Special Post by – Brett Buchanan, CEO and Editor of Virable.net
Most people understand that our government is now slave to a banking oligarchy that rules every economic turn in this nation with an iron fist.
With that said, in case you missed the last twelve or so years in the US we’d like to give a brief rundown of the seminal events that landed us in this decade of economic malaise we call the Great Recession.
Leading up to 1999 five major banks had been pushing a piece of legislation, the Gramm-Leach-Bliley Act, through congress. If passed into law the act would repeal previous legislation, the Glass-Steagall Act, that had been in force since 1933. Glass-Steagall had been signed into law to prevent the rampant speculation and co-mingling of funds allowed banks prior to the stock market crash of 1929. Glass-Steagall’s primary purpose was to separate commercial banks from investment banks – to keep savings away from risk.
Gramm-Leach-Bliley was signed into law in 1999 by then President, Bill Clinton. Citigroup’s purchase of Traveler’s Insurance, a deal that had hinged on Bill Clinton’s signature, was consummated within weeks. The new legislation opened the doors for the largest banks in the world to take on unfathomable levels of systemic risk the likes of which spiraled out of control into a global speculative orgy.
Very few people understood the dire impact Gramm-Leach-Bliley would have on the economic futures of every American citizen. This single piece of legislation had turned global transnational banking into a financial Wild West. Its lead senatorial proponent, US Sen. Phil Gramm (TX Rep), left the senate at the end of his term and accepted a vice-chairmanship at UBS AG, an investment bank and primary dealer for the Federal Reserve.
Jump forward to the sub-prime meltdown, the financial crisis of 2008, and the decade of lost growth in which we are now mired. The same five banks that had pushed for the repeal of a law that had prevented them from concentrating power are now exponentially more powerful than they were before. The levels of risk they take with our savings accounts, 401k’s, and public trust money borders on criminal behavior.
More than half of banking industry assets are on the books of just five institutions. The top 10 banks now account for 61 percent of commercial banking assets, substantially more than the 26 percent of only 20 years ago; their combined assets equate to half of our nation’s GDP.
Remember that banks count your debt, and your liabilities to them, as assets. So if those debts go bad, the bank collapses. And if that risk of collapse is not spread widely enough then one bank can bring the whole system down. Too big to fail, as it were.
That our nation’s leaders allow this fundamental flaw to exist is proof of their absolute failure to protect the interests of average Americans. Thomas Jefferson warned that banks were more dangerous than standing armies. He was right.
The only conclusion an intelligent person can draw is that our elected officials are either ill-equipped to understand the complexities of banking regulation or that their votes were bought-and-paid-for by the very banks pushing for said deregulation. In either case, our nation’s leaders have failed and failed miserably on all counts.
Five banks run roughshod over this nation, and by default, the world. A follow up to this article includes a recent letter from Dallas Federal Reserve President, Richard Fisher, in which he calls for the breakup of the five major banks. Until then…
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