“As for allowing corporate ownership, corporations want to be affiliated with banks for the very same reason that Bonnie and Clyde and Willie Sutton wanted to be affiliated with banks, because that is where the money is. ” -Stephen P. Pizzo
I read something like this and I recall a long ago image of Neal Bush drinking champagne from his cowboy boot in the coporate offices of Silverado Savings and Loan (RIP).
The journalist, Stephen Pizzo, covered the S&L crisis and gave testimony in 1991 regarding the repeal of Glass-Steagal.
He does not mince words!
“Corporate ownership of banks will also give big business a critical tool with which it can engineer society and the competitive business environment in ways heretofore out of their reach. Suppliers who accommodate a corporate bank’s department store chain, for example, will find credit plentiful and easy, while those who do not play ball will find the same credit tight, expensive, and at critical times, unavailable.
“The Mafia built its empire on just such subtle, difficult-to-prove, extortive, and anticompetitive relationships. In a matter of a decade after this legislation passes, the competitive marketplace will become the twin of today’s electoral process. Upstart challengers will have almost no chance against established incumbent businesses that have already made their Faustian contracts with the new masters of corporate banking.
“As for re-admitting banks into the securities marketplace, bankers will of course readily agree to to firewalls that will prohibit them from using their money to fund or prop up their securities trading affiliate or its customers. But of course, on the street, these firewalls will pose no real barrier at all.
“As we autopsied dead savings and loans, we were absolutely amazed by the number of ways thrift rogues were able to circumvent, neuter, and defeat firewalls designed to safeguard the system against self-dealing and abuse. One of the favorite methods was to link up like-minded thrifts in the daisy chains through which they could circulate inflated assets and hide their rotten loans to each other and to each other’s customers from regulators.
“Banks that need to get money to a trouble securities affiliate will do exactly the same thing. By linking up three or more banks, each with its own securities subsidiary, a daisy chain will facilitate a round robin of reciprocal loans in times of need. Then, the next time we have a Black Monday on Wall Street, this daisy chain will swing into action as a handful of mega-banks try to prop one another’s securities subsidiaries and their customers as the market plummets.
“In such a scenario, billions of federally insured dollars will disappear in the twinkle of a few program trades.”
Hmmm… sound familiar? Man I can just keep quoting. At his site he does us the service of embolding the text where he “told us so” for your convenience.
It’s not too long (he has a link to the full transcript) but nonetheless a great read!
“The rich require an abundant supply of the poor.” -Voltaire
“Bankers require an abundant supply of debtors.” -Paco Bell