To What Extent are our Biggest Banks and Financial Institutions being Operated as Criminal Enterprises?

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DrKrbyLuv's picture
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Joined: Aug 10 2008
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To What Extent are our Biggest Banks and Financial Institutions being Operated as Criminal Enterprises?

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On Wall Street there have always been only two basic ways to make money. The first and most difficult: Be a great investor. To the best investors go the profits; the biggest rewards go to those who are best at being able to recognize and pick the businesses that will win for America, while the punishment of losing money is reserved for those who are not so good at this task.

The second, and now seemingly the preferred method of making money on Wall Street, is to exploit and/or trick those who are kept from knowing as much as you, about current market and company circumstances, and by this means take their money, even if you have to buy politicians, change the laws, or even break the laws to do so.

This second way of making money on Wall Street was much easier to pull off prior to the Internet and 24-hour Exchanges etc. – such technology is the enemy of any business that makes its living overcharging customers who know no better or are given no other choice. As a result, bankers, facing an onslaught of web-driven transparency and reduced profitability during this last decade, along with an increasingly educated customer-base, were eager to change the laws in 2000 and are even more eager to protect those changes now.

Owing to modern information technology, stock and bond trading had become a very low-margin, modest-profit business — until the legalization in 2000 of a secretive market for crooked insurance schemes with no transparency or accountability, which then became an absolute boon to the profitability (for some) of stock and bond trading, and especially insurance/derivatives trading.

With credit derivatives, banks and other insurers (with nowhere near enough backup money to ever pay off the claims that might someday be made) offer, for a reoccurring fee, to effectively "insure" financial assets of many kinds. Example: Credit derivatives were used to “insure” much of the real estate and pension liabilities in America over the past decade.

The key to success here is that when there is widespread default, and massive claims against that so-called credit insurance, the banks keep all the past payments, and the taxpayer (under threat of system-wide economic collapse) pays off the claims (in the form of a bailout), while getting nothing in return.

This quite simply, is a brilliant way to steal our money, says Ratigan.  But this method of "business" is only possible if the government continues to:

a) allow these crooked insurance contracts to be written in secret,

b) allow the insurance underwriters to hold little or no money in reserve for possible payment, and . .

c) allow them to sell enough coverage on enough vital national assets that if there is a large-scale default, the taxpayer has no choice but to pay.

“Considering the $23.7 trillion of taxpayer money being used to support these Corporate Communists” (Ratigan's words), one would hope they could at least make a few billion in profits with it. But all things considered, making a few billion from risking a few trillion (in taxpayer money) is a rather pathetic return, no?

Bottom line: We are allowing these outdated and overly large banks to take control of our government and change the rules so that they are protected (communist-style) from the natural competition and reward systems that have created so many innovations in our country. By this means we are allowing them to not only steal from the citizens (communist-style) on behalf of the least worthy, but also to doom our citizenry by trapping and tying up the very capital that could have otherwise been used to generate new innovation and highly productive jobs – just like in the old USSR!

Do we want to continue to allow our government to be commandeered by those in our banking system who have failed and been passed over by technological advancements, and innovation, to the point that they've run their businesses into the ground and have had to be bailed out by a federal government that they have to some very significant extent infiltrated? Well that's the kind of government we now have! Alumni from Goldman Sachs now hold many key positions in key government agencies. Most recently we learned that the SEC has hired a former Goldman hand as its chief operating officer in its enforcement unit. What a perfect example of appointing the fox to guard the henhouse. Wake up America.

William K. Black is a professor of economics and was the senior regulator during the S&L crisis. He recently wrote an article titled, How the Servant Became a Predator: Finance's Five Fatal Flaws. Here's an excerpt:

What exactly is the function of the financial sector in our society? Simply this: Its sole function is supplying capital efficiently to aid the real economy. The financial sector is a tool to help those that make real tools, not an end in itself. But five fatal flaws in the financial sector's current structure have created a monster that drains the real economy, promotes fraud and corruption, threatens democracy, and causes recurrent, intensifying crises.

1. The financial sector now harms the real economy.

2. The financial sector now produces recurrent, intensifying economic crises here and abroad.

3. The financial sector's predation is so extraordinary that it now allows the upper one percent of our nation's income receivers to capture an unprecedented and ever more hugely disproportionate share of our nation's total income.

Black also says that that the government's entire strategy now – just as during the S&L crisis – is to cover up how bad things are (“the entire strategy is to keep people from getting the facts”).

It should not be a surprise that the owners of the New York private federal reserve bank were the biggest recipients of the bail-out fraud.  The federal reserve is America's real enemy and the reason why we have a national debt and income tax.  I challenge anyone to justify why our nation borrows money while we hold the power to issue it ourselves for free or for national profit.  

  • "There are two ways to enslave a nation. One is by the sword. The other is by debt."  — John Adams, Second President of the United States 
  • “I place economy among the first and most important of virtues, and public debt as the greatest of dangers to be feared.” “To preserve our independence we must not let our leaders load us with perpetual debt. ….If we can prevent the government from wasting the labours of the people under the pretence of caring for them, we will be wise.”  — Thomas Jefferson
  • “I go on the principle that a Public Debt is a Public curse and in a Republican Government a greater than in any other.”  — James Madison
  • “Democracy is a form of government that cannot long survive, for as soon as the people learn that they have a voice in the fiscal policies of the government, they will move to vote for themselves all the money in the treasury, and bankrupt the nation.”  — Karl Marx


CB's picture
Status: Gold Member (Offline)
Joined: Mar 18 2008
Posts: 365
Re: To What Extent are our Biggest Banks and Financial ...

Its a sad state of affairs Larry! Wish I felt hopeful... It is clear that many people realize what has happened - but I sure don't expect any top-down change to fix things.

Lbart09's picture
Status: Bronze Member (Offline)
Joined: Oct 6 2009
Posts: 45
Re: To What Extent are our Biggest Banks and Financial ...

Too bad more of these corporate communists aren't getting their pay drastically cut so they will take their talent elsewhere (Thailand, maybe? Ethiopia?  Sri Lanka?).  Then, as predicted. second-rate people would take the places of these talented money makers.  Hopefully the 2nd raters would be too unimaginative to take such devastating advantage of the system.

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