A.J. DiCintio
The Republican establishment and the banks
By A.J. DiCintio
Historically, the Republican Party Establishment has behaved at its worst when it has licked the boots of crony capitalists who love nothing more than using the power of government for their own selfish purposes.
Putting other examples of that perversity aside, this piece limits itself to the current relationship between the Establishment and the banking industry, the necessary but dangerous institution Jefferson regarded as so inimical to freedom and prosperity he considered it "more dangerous to our liberty than standing armies" and warned it would one day cause, in this land of incredible economic possibilities, our "children [to] wake up homeless."
However, despite all the warnings we have inherited about the need to keep the banking industry under strict control, the current Republican Establishment continues to resist reasonable calls for banking reform.
For instance, while distinguished conservative bankers such as Thomas Hoenig and even stalwart libertarian politicians such as Ron and Rand Paul agree that banks cannot be allowed to grow as big as market forces allow, the Republican Establishment refuses to limit the size of individual banks.
How extreme is its madness?
Well, consider that its position perfectly reflects that of Glenn Hubbard, one of Mitt Romney's chief economic advisers, who opined that while he wouldn't know how to "figure out" where to draw the line on bank size, market forces could come up with the answer, a statement revealing, among other distressing things, that uber liberal Dennis Kucinich is not alone in reacting to realities that ought to send chills through our bones as "benign."
Think of it. The dean of the Columbia Business School finds nothing to worry about despite the fact that in September of '08, the collapse of Lehman Brothers precipitated the banking crisis although its assets were "only" $640 billion or a "mere" 5% of GDP.
Nothing to worry about despite the fact that today the assets of the top six U.S. banks amount to $9.2 trillion or 58% of GDP.
Nothing to worry about despite the fact that in Cyprus, market forces decided that an 800% bank assets/GDP ratio posed a danger neither to the nation's citizens nor its economy.
The Republican Establishment turns a blind eye toward more than individual bank size and the size of the entire banking industry, however, as it pursues its "What, Me Worry?" policy toward what banks do and how they do it.
For example, while it would never agree to allow individuals and other financial entities to trade enormous amounts of inherently risky derivatives other than in the sunlight of an open exchange, the Establishments refuses, in yet another instance of its Alfred E. Neuman approach to banking regulation, require the same of banks.
And the perverse largesse the Establishment extends to banks doesn't end there; for it also refuses to prevent banks from commingling depositors' FDIC-insured money with other cash to be employed in various stock, bond, commodity, mortgage, currency, and derivative trading activities.
Yes, while the Establishment's members are correct to argue that ordinary welfare and entitlement programs must be initiated with great restraint and care as well as monitored with meticulous vigilance, they exempt banks from those principles, as exemplified not just by the FDIC "bonus" they bestow upon them but the whatever-it-takes bailouts (i.e. "corporate welfare") they lavish upon them when they stupidly get themselves (and, unfortunately, the nation) in a financial mess.
Completing this hypocritical trinity is the fact that while a few brave Republicans, including Ron and Rand Paul, are willing to completely open the books on the enormously powerful private bank called the Federal Reserve, the Republican Establishment has no such interest despite this all too real and all too frightening reality:
With big bank CEO's sitting on the Fed's regional boards and former big bank bigwigs holding high posts in the Treasury Department, the fix is in for government of, by, and for an industry that continues to take an ever increasing share of the wealth produced only by (as Establishment Republicans love to remind us when it suits their purpose) the Constitution's "We the People."
Finally, there is this:
In a tribute to the human mind's astonishing capacity to wallow in pride, greed, and just plain stupidity, Establishment Republicans are particularly smug about their political situation.
Not that they ought to be, for just as their inaction regarding genuine healthcare reform played a major role in hatching the abomination called Obamacare, their failure to respect the public interest and reform the banking industry might be the straw that ironically leaves them an establishment peeping its peeps beneath the emblem of a third party whose powerlessness is exceeded only by its insignificance.
