By Pam Martens and Russ Martens: May 15, 2019 ~
The House Financial Services Committee, Chaired by Democratic Congresswoman Maxine Waters, has been doing the heavy lifting for Congress when it comes to oversight of the mega banks on Wall Street. After grilling the CEOs of these banks on April 10, the Committee will convene again tomorrow to grill the Federal regulators of these serially charged mega banks.
The witness list includes: Rodney Hood, Chairman, National Credit Union Administration; Jelena McWilliams, Chairman, Federal Deposit Insurance Corporation (FDIC); Joseph Otting, Comptroller, Office of the Comptroller of the Currency (OCC); and Randal Quarles, Vice Chairman of Supervision, Board of Governors of the Federal Reserve System.
The Committee has released a very impressive Memorandum, which lays out the Frankenbank framework that exists in the United States today. For example, consider this one sentence from the Memorandum:
“U.S. G-SIBs [Global Systemically Important Banks] made $780 billion in profits over the last 10 years while paying at least $163.7 billion in fines, though there have been few examples where prudential regulators utilized their extensive authorities to impose more severe penalties.”
The profits versus the fines clearly suggest that Senator Bernie Sanders may need to refine his meme that “the business model of Wall Street is fraud” to “the profit model of Wall Street is fraud built around the reality that Big Law will get the banks continually off the hook for pennies on the dollar and no jail time in exchange for billable hours and a revolving door to the Justice Department.”
It’s hard to keep up with all those fines and crimes by the mega banks so the nonprofit watchdog, Better Markets, released an in-depth research report on “Wall Street’s Six Biggest Bailed-Out Banks: Their RAP Sheets & Their Ongoing Crime Spree” on April 9, the day before the CEOs were to take their seats before the Committee. The report reached the only conclusion any rational person paying attention could reach:
“[Six Wall Street mega banks] have engaged in—and continue to engage in—a crime spree that spans the violation of almost every law and rule imaginable. Taking the breadth and depth of their illegal conduct as a whole, the six biggest banks in the country look like criminal enterprises with RAP sheets that would make most career criminals green with envy. That was the case not just before the 2008 crash, but also during and after the crash and their lifesaving bailouts…In fact, the number of cases against the banks has actually increased relative to the pre-crash era.”
The six mega banks profiled in the report are: Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.
Another nugget from the Committee’s Memorandum illustrates the unprecedented and dangerous concentration of assets at a handful of Wall Street mega banks. The Committee writes that “As of December 31, 2018, there were 5,406 FDIC-insured commercial banks and savings institutions that held a combined $17.9 trillion in assets…” It then notes that there are eight mega banks in the U.S. “that hold a combined $11.1 trillion in assets, comprising roughly 50 percent of domestic banking assets.” Not to put too fine a point on it, but $11.1 trillion is actually 62 percent of $17.9 trillion. The discrepancy is likely that the $17.9 trillion figure includes foreign assets.
A regulatory system that would allow 8 banks to control 62 percent of all banking assets held by the nation’s 5,406 insured banks is beyond help. It needs to be dismantled along with the mega banks and a sane framework created for both. Congress has been holding hearings for a decade without making a dent in the Wall Street crime wave and without any serious reforms that could prevent another $29 trillion secret bailout by the Federal Reserve when these banks blow themselves up again. The question is how long the American people will tolerate this hubris.
The hearing begins at 10:00 a.m. and can be watched live here.