are not too big to have to obey the law."
This is interesting because, as often, real change in America starts at the state level.
When many state prosecutors are trying to come to a deal with the banks for a cash settlement ‘for faulty foreclosure practices and possibly reforms to foreclosure practices’, other state prosecutors have rejected deals and have sued banks – 'Nevada sued Bank of America in September, New York has launched a broad investigation into a dozen financial institutions' (FT) and California announced it would not agree to a settlement over foreclosure abuses that state and federal officials have been working on for more than a year (The Californian.com).
When many state prosecutors are trying to come to a deal with the banks for a cash settlement ‘for faulty foreclosure practices and possibly reforms to foreclosure practices’, other state prosecutors have rejected deals and have sued banks – 'Nevada sued Bank of America in September, New York has launched a broad investigation into a dozen financial institutions' (FT) and California announced it would not agree to a settlement over foreclosure abuses that state and federal officials have been working on for more than a year (The Californian.com).
No doubt that this is the indirect result of the different protests and sit-ins, and other Occupy Movements which have demonstrated people’s anger over Wall Street. It seems that the ability for states to go after the banks is also the result of the Dodd-Frank legislation which restricted the ability of federal authorities to bar states from acting in such cases. (Too bad Frank Dodds is retiring!).
One of the reasons for the current crisis, as you can see in the following graph, is that banks have indeed become so big that they have no accountability.
Too big to fail indeed:
The big argument from the banks in the '90s was that without deregulation, they would lose out to foreign banks. This is an argument that all the banks in the world used to justify their mergers. So with the complicity of governments, they have become too big to fail….but not too big to pay. No doubt they will use this recession to scare people into thinking that the entire financial system may be at risk if they are asked to pay too much.
Then what? Then, they should be split up.
Even conservatives agree:
Even conservatives agree:
Big banks are bad for free markets. Far from being engines of free enterprise, they are conducive to what might be called “crony capitalism,” (National Review, cited in MSN Money)
Indeed, if you believe in free enterprise, split up the banks.
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