(This is a partial report on a seminar conducted by authors Mary Bottari, William Greider and Van Jones before an audience of 300 Nation Magazine readers on an annual cruise sponsored by the magazine. Reports on what Jones and Greider said will follow.)
Economist Mary Botarri reported:
Federal Reserve has bought trillions of dollars in bad mortgage loans from banks with the anticipation of later salvaging a large portion through repayment on the loans.
Dodd / Frank reform bill had some good things. Consumer protection although it is being hobbled by refusal of Republicans in Senate to approve director; higher bank margins of capital to loans; Resolution Authority for taking over banks under duress. However, Resolution Authority requires action by Secretary of Treasury and four months notice to bank which is unrealistic. Dodd / Frank did give us Federal Reserve audits of banks.
On the negative side, Dodd / Frank did not address core problem of separating old fashion bank activities from the gambling of investment banking. There is no cap on size and, in fact, the top banks are much larger than before the crisis and thus even more “too big to fail.” Dodd / Frank left decisions on leverage and capital authorities to regulations where most are stalled and are being resisted by bankers at regulatory levels.
Claims six biggest banks now a lot, lot bigger. Such an incredible series events could occur and yet today banks assets are worth 67% of GNP.
Bottari says word is Bank of America is “a zombie bank in deep trouble and no one is dealing with it.” Its stock is selling around $5 per share and B of A is moving billions of debt from the uninsured Merrill Lynch subsidiary to the bank where it is subject to FDIC insurance.
Morgan Stanley may still be in great trouble.
She asks “Why are there bankers on Federal Reserve board?”
Bottari estimates there are twenty consumer lobbyists against 3000 bank lobbyists!
She announced that a group will soon petition government to break up B of A.
In contrast, Bottari says Securities Exchange Commission doing good job compared to Department of Justice in collecting heavy fines for violations. However, it is settling cases by permitting culprits not to admit to their violations, thus protecting them from litigation from those cheated.
Bottari asks how is it that despite all the malpractices and corruption that brought about the crash of 2007 2008 that no one from the finance industry has gone to jail?
Bottari points out the need to make Wall Street help pay for what it has done. She recommends a financial transaction tax which is a small sales tax as low as 0.03% on trading. It would bring in billions of dollars in much needed tax revenue each year.
When asked about how to restore ethical values, Bottari states that bail outs are so massive for institutions and yet created so little to help home owners facing foreclosure situation that it affronts public’s fundamental notion of fairness.
Battari considers Occupy Movement a ray of joyous hope. Concludes we must marry that energy with good ideas and press forward.
