Thursday, July 29, 2010

Megabanks Continue to Devour America's Banking System.

Regulators seized seven small banks last week. That brings the total U.S. bank failures to 103 so far this year compared to 57 at the same time last year. The FDIC now estimates that their funds will experience a $60 billion reduction due to additional bank closings between now and 2014. The agency's deposit insurance fund stood at negative-$20.7 billion at the end of the first quarter, and the FDIC estimates that the seven bank failures on Friday will reduce the fund by another $431 million.

Meanwhile, the six biggest banks in the United States (Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo) now possess assets equivalent to 60% of America’s gross national product. In the mid-1990s, these "six banks" had less than 20%. Their assets were less than 20 percent of the gross national product.

These megabanks are slowly transferring the wealth of our nation to themselves and to the international financial interests that control them. They can make money no matter what happens in our economy because as bank credit continues to contract  - outstanding consumer credit fell $2.2 billion; real estate lending contracted $9.2 billion; and commercial industrial loans slid $5.1 billion - they continue to make money hand over fist.

As Matt Taibbi so eloquently put it in his article, The Great American Bubble Machine,

"The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."
Anyway, the megabanks continue to report very large profits as they devour enormous shares of the U.S. banking market.  The new reality is that the legislation and regulations implemented over the last few decades were deliberately designed to continue the consolidation of power under way right now, while we the taxpayers financially suffer as we continue to pay the price.
To keep the global economy on track, people in the United States and the rest of the developed world need to work longer before retiring, pay higher taxes and expect less from government. And the cheap imports lining the shelves of mega-chains such as Wal-Mart and Target? They need to be more expensive.

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