There is some concern Bernie Sanders will go after banks and insurance companies with firebombs, gelignite, and earthmoving equipment since his passion is high regarding the damage these corporations do to the American economy. The concern is dynamiting those corporations will go too far and will collapse the economy immediately. And they're probably right.
We see no reason for such concern because we see Bernie Sanders is working within the system rather than pelting it with bricks and bottles from the outside. He knows the system inside-out and he's well-aware if he simply unplugs those corporations then the economy will collapse.
Something you may not realize is real Republicans (i.e. Goldwater Republicans) want the banks broken back down to normal size as well. There is little logic in a Republican's defense of the individual republics (i.e. the states) in the country while also defending centralized corporate banking structure and there is no defense of it or none I have heard.
Bernie Sanders has delivered something of singular rarity in politics, a clear statement of direction. That his direction with banks agrees with that of Goldwater Republicans doesn't even surprise us here on the Socialist Left because we do not view it as a political matter. The only question is of practicality in terms of which way works best. State level banks work best for the people while national banks work best for the banks. Well ... how should we decide that, huh.
After working in one of America's largest banks for about ten years, we can tell you the national banks exhibit a level of predation on each other which will likely surprise you. They're constantly consuming each other to get bigger, bigger, bigger. There is still predation at the state level but the scope is much more limited so there is less of it. The consequence of the predation is the giant Monsanto banks of today such as Bank of America.
From that time, I can also tell you it takes about two years for a bank to complete acquisition of another bank after buying it. My involvement with such things was technical but that gave a deep awareness of the scope of the change required to accomplish such things.
Based on the above, it's likely divestiture of the type proposed by Bernie Sanders would take at least as long as an acquisition and likely longer. There is zero concern about demolition because Sanders has been working this problem assiduously for decades and he will know better than anyone he can't ride in on a horse with a dynamite and whisky solution. It's a dynamite proposal so, ok, let's sit down and figure out how to make it work. That's the political part so get on with it.
Hillary Clinton offers nothing more than status quo and, oh yeah, she will support women's rights. Well, thanks for that carpet-dress lady. Maybe the richest political couple in Washington will start working soup kitchens. What do you think.
The GOP candidates are all talking about 'making America great again' but there has never been one who did not say that. There also hasn't been one yet who ever delivered on that promise. America's reputation in the world just now is rather less than sterling and it will take more than bravado to convince anyone otherwise.
None of the GOP pols offer anything substantive for direction other than tearing down the Affordable Care Act and bombing the bejeebers out of the Middle East, apparently in the thinking these have not been tried previously. Clinton doesn't differ substantively from that lot except on increasing taxation on the rich but Bill Clinton didn't do it so there's no reason to believe she will either. Bill Clinton was the final death of Glass-Steagall and now he sits on ninety million dollars but people don't think there's a connection. Well ...
(Ed: the GOP pols also hate Mexicans)
Yah, well, if any of them were bright enough to read a road map, they would know more Mexicans are leaving the U.S. than are entering it. The GOP didn't exactly pick the best apples in the farmer's bushel basket this season.
The Statement of Direction is important. America needs one and hasn't had a clear direction in years. The last one came from Ronald Reagan and we'll not critique his Presidency now beyond the clarity of his statement. He said what he would do and he did it.
Bernie Sanders also offers a clear Statement of Direction and you may not agree with it but we're sure you know the value of such things. A largely apolitical version was in Kennedy saying America needs to get to the Moon.
Transplanted from Comments:
Kannafoot said...
My support for a return to the pre-interstate banking restrictions is for the following reasons:
1. Risk mitigation. While we've had localized banking crises under Glass-Steagall, the impact is just that - localized. It greatly reduces the risk of a global financial crisis if individual banks (including their holding companies) are restricted to the county or state level.
2. Financial Stability. There was a time when banks, like utilities, were considered "widows and orphans stocks." They paid a healthy dividend, but there was little fluctuation in share price. They were income stocks - stable, secure, one step up from bonds. When banks became growth stocks, the risk to the overall economy similarly increased.
3. Job Growth. There's a significant amount of infrastructure that's required to run a bank. The return to a state-sized banking system increases the net number of jobs in back-office operations, call centers, and technology centers. Now, there will certainly be a surge in outsourcing firms that would step up to offer those services in a pooled fashion, but the increased number of banks as a whole would still generate a net increase in jobs. We can address the outsourcing problem under different measures (and that does need to be addressed.)
4. Diversification. Banks are the lifeblood of corporate spending since they provide the lending necessary to fuel the economy. Smaller banks with a smaller working capital would force corporate borrowing to be spread across far more banks than happens today. That's great from a risk perspective and it's great for the local communities that house those smaller banks.
None of this can happen overnight, however. My best guess is it would take a minimum of 10 to 15 years to fully implement - about the same amount of time it took to dismantle Glass-Steagall. Of course, if you don't start now, then it will always be 10 to 15 years away.
We see no reason for such concern because we see Bernie Sanders is working within the system rather than pelting it with bricks and bottles from the outside. He knows the system inside-out and he's well-aware if he simply unplugs those corporations then the economy will collapse.
Something you may not realize is real Republicans (i.e. Goldwater Republicans) want the banks broken back down to normal size as well. There is little logic in a Republican's defense of the individual republics (i.e. the states) in the country while also defending centralized corporate banking structure and there is no defense of it or none I have heard.