© A.J. DiCintio
April 14, 2013
Historically, the Republican Party Establishment has behaved at its worst when it has licked the boots of crony capitalists who love nothing more than using the power of government for their own selfish purposes.
Putting other examples of that perversity aside, this piece limits itself to the current relationship between the Establishment and the banking industry, the necessary but dangerous institution Jefferson regarded as so inimical to freedom and prosperity he considered it "more dangerous to our liberty than standing armies" and warned it would one day cause, in this land of incredible economic possibilities, our "children [to] wake up homeless."
However, despite all the warnings we have inherited about the need to keep the banking industry under strict control, the current Republican Establishment continues to resist reasonable calls for banking reform.
For instance, while distinguished conservative bankers such as Thomas Hoenig and even stalwart libertarian politicians such as Ron and Rand Paul agree that banks cannot be allowed to grow as big as market forces allow, the Republican Establishment refuses to limit the size of individual banks.
How extreme is its madness?
Well, consider that its position perfectly reflects that of Glenn Hubbard, one of Mitt Romney's chief economic advisers, who opined that while he wouldn't know how to "figure out" where to draw the line on bank size, market forces could come up with the answer, a statement revealing, among other distressing things, that uber liberal Dennis Kucinich is not alone in reacting to realities that ought to send chills through our bones as "benign."
Think of it. The dean of the Columbia Business School finds nothing to worry about despite the fact that in September of '08, the collapse of Lehman Brothers precipitated the banking crisis although its assets were "only" $640 billion or a "mere" 5% of GDP.
Nothing to worry about despite the fact that today the assets of the top six U.S. banks amount to $9.2 trillion or 58% of GDP.
Nothing to worry about despite the fact that in Cyprus, market forces decided that an 800% bank assets/GDP ratio posed a danger neither to the nation's citizens nor its economy.
The Republican Establishment turns a blind eye toward more than individual bank size and the size of the entire banking industry, however, as it pursues its "What, Me Worry?" policy toward what banks do and how they do it.
For example, while it would never agree to allow individuals and other financial entities to trade enormous amounts of inherently risky derivatives other than in the sunlight of an open exchange, the Establishments refuses, in yet another instance of its Alfred E. Neuman approach to banking regulation, require the same of banks.
And the perverse largesse the Establishment extends to banks doesn't end there; for it also refuses to prevent banks from commingling depositors' FDIC-insured money with other cash to be employed in various stock, bond, commodity, mortgage, currency, and derivative trading activities.
Yes, while the Establishment's members are correct to argue that ordinary welfare and entitlement programs must be initiated with great restraint and care as well as monitored with meticulous vigilance, they exempt banks from those principles, as exemplified not just by the FDIC "bonus" they bestow upon them but the whatever-it-takes bailouts (i.e. "corporate welfare") they lavish upon them when they stupidly get themselves (and, unfortunately, the nation) in a financial mess.
Completing this hypocritical trinity is the fact that while a few brave Republicans, including Ron and Rand Paul, are willing to completely open the books on the enormously powerful private bank called the Federal Reserve, the Republican Establishment has no such interest despite this all too real and all too frightening reality:
With big bank CEO's sitting on the Fed's regional boards and former big bank bigwigs holding high posts in the Treasury Department, the fix is in for government of, by, and for an industry that continues to take an ever increasing share of the wealth produced only by (as Establishment Republicans love to remind us when it suits their purpose) the Constitution's "We the People."
Finally, there is this:
In a tribute to the human mind's astonishing capacity to wallow in pride, greed, and just plain stupidity, Establishment Republicans are particularly smug about their political situation.
Not that they ought to be, for just as their inaction regarding genuine healthcare reform played a major role in hatching the abomination called Obamacare, their failure to respect the public interest and reform the banking industry might be the straw that ironically leaves them an establishment peeping its peeps beneath the emblem of a third party whose powerlessness is exceeded only by its insignificance.
© A.J. DiCintio
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