Believe it or not, despite our economy’s generally decrepit health, some business sectors are doing well. Gold mining is thriving, and of course the banking and financial sector remains strong.
Big banks have performed especially well, raking in record profits since the TARP intervention in 2008. And that is pleasing, because in a down economy, it is crucial that the top performing industries continue to profit — after all, the worst kind of poverty is a poverty of hope. Champagne wishes and caviar dreams are what keep blue collar trailer parks voting red.
Thus, in certain situations it is prudent that the government mainly look the other way while predatory bank strategies damage small local economies. Bolstering the bottom line of the nation’s highest profile and most celebrated banking brands maintains the illusion of prosperity, and if you know anything about illusion versus reality, it’s that reality can cause an annoying ailment known as cognitive dissonance. So naturally, the innate prestige of our brightest and most profitable banking institutions should supersede the actions of a couple wayward J.P. Morgan bank managers.
Without even an admission of wrongdoing, J.P. Morgan graciously agreed to a forced SEC settlement to terminate $650 million in fees for Jefferson County, Alabama, a delinquent account whose debt from “allegedly” corrupt J.P. Morgan sewer bonds amounted to only about $3.2 billion.
But don’t be confused by the J.P. Morgan SEC dealings, or those involving its illustrious Manhattan neighbor Goldman Sachs who agreed to pay $550 million — about 1.4 percent of its total 2010 profit of $39.2 billion. The fine is equivalent to two California speeding tickets for the median family income of $50,000, so worry not, the big banks are doing great these days. Thanks to online traffic school, we have ensured their continued lucrative prosperity. And the record setting must continue — think of Robin Leach’s Lifestyles of the Rich and Famous. Seriously, what would the world do without a round, pompous Brit who looks exactly like two separate Pomeranians?
But mean British jokes aside, in order to ensure the continued unsustainable profitability of our big banks and the moral culture they promote, there is the minor concern of a nationwide call to drop big banks in favor of local credit unions.
The movement’s name, “Bank Transfer Day,” is hardly catchy or even coherent. But mainly, the arguments behind the growing popularity of credit unions are misguided, especially when considering the fact that all credit unions are by definition nonprofit and therefore decidedly un-American. And even more confounding is a credit union’s democratic framework, which allows for volunteers to be elected into leadership positions and creates a climate of equitable member value. But inexplicably, despite these shortcomings, the movement continues to grow.
Even more curious is the growing public appreciation for many credit unions’ community-lending initiatives that seek to fund small businesses and go out of their way to refinance negligibly profitable loans like those issued for nonprofit elderly housing properties. It’s no wonder these nonprofit cuckoo birds flock together. But fret not, it still remains unlikely that the money-loving general public will ever embrace an institution whose charter exists expressly to create opportunities for its members to save money — our harmonious human history has instilled in them that the money game is best played by sharks.
Still though, in order to maintain that our national treasure does remain under the private control of a few elite banks, momentum propelling the movement to tell banks to “shove it” must be stopped. If the confused “99 percent” ever form a consensus to switch to credit unions, gone might be the days of exorbitant CEO-to-underling pay ratios as banks would be forced to shift to a more modest compensation model in order to stay competitive.
Banks are not taking this threat lightly.
Recognizing the worldwide outcry against their terrific success, many big banks have decided in lockstep to cancel plans for monthly debit card fees. With “Bank Transfer Day” approaching on Nov. 5, the reversal late last week by Wells Fargo, B of A and others hardly hurts their chances of turning a monstrous profit. But what the turnaround on fees does do is attempt to calm some of the populist rage that keeps surfacing despite good-natured and safety-first banking policies like equipping embattled high-flying CEOs with golden parachutes to replace their melted wings.
Banks believe that by rescinding their threatened fee hike they can move forward under the illusion that they are making an actual compromise. This useful strategy is similar to that of any salesman who presents his customer with an inflated price at first, but then falls back to the standard offer, all the while nurturing in the customer the impression that he has bargained for a good deal. It’s nothing new, but what is important to the banks is giving customers what they want.
Of course, what customers want most of all is more money. But that generally conflicts with the corporate bank’s foremost stated purpose of serving its limited shareholders. Leave the democratic equal representation gibberish for credit unions like Cal’s own CUBS on Lower Sproul. Democratic ownership has no place in the lucrative world of charging people to hold onto their own money.