I started working in banks in the Fall of 1978. No management position for this recent graduate school graduate, I started as a part-time drive-up window teller. Banking used to be a good place to work despite the fact that every bank I worked for made it perfectly clear that employment depended on NO UNIONS! To make up for the protections unions require, bankers offered decent health insurance coverage, relatively competitive compensation, regular hours, and all those bank holidays off work! One part of my calculation was that banking skills are easily transportable elsewhere, and my plan included relocating to beautiful Oregon and points west of my Minnesota home. The Minnesota legislature has just passed a new law allowing state chartered banks to open branch offices. My job was a direct result of changing the rules within the industry, and I saw that eventually take my career after twenty-two years on the job.
January 27th, Bill Moyers broadcast one of the most lethal indictments of the "Too Big To Fail" banking exceptions from our recent economic collapse. Mr. Moyers rightly explains how the financial industry's tight control over the legislative process has put all of our economic future in slavery to the needs of the big banks - never mind the account holders. How Big Banks Are Rewriting The Rules Of Our Economy
Follow me below the Orange Squiggle - but only after watching Bill Moyers, former Citibank executive John S. Reed, and former Senator Byron Dorgan on the demise of Glass-Steagall in 1999.
Back in 1978, there were still commercial banks, investment banks, savings & loans, and state-chartered banks, all eager to pay you 5.5% (daily compounding) for a passbook savings account. There was no such thing as an Automatic Teller Machine, American Express was essentially the ONLY credit card on the market - available only to a select few, and citizens were protected with federal insurance on their banking accounts. Not every financial institution could offer you a checking account, and if you wanted to play on Wall Street you could only get there through an investment bank. When I started working in banks, every larger city had several financial options to choose to choose between, all regulated and insured to differing degrees as specified by law and their individual charters. One comon factor in most of these institutions was regulatory control, the exception being investment banking, and that was considered to be regulated by the Securities and Exchange Commission. There never was any Federal insurance on those banks or for their accountholders. This was the legacy of Glass-Steagall since FDR's day.
Mr. Moyer's discussion brought me right back to loosing my job in Portland. I was employed by Benj. Franklin Savings and Loan, headquartered in Portland but with branches in fourteen western states. The FSLIC regulators approached Benj. with the offer to acquire another Savings & Loan operation having difficulties (Equitable) with branches in a few states we wanted to have a presence. Adding a further inducement, the regulators offered Benj. Franklin "goodwill" when it came to judging compliance with reserve requirements the institution was required to maintain. Well, after the Arizona S&L meltdown in the late 80's, the Resolution Trust Corporation was established to manage all the failed S&Ls. In the midst of all that, Benj Franklin was financially sound, until the RTC revoked the millions of dollars of "goodwill" granted when the merger was offered. With one regulatory change, the books went out of balance, and wonder of wonders - Bank of America was there with their checkbook in hand. Benj. Franklin was no more, and I was looking for work in a saturated market.
My next bank employer was a change in charter for my experience, from a Savings & Loan to working for US Bancorp. (No, not that US Bank!) I worked for the original Oregon bank with the presence of mind to use US Bank as their name from the earliest charter. By the time I worked for that operation, the federally chartered commercial bank had already moved across state borders into western neighbor territories. I was again writing docuemtation for the operation all across the country. I will always remember the December 1996 video newsletter sent to all the branches, with then-President Gerry Cameron, all but pounding on the podium to emphasize the point he was making about not selling the bank. His year-end message was, "We will not be sold!" One week into the New Year the announcement went out that we had just been purchased by First Bank Systems out of Ohio, the president of that operation having a house next to Mr. Cameron's house on the SoCal golf course outside their patio doors. All those folks who took cheer from the year-end message were stunned when the layoffs began. Mr. Cameron was said to have received a multi-million dollar tax-free bonus to go along with his brief stint on the new board of directors for First Bank Systems to take over the much more marketable name of US Bancorp. Vulture capitalism at it's finest!
My next banking job was secured in Southern California, writing operational procedures for City National Bank, a private commercial bank located in Beverly Hills. (City National was the bank who bankrolled Frank Sinatra to ransom Frank Jr. from the kidnappers.) This was an entirely different bank working experience, plenty of funds to finance systems and training, but they would only cash checks written on the bank for the gardeners who worked in Beverly Hills, not open them an account. One of the profit centers for the operation was City National Investments, their wealth management service offered only to those people with a minimum of $5 Million in disposable income. I was frankly releived to leave that position to take care of a parent. Guess I was too much the Savings & Loan type of guy.
What I am assuming will be my last employment in the banking sector started after a couple of years, but took me over to the "Dark Side" of the banking business, probably at the worst time possible. I had worked on loans a little bit way back at Benj. Franklin, assembling home loan files to send to the Loan Committee for decision. This was back in the days of 30-Year Fixed Rate Mortgages, demanding Loan Committees, and good products sold on to the secondary market. When next I crossed paths with the lending folk in 2005 it was already too late for the industy. I was hired at Washington Mutual to maintain and circulate their nationally distributed in-house lending manual and the external broker version. When I started, Washington Mutual's default loan product was still the 30-Year Fixed Rate Mortgage, but that did not last long. I was in the position for only a few months before the ALT-A mortgages were made the default loan product. (All the ALT-A products have been affectionately dubbed "Liar Loans" with good reason.) My mentors in Home Loans were stunned when those loan products became the standard product. These people had decades of experience writing loans, and they saw no honest good result from using those products. WaMu was driven by their share prices to offer the same bad products to the same bad borrowers who everyone else was lining up to give money to. Because our department was dragging our feet into the new regulatory morass, one of the lending groups within the company (folks who championed the outside brokers who fed their loans into WaMu's portfolio) staged an internal coup to remove our department from the company. Once again, the rules and regulations were loosened to the point where the system failed, and JP Morgan Chase was there to buy-up the pieces. I do not believe there is another job in banking for me. All those writers are headquartered in New York City!
Mr. Moyer's discussion reminded me of all these choices made for the benefit of the few, made possible by their control over regulatory manipulations to favor their own interests, never mind the citizen trying to save a few dollars to pay down their credit card debt. The odds are stacked against us, and we have too few champions who speak for us.
Thank goodness Bill Moyers remembers the 99% and speaks for all of us. We need his voice.