Which Bank Is the Worst for America? 5 Behemoths That Hold Our Political System Hostage
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To create those complex financial instruments, finance has begun to cannibalize the “ best and brightest” college graduates--or at least those looking for the fattest paychecks, whether purely out of greed or a need to pay off heavy student loan burdens (often owed to the same banks).
Pat Garofalo at Think Progress noted that “The four biggest banks issue 50 percent of mortgages and 66 percent of credit cards: Bank of America, JPMorgan Chase, Wells Fargo and Citigroup issue one out of every two mortgages and nearly two out of every three credit cards in America.” Not only that, but he also pointed out that the five banks we’ve tracked here are the ones that control 95 percent of the derivatives in the country--the complex financial instruments that investor Warren Buffet called “financial Weapons of Mass Destruction.”
Perhaps the most pernicious effect of Wall Street’s influence is yet to come. By watering down or killing off new regulations designed to prevent the next bubble-induced meltdown, they imperil future generations’ prosperity just as they did when they lobbied hard to kill financial regulations in the 1990s--resulting in, to give one example, the passage of the Commodity Futures Modernization Act in 2000, which kept derivatives and credit default swaps unregulated and allowed the banks to keep gambling without oversight.
The banks have simply gotten too powerful; ”too big to fail” has become too big to regulate. Yet, even as they grow, spend on lobbying and campaigns and institute fees, they represent a giant ticking time bomb at the heart of our economy.
It can be difficult to gauge which of the big banks has had the greatest negative impact on society, as so many of the problems were created by the combined practices of the entire industry. Bank of America stands out for its sheer size. It is the country’s biggest bank, controlling 12 percent of the nation’s deposits, and 20 to 25 percent of the mortgage market (and a huge chunk of its mortgage fraud as well). While it continues to face lawsuit after lawsuit for fraudulently selling securities -- from both the government and private companies -- its plummeting stock price is bringing it ever closer to collapse. What’s the endgame if America’s largest bank runs out of money? If ever a bank was too big to fail, it is Bank of America.
Robert Kuttner, co-founder of the American Prospect , wrote of the prospect of the giant going under:
"Worst of all would be to let a large institution like Bank of America just fail. Outside of the hard-core Tea Party right, nobody supports this.
"The second worst policy would be to just keep throwing money at a zombie institution to keep up the pretense that it is solvent. We tried that policy in 2008 and 2009. It helped entrenched bankers keep their jobs and their outsized profits, but a wounded banking system continued to be a lead weight on the rest of the economy."
Bank of America is no doubt the biggest lead weight on the economy right now, and its zombie status keeps everyone wondering what the endgame will be. One of the things that was included in the Dodd-Frank bill was a provision that would allow the FDIC to take failing banks into receivership, seize them, break them up and reorganize them. The question is, will an administration that’s proven unwilling to make any serious changes to the financial industry take that step? Or will it instead bail out BofA yet again -- a step that Kuttner warns could be a political and economic disaster.