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Podcast: What’s Up With the Banks?

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(Emmanuel Dunand/AFP/Getty Images)

Last week, ProPublica's editor-in-chief Steve Engelberg sat down with senior reporter and "The Trade" columnist Jesse Eisinger to talk about what's wrong with banks being so big.

The pair discussed the impact of Dodd-Frank, why shareholders seem to be happy with the current system, whether the recovery is working for all of us, what really happened with the London Whale and why there isn't more competition in the banking industry?

In response to that last question, Eisinger said, "I think it's an oligopoly that is protected by our political class and protected by the regulatory structure. I think that the Federal Reserve – if you dosed them with truth serum – would say we want in this country six large banks that we can monitor much more easily than the banking system that we have today. And so there's a bias toward large banks. They believe that large banks are diversified entities, so that the diversification helps protect them. I think the diversification makes them unmanageable. And they're extraordinarily powerful entities."

Russell Miller

June 4, 2013, 2:54 p.m.

The big banks own Congress.  They love to see intellectuals debating on how to avoid problems, assign blame, and pound chests with solutions that seem simply logical.  They know nothing too bad is going to happen to curtains their influence that will make it thru Congress. So argue away!

Yeah, nothing surprising here. Unfortunately, anything that is able to take the banks down can take the country with it.

BasicFunguist

June 4, 2013, 4:54 p.m.

The Mexico City branch of HSBC Bank was the “go to” outfit for the Mexican drug cartels, Middle East arms smugglers, as well as other terrorist groups looking to surface funds derived through these criminal enterprises. 

Eric Holder, erstwhile counsel to the “1%ers” who are pillaging America as our Attorney General pursues HSBC; and guess what,  HSBC cops a “nolo contendere”, gets penalized by a fine that amounts to about four weeks worth of the bank’s profit and NO ONE GOES TO JAIL!!!!

No, a money-center bank, one of the largest on the planet launders billions of criminal funds and they get a slap on the wrist while Me. Holder and his armed minions at the DOJ invades Medical Marijuana dispensaries.

If marijuana is a Schedule I dangerous drug, so is a can of Budweiser and government of the people, by the people and for the people has regrettably been hijacked into a Mussolini-style fascist state.

It’s an old, old joke in politics that you never attack someone who can turn out the lights.  They originally meant that literally, as in Standard Oil, but given that politicians (and government) rely on banks for payroll, personal finances, corporate finances, and general money management, not to mention campaign contributions, it’s not hard to see why they might protect banks from wrongdoing rather than pursue them.

The banks, by their own admission, stand at the light switches and aren’t afraid to use them.

There’s a handful of solutions, I think, but they involve buy-in from the sold-out.  For example, recognizing that it’s 2013 with largely free access to all sorts of politician-friendly media, we could demand that election campaigns run on a shoestring budget, eliminating the direct dependency.  The government can go (back) into the banking business to remove banks’ direct leverage over the government.  We could tax private income of (current and former) public servants at 125%, preventing the revolving doors.

But we don’t, because nobody goes into politics with the intent of having less power, because Machiavelli was largely right.  You can’t help people without power, so even people who want to help put power first.

clarence swinney

June 8, 2013, 10:11 a.m.

SLIPPERY SLOPE
The House is fixated on Obama scandals rather than the economy.
One third of the committees are investigating rather than fixing.
Twp thirds of the jobs lost in the Great Recession paid middle class wages yet 22% created under Obama paid a mid-wage. Obama can talk when he said “ we know America thrives when every person
can find independence and pride in their work, when the wages of honest labor liberate families from the brink of hardship”.
  He promised to address income inequality. When? How?
The gap between middle-class and wealthy has grown steadily since 1970s.
Income inequality is reducing the ability of Americans to climb from one class to another. “Permanent inequality”?
Between 1979 and 2007 the top 1%  saw after-tax income grow by 275%, the next 19 % by 65%.
Eighteen percent for the bottom fifth.
No Republican has presented a populist message only stopped Obama’s Americas Jobs Program which could have created/saved 4 million jobs.
We have a National Income of $14,000B yet this year will borrow $642B.
The and tax exemptions cost us over $1300B.
When will we awaken and pay our way and go to taxing wealth as in the past great growth years.
The jobs sent overseas will not return. Cheap labor equals big profits. Instead of a 20% mark up try an 80% mark up.

Shane Archér

June 9, 2013, 12:51 p.m.

Why would we assume that either the gov’t or the banks care about the average citizen?  How many millions does the gov’t spend a year on think tanks that are funded solely to come up with ways to keep us pacified?  As long as Mr. & Mrs. John Q. have their gas-guzzling SUV and their $5 a cup coffee every day, why would we do anything to change the status quo? And if we are corporately unwilling to do something to change the Corporations, why would they change? “If it ain’t broke…”.  What do we vote for: diversify the banks even further so that more fail, or concentrate the financial resources into the hands of even less people? I hear a lot of problem with very little solution these days.

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