Rebooting the American Dream by Thom Hartmann

Author:Thom Hartmann
Language: eng
Format: mobi
Tags: Non-fiction, Politics
ISBN: 1605097063
Publisher: Berrett-Koehler
Published: 2010-10-11T00:00:00+00:00

Banks should be thought of as public utilities, even if they’re privately run. They exist to take deposits, facilitate commerce, and lend money to businesses and individuals. As such they shouldn’t be in the business of gambling or speculating with other people’s money. From the Glass-Steagall Act of 1933 until its 1999 repeal with the Gramm-Leach-Bliley Act (put forward by Republican senator Phil Gramm—there’s that name again), banks could not get into the business of speculation.

After Phil Gramm’s spectacular little bit of deregulation in 1999, banks went on a consolidation binge (we still weren’t enforcing the Sherman Antitrust Act), with some buying up investment houses and others being bought by investment houses. The result was a speculative frenzy that nearly crashed the entire world banking system—and still may.

Because of this and another 2000 change in the law brought to us by Phil Gramm, it is currently perfectly legal for your bank to engage in what’s called “proprietary trading”—and most all of the big national banks do. Proprietary trading is where the bank takes your deposits and, instead of loaning them out to your neighbors to buy a house or start a business, “invests” that money in the stock market, trading stocks, currencies, credit default swaps, and all manner of other things, minute-by-minute, hour-by-hour, 24 hours a day on superfast and highly sophisticated computer systems.

When the market is going up, your bank shows a huge profit and pays its traders and CEO millions. When the market goes down, your bank declares an emergency and gets bailed out by Congress and the Federal Deposit Insurance Corporation—and continues to pay its traders and CEO millions.

This is, frankly, insane. FDR was right: banks should be banks and nothing else. Nice boring businesses—green eyeshades and flannel suits, banker’s hours, nothing exciting. It’s your money, after all, that they’re holding.

Until the day when the big banks are brought back under control, there are two alternatives.

Local Banks and Credit Unions

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