Banks and your money: bailouts from the taxpayer while profiteering from the poor

Overdraft fees and the latest in let them eat cake.  Does anyone besides me see the irony in banks lobbying so hard to keep overdraft fees?  Can anyone think of any large overdrafts lately?  Not the kind measured in pennies and caused by bouncing a check at the grocer or gas station, but the kind measured in trillions and caused by greed and arrogance.

After taking their bonuses off the top, like good little MBAs, the banks are busy right now spending money on lobbyists at the highest rate in history. No amount of our tax money is being spared in the effort to bribe our congressman into voting against the national interests in favor of the banks. Should banks be more regulated? – heck no. Should risky investment strategies continue to be backed by government guarantees as if they were pennies in a piggy bank? – of course. How about a tax on excess bonuses paid with taxpayer money? – socialist! Should banks that were “too big to fail” be broken up as part of a taxpayer bailout – communist plot!

But it does not stop there – having already lost any sense of shame, the bankers are now lobbying to keep their piratical overdraft fees in place. I mean – are you kidding? Banks have received bailouts worth more than centuries of their old fashioned profits. They overspent their accounts by an average of 32 to 1. All of this and yet they have the hubris to whine when congress tries to prevent them from forcing individual taxpayers into bankruptcy by charging wildly inflated fees for overdrafts. Mere humility would suffice for banks to realize how brief and small these public overdrafts appear next to the bank failures. AIG for example, received a bailout equal to 14 times the amount of profit its previous chairman had managed to earn from 1968 to 2005. Banks lost the equivalent of centuries and centuries of their total capitalist profit and the taxpayers made up for it, in one huge welfare check for the rich. Yet, despite this rather substantial overdraft, they paid no penalties – none, what so ever.

Banks, it seem, love taxpayers as a deep pocket group. But as individuals, the banks see us as lazy, cheating, spendthrifts who cannot follow simple rules and stick to a budget. Bankers should, of course, be very, very familiar with that sort of person, since it is the profile of their own executives. The very best and brightest from Harvard and MIT went out and placed bets that would shame a drunken gambler; then sold them to the public with convoluted schemes that no snake oil salesman would have dared to tap-dance around. The result of all this learned technocratic flim flam? The collapse of the American economy; and what did these capitalist men of iron do? They ran to the government, wailing and moaning for a socialist bailout. It was the ultimate in overdraft protection but they paid no price and suffered no inconvenience for it save, perhaps, a sham TV grilling by their best employees – our congress.

The Bank bailout was so prodigious and so over the top that many little elements of it have gone from the public memory. Beside the bail out of their debt swapping, double dipping derivatives which accounted for over a trillion and a half dollars, banks also received money from TARP. TARP was a mere 700 billion – by the way, that is 700,000,000,000 we just do not see the zeros anymore and I think they add a certain zest to the numbers. 700 billion is the entire gross domestic product of the United States in 1965, 1.5 trillion is our entire GDP in 1975, – these numbers are huge and amazing, yet we swallow them with ease.

The banks, ever prone to double dipping, have got money from TARP also. In one program alone, 75 billion dollars was given to the banks to help 9 million homeowners prevent foreclosure. With their usual flair for success, they have spent 27billion and helped less than 33,000 customers. Now mind you, this is just to get the banks to lower rates or extend terms, they do not have to release the mortgages – they will still receive huge profits from the homeowner after they have milked the taxpayers. At the rate they are going it is costing us around 2,500,000 per mortgage to get the banks to extend the homeowner a little more time to make his payments. How noble.

Milking fees from poor people is a great financial growth industry. There are seminars conducted on how to maximize profits in the poverty “market”. In 2008, the banks made over 24 billion in overdraft fees alone. Estimates for 2009 would place them well over 30 billion. Overdraft fees affect over 50 million people a year – meaning they will pay nearly $300 a person in 2008. All of these overdraft fees in a time when the banks have been showered with public funds to bailout their own incompetency.

Which gets me to the point – I do not intend to post a long argument here - frankly, I am too disgusted. But this point, at least, is clear. I understand that we must place some sort of sanction on people who spend more money that they have in their accounts. Really, I do – but isn’t there a saying about what’s good for the goose is good for the gander? God knows what that is supposed to really represent – but it means fair is fair. The banks just committed the largest overdraft in history. They were handed