Bust up the Big Banks

Les Leopold, a senior advisor to the BlueGreen Alliance, floated a simple but radical idea at the alliance’s Good Jobs Green Jobs conference:  The big banks caused the big crash, so it’s time to bust up the big banks.  The catch is replacing them.

That, in so many words, summarizes what Leopold said in a conference session entitled 99% Economics: What we need to know about the economy to protect our jobs, health and the environment.  To give you an idea of how many people agreed with him, the crowd in the meeting room was standing-room only and spilled into the nearby hall.

Leopold pulled no punches.  He called Wall Street’s denizens, led by the big banks but also including other forms of financiers, “job destroyers” – a point workers definitely agree with.  He said financial finagling led to the 2008 Great Recession.

And the banks “sold (President) Obama a bill of goods” for pulling the nation out of the crash.  “Restore the financial sector and the rest will come along,” Leopold said the financial tyrants proclaimed.

Except the rest didn’t, and the banks are responsible for that, too, he added.

The financial sector has grown in an outsize way for the last two decades, Leopold said, and reaped in all the gains from our productivity and hard work.

Data show the top 1% garnered 95% of the added wealth created since 2000, and the wealthiest 1% of U.S. population now controls 38% of national wealth, a higher share than before the 1930s’ Great Depression.  The bottom 60% controls 2% or less.

Wait, Leopold said, it gets worse.  Late in the 20th century, financiers were drowning in unpaid debts from developing nations.  Those nations couldn’t export goods to earn money to repay their bank loans.  So what was the banks’ solution?

Make it easy for the developing nations to export goods to the U.S., to gain the currency they needed to repay the banks.  Easy, how?  So-called “free trade treaties.”

Who do you think wrote NAFTA, CAFTA and all the rest? Leopold asked.

And who do you think forced the firm you work for to cut your wages, kill your health insurance, convert your pension into a 401(k) – and then gut it – and break your resistance by smashing unions and pitting public workers against private workers?

“Your boss isn’t just at your workplace.  He’s also on Wall Street.  So if you’re fighting your (workplace) boss, you’re fighting for crumbs,” Leopold says.

“Once we see who we have to go after” to take back control of the economy and make it work for workers, then “labor, environmentalists and the wider community can figure out how,” he adds.  Otherwise, there’s a new type of capitalism, he warns.  It features permanently high long-term joblessness, low pay, a huge wealth gap, bankrupt cities from Detroit and Camden to Newark and Compton, and rampant poverty.

There are ways to bust the banks, Leopold pointed out, and not just through the tough law, Dodd-Frank, that Congress passed after the crash.  Leopold says it didn’t go far enough, and the banks have spent subsequent years undermining its rules.

Here’s one way, he added: Set up your own state-run bank.   One big source of capitalists’ cash is tax revenues from 49 of the 50 states.  The states collect them and then deposit them in the banks’ accounts, for “safekeeping.”  That’s $1 trillion yearly.

The 50th state is North Dakota.  It has its own state-owned and state-run bank.

North Dakota established its bank in 1919 when the Populists and the Farmer-Labor Party were still powerful, “because the big banks in Chicago and Minneapolis wouldn’t lend to farmers and ranchers.  They were ripping them off,” Leopold said.

North Dakota’s state bank collects and holds state revenues, and when it lends cash out, money “goes to 80 community banks in the state” who in turn lend it to North Dakotans, with a few state-mandated strings attached, he added.

“For every $1 million (local) bankers and borrowers get, they have to create a permanent job.  Think of what you could do with $1 trillion.  That’s a million new jobs.”

Don’t like a state-run bank?  Wait, there’s another financing mechanism, Leopold says.  It’s one we used to have, though he didn’t mention that: The Post Office.

Anyone old enough to remember postal savings plans will know what Leopold is talking about.  “Other countries have this” and the U.S. Postal Service, with its unrivaled network of local post offices, would have branches everywhere and be a handy place to deposit new capital that’s not under control of Wall Street and its cronies.

(Leopold didn’t say so, but becoming a savings source and lender could also give USPS a lot of new revenue to help it pull out of its GOP-created financial hole.)

“Go back to your worksite and see if anyone supports Wall Street,” Leopold urged.  “Ninety-nine out of 100 people are ticked off at it.  We’ll have to fight on several fronts at once, but here’s a great opportunity if we develop the organizational means to carry it out.   We gotta blow apart Wall Street as we know it and make them into something like a regulated public utility.”