How exciting, I just received in my newsfeed that Wells Fargo Posted a record $4.1B profit. This was 72 cents on a share price of around $24/share. As a conservative normally this would make me happy. Yet today it doesn't, in fact, frankly I'm pretty pissed off. I'm pissed off at wall street and I'm pissed off at the Republicans.
I'm a business owner, I employ around 30 people, I work hard and I try to be a good boss. I'm a fiscal conservative which means I firmly believe that we should live within our means, but I'm an entrepreneur which means I'm willing to take a risk and push all my chips into the pot if I think there is a good return. The banks are supposed to be there to help us to grow. They enjoy special protections from the government (like FDIC deposit insurance).
I'm not a tea partier but I think I get what "they" really want. To some extent I see some of the things as very similar to occupy wall street.
What I'm angry about (and what I think the teaparty and OWS are angry about) is that the banks claimed they were too big to fail so we gave key banks bailouts (Wells Fargo didnt need a bailout, but they were forced to take TARP money). Yet none of the banks are lending in the way that our economy needs them to. Now I see that they are raising fees and yet are making record profits. Small banks get crushed by the oligopoly of the majors. Ultimately the American people are suffering and the banks ARE the root cause of it. Banks should make money FROM LENDING. Lending is scary and risky so instead they are charging fees so they dont have to lend money.
The essence of banks is that you deposit your money. They then lend it out and make a higher interest rate. To encourage people to deposit money into banks, the government has created FDIC to guarantee you never lose your money, even if the bank goes out of business because of bad loans. Banks benefit GREATLY from FDIC (government protection). If they are just going to make money from fees then they dont need FDIC protection because they arent taking any risk.
Here is what I think should happen to the banks and what OWS should go for
1) The banks were too big to fail - we should have caps of revenue, employees or whatever to force them to be smaller so no bank can influence our government. With many smaller banks no one bank will have the power to get special privileges from the government. This should go for all companies. When a bank makes a stupid policy to limit lending, it shouldnt be able to impact our whole economy.
2) Banks should have a maximum number of FDIC insured accounts. Any bank that pisses off the government should lose its FDIC protection. This is the nuclear option that would bring any bank to its knees. No one will deposit money into a non FDIC insured bank. The # of FDIC accounts should also be proportional to how much money is lent out. If a bank is not lending money for a certain portion of its assets, then it doesnt need to be covered by the FDIC.
3) The money they make from credit cards should be reigned in with caps on interest rates or changes to terms. Contracts that can be modified at any time should be completely banned.
4) Bankruptcy laws should be made more liberal so consumers can default and the banks can be made to feel pain if they get too liberal with credit.
5) We should engage in economic warfare with China and any country whose government creates barriers for their people to buy our products. We cant open our trade borders while our partners keep theirs closed.
The capitalists, banks and corporations (who I dearly love) have really done bad things with so called free trade. This is in their nature. We benefit from their greed, but we also have to highly regulate them to ensure they dont blow up the entire system.
Here is the rub, while the country as a whole benefits, individual groups within the country benefit differently. As has become obvious, shareholders (owners, bankers etc) make a lot more money. However, workers who are not shareholders get completely crushed. It has become clear that the efficiency we have gained by outsourcing all manufacturing is actually destroying our way of life. What the economists aren't able to model is that the owners make all the money. We should accept less overall efficiency (less total net money) and instead return to policies which created a better distribution of wealth. I have explained this concept to my fellow conservatives and they (almost) do get it.
China is waging economic war against us and they are using our own institutions - banks, corporations and government to wage it.