Bernie Sanders has delivered something of singular rarity in politics, a clear statement of direction. That his direction with banks agrees with that of Goldwater Republicans doesn't even surprise us here on the Socialist Left because we do not view it as a political matter. The only question is of practicality in terms of which way works best. State level banks work best for the people while national banks work best for the banks. Well ... how should we decide that, huh.
After working in one of America's largest banks for about ten years, we can tell you the national banks exhibit a level of predation on each other which will likely surprise you. They're constantly consuming each other to get bigger, bigger, bigger. There is still predation at the state level but the scope is much more limited so there is less of it. The consequence of the predation is the giant Monsanto banks of today such as Bank of America.
From that time, I can also tell you it takes about two years for a bank to complete acquisition of another bank after buying it. My involvement with such things was technical but that gave a deep awareness of the scope of the change required to accomplish such things.
Based on the above, it's likely divestiture of the type proposed by Bernie Sanders would take at least as long as an acquisition and likely longer. There is zero concern about demolition because Sanders has been working this problem assiduously for decades and he will know better than anyone he can't ride in on a horse with a dynamite and whisky solution. It's a dynamite proposal so, ok, let's sit down and figure out how to make it work. That's the political part so get on with it.
Hillary Clinton offers nothing more than status quo and, oh yeah, she will support women's rights. Well, thanks for that carpet-dress lady. Maybe the richest political couple in Washington will start working soup kitchens. What do you think.
The GOP candidates are all talking about 'making America great again' but there has never been one who did not say that. There also hasn't been one yet who ever delivered on that promise. America's reputation in the world just now is rather less than sterling and it will take more than bravado to convince anyone otherwise.
None of the GOP pols offer anything substantive for direction other than tearing down the Affordable Care Act and bombing the bejeebers out of the Middle East, apparently in the thinking these have not been tried previously. Clinton doesn't differ substantively from that lot except on increasing taxation on the rich but Bill Clinton didn't do it so there's no reason to believe she will either. Bill Clinton was the final death of Glass-Steagall and now he sits on ninety million dollars but people don't think there's a connection. Well ...
(Ed: the GOP pols also hate Mexicans)
Yah, well, if any of them were bright enough to read a road map, they would know more Mexicans are leaving the U.S. than are entering it. The GOP didn't exactly pick the best apples in the farmer's bushel basket this season.
The Statement of Direction is important. America needs one and hasn't had a clear direction in years. The last one came from Ronald Reagan and we'll not critique his Presidency now beyond the clarity of his statement. He said what he would do and he did it.
Bernie Sanders also offers a clear Statement of Direction and you may not agree with it but we're sure you know the value of such things. A largely apolitical version was in Kennedy saying America needs to get to the Moon.
Transplanted from Comments:
1. Risk mitigation. While we've had localized banking crises under Glass-Steagall, the impact is just that - localized. It greatly reduces the risk of a global financial crisis if individual banks (including their holding companies) are restricted to the county or state level.
2. Financial Stability. There was a time when banks, like utilities, were considered "widows and orphans stocks." They paid a healthy dividend, but there was little fluctuation in share price. They were income stocks - stable, secure, one step up from bonds. When banks became growth stocks, the risk to the overall economy similarly increased.
3. Job Growth. There's a significant amount of infrastructure that's required to run a bank. The return to a state-sized banking system increases the net number of jobs in back-office operations, call centers, and technology centers. Now, there will certainly be a surge in outsourcing firms that would step up to offer those services in a pooled fashion, but the increased number of banks as a whole would still generate a net increase in jobs. We can address the outsourcing problem under different measures (and that does need to be addressed.)
4. Diversification. Banks are the lifeblood of corporate spending since they provide the lending necessary to fuel the economy. Smaller banks with a smaller working capital would force corporate borrowing to be spread across far more banks than happens today. That's great from a risk perspective and it's great for the local communities that house those smaller banks.
None of this can happen overnight, however. My best guess is it would take a minimum of 10 to 15 years to fully implement - about the same amount of time it took to dismantle Glass-Steagall. Of course, if you don't start now, then it will always be 10 to 15 years away.
3 comments:
My support for a return to the pre-interstate banking restrictions is for the following reasons:
1. Risk mitigation. While we've had localized banking crises under Glass-Steagall, the impact is just that - localized. It greatly reduces the risk of a global financial crisis if individual banks (including their holding companies) are restricted to the county or state level.
2. Financial Stability. There was a time when banks, like utilities, were considered "widows and orphans stocks." They paid a healthy dividend, but there was little fluctuation in share price. They were income stocks - stable, secure, one step up from bonds. When banks became growth stocks, the risk to the overall economy similarly increased.
3. Job Growth. There's a significant amount of infrastructure that's required to run a bank. The return to a state-sized banking system increases the net number of jobs in back-office operations, call centers, and technology centers. Now, there will certainly be a surge in outsourcing firms that would step up to offer those services in a pooled fashion, but the increased number of banks as a whole would still generate a net increase in jobs. We can address the outsourcing problem under different measures (and that does need to be addressed.)
4. Diversification. Banks are the lifeblood of corporate spending since they provide the lending necessary to fuel the economy. Smaller banks with a smaller working capital would force corporate borrowing to be spread across far more banks than happens today. That's great from a risk perspective and it's great for the local communities that house those smaller banks.
None of this can happen overnight, however. My best guess is it would take a minimum of 10 to 15 years to fully implement - about the same amount of time it took to dismantle Glass-Steagall. Of course, if you don't start now, then it will always be 10 to 15 years away.
Hear ye Hear ye
Had to pop this up to the main body of the article. Excellent points all and thanks.
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