Over half of US banking assets held by 5 banks

By Al Lewis
Dow Jones Newswires

We have finally reached the point in our financial history where even bankers hate bankers.

Last week, the Federal Reserve Bank of Dallas issued its 2011 annual report with a 34-page essay, “Why We Must End Too Big To Fail—Now.” The report stops short of calling our nation’s largest banks terrorists, but it does dub them “a clear and present danger to the U.S. economy.”

It begins with a letter from regional Fed president Richard Fisher. “More than half of banking industry assets are on the books of just five institutions,” he complains. “They were a primary culprit in magnifying the financial crisis, and their presence continues to play an important role in prolonging our economic malaise.”

This is not the Tea Party. This is not Occupy Wall Street. This is not some disgruntled Goldman Sachs guy firing off a nastygram to the New York Times on his last day. This is a member of the Federal Reserve itself—an institution that bears responsibility for our banking system devolving into an untenable oligarchy that buys off politicians, captures regulators and eats up our money. This is a member of the establishment saying Too-Big-To-Fail, or TBTF, must die.

“The term TBTF disguised the fact that commercial banks holding roughly one-third of the assets in the banking system did essentially fail, surviving only with extraordinary government assistance,” the essay reads.

Their executives paid themselves fortunes to execute failed mergers and acquisitions and accumulate unimaginable piles of toxic debts. We saved them to save the financial system. But now we must break them up so they don’t put us in this ridiculous situation again.

These banks are “a hindrance to the very ideal of American capitalism,” Mr. Fisher writes. And capitalism requires “creative destruction.”

I would add that most of these TBTF banks are criminal enterprises and deserve the death penalty, anyway. The record is clear: They’ve paid millions of dollars to settle fraud allegations, often without admitting or denying guilt. And to crib a line from Gregg Costa, a federal prosecutor who recently won a conviction against Ponzi schemer Allen Stanford: “Fraud is just theft wearing a business suit.”

To keep everyone honest, capitalism demands the kind of competition that big banks love to crush.

“When competition declines, incentives often turn perverse, and self-interest can turn malevolent. That’s what happened in the years before the financial crisis,” the Fed essay says.

“A financial system composed of more banks—numerous enough to ensure competition but none of them big enough to put the overall economy in jeopardy—will give the United States a better chance.”

So how do we get there? The Dallas Fed doesn’t offer many clear solutions, but one way to go may be as simple as a variation on a 1960s anti-Vietnam War mantra: “What if there was a bank and nobody showed up?”

If you hear that your delusional, oversized banker is threatening the nation’s economy, why do you still bank there? Have you no patriotism?

You can’t wait for the next Democrat or the next Republican or the next Ron Paul to take action. There is only one thing you can do: Find a well-managed community bank or a credit union that hasn’t been bailed out or settled allegations of fraud and put your money there.

You don’t have to take it from the left or the right, or even me. Take it from the Dallas Fed: “Achieving an economy relatively free from financial crises requires us to have the fortitude to break up the giant banks.”

Related:

Fed Struggles with Perceptions of Transparency
July 30, 2009, PBS
http://www.pbs.org/newshour/bb/business/july-dec09/federalreserve_07-30.html

As the Federal Reserve moved rapidly and radically last year to prevent what it feared was an economic meltdown, it bailed out some institutions, but not others, forced mergers, [and] created hundreds of billions of dollars. The net result: increased suspicion of the Fed itself. That’s nothing new. The 1913 act of Congress that established America’s central bank was … a compromise between government … and private banking interests, which owned the 12 regional Fed branches.

Does the Federal Reserve Have Too Much Power?
March 26, 2012, PBS
http://www.pbs.org/newshour/businessdesk/2012/03/does-the-federal-reserve-have.html

There’s a legitimate case that the Fed has too much power, is insufficiently beholden to the people in what’s supposed to be a democracy, since no one on the Fed is chosen by popular election and private bankers are heavily represented on its board. This has long been the argument of financial journalist William Greider, author of a major book on the Fed, “The Secrets of the Temple.” Greider: “The idea of giving the Federal Reserve still greater power [is] dangerous. First of all it rewards failure. But secondly, it puts them in the position as arbiter of who shall fail and who shall succeed.

For lots more on hidden manipulations of the Federal Reserve, click here.

George Soros on the Coming U.S. Class War
January 23, 2012, Newsweek Magazine
http://www.thedailybeast.com/newsweek/2012/01/22/george-soros-on-the-coming-u-s-class-war.html

“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” [George] Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.” Soros draws on his past to argue that the global economic crisis is as significant, and unpredictable, as the end of Communism. To Soros, the spectacular debunking of the credo of efficient markets — the notion that markets are rational and can regulate themselves to avert disaster — “is comparable to the collapse of Marxism as a political system.”

Vatican bank image hurt as JP Morgan closes account
March 19, 2012, CNBC/Reuters
http://www.cnbc.com/id/46784687/Vatican_bank_image_hurt_as_JP_Morgan_closes_account

JP Morgan Chase is closing the Vatican bank’s account with an Italian branch of the U.S. banking giant because of concerns about a lack of transparency at the Holy See’s financial institution, Italian newspapers reported. The move is a blow to the Vatican’s drive to have its bank included in Europe’s “white list” of states that comply with international standards against tax fraud and money-laundering. The bank, formally known as the Institute for Works of Religion (IOR), was entangled in the collapse 30 years ago of Banco Ambrosiano, with its lurid allegations about money-laundering, freemasons, mafiosi and the mysterious death of Ambrosiano chairman Roberto Calvi – “God’s banker”.

Note: The fact that JP Morgan is closing it’s Vatican accounts is a major sign of the intense changes happening behind the scenes. ~ Fred Burks

Brother, Can You Spare $6 Trillion?
February 18, 2012, New York Times
http://www.nytimes.com/2012/02/18/world/europe/italy-arrests-8-in-fake-us-treasury-bonds-scam.html

The Italian police … arrested eight people on charges related to the seizure of $6 trillion in fake United States Treasury bonds, in a mysterious scheme that stretched from Hong Kong to Switzerland to the southern Italian region of Basilicata. The value of the seized bonds is in the neighborhood of half of the United States’ entire public debt of $15.36 trillion