UNTIL A WAY OUT, ALL AGREE: NO BONUSES FOR TAKING DOWN THE SYSTEM, AND Too-Big-to-Fail HAS GOT TO GO! I say BREAK THEM UP OR RISK A REPEAT!

Written by Jim McGrath Thursday, 14 January 2010 14:08

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FOR STARTERS, Republicans and Democrats, anyone with sense, and anyone that doesn't work on Wall Street or have a vested interest in promoting our ruin, agree: the too-big-to-fail way of running business doesn't merit bonuses, it merits firing.  And this is what would have happened, had the government not stepped in for fear of utter global collapse. Financial Inquiry Chairman Angelides aptly likened it to selling a car with bad brakes and then taking out an insurance policy on the buyer.

As The New York Times reported, in comments after committee hearings by John Taylor, president of the National Community Reinvestment Coalition:

"the banks should be held more accountable for what they sell...

... If the leaders of Wall Street did not consider the possibility of housing prices dropping in their own stress tests and due diligence,"  he added, "if they did not know that the F.B.I. had been raising red flags about mortgage fraud since 2004, and if they did not know that high-cost, no-doc, interest-only loans were being made right and left to anyone, then their spirited defense of their employees falls flat."

Based on what we heard today,'  he added, 'they should be firing people, not giving them bonuses.'

For a summary account of the bank practices, see The New York Times article, "Banks Bundled Bad Debt, Bet Against It and Won." at http://www.nytimes.com/2009/12/24/business/24trading.html?_r=1&ref=business

BUT WHAT SEEMS VASTLY UNREPORTED, AS USUAL, IS NOT WHAT HAS HAPPENED, BUT THE UNDERLYING, CURRENT STATE OF AFFAIRS: Most mainstream media doesn't broadcast widely that the banks are really insolvent, as they continue to report essentially false profits, the government providing billions in loans and letting them keep toxic and other bad assets off their books, in favor of sleight-of-hand accounting to hide their true financial state.  All ostensibly to prevent another panic, when everyone sees the emperor has no clothes. Then, everyone will run. Run with their money out the door, run on the banks, and run for the financial hills.

A THREE STEP SOLUTION:

ONE- The Too-Big to Fail Tax as a start will help, more than simply a levy, it is touted as a method to reduce their size, thereby making them small enough to fail without wreaking havoc on everyone.

TWO - Then, claw back their bonuses and salaries for what is really failure disguised as success with the help of bailouts and loans and bogus accounting.

LASTLY, break them up in a manner that will not demolish the entire global economic system infected with their toxic assets and leveraged-to-the-hilt derivatives, default swaps and other "innovations" intertwined so intricately as to make global ruin a can of worms that must be undone.  BUT UNDO IT WE MUST!

BUT MANY REMAIN OSTRICHLIKE -- ESSENTIALLY LETTING THE BANKS BRING US TO A WORSE CRISIS,  BY BECOMING EVEN BIGGER, MORE OF A THREAT, AND CONTINUING SIMILAR AND WORSE RISKY PRACTICES -- as though no crisis took place! (For more on what is really happening, see Robert Reich's expose at http://www.huffingtonpost.com/robert-reich/why-obama-must-take-on-wa_b_422071.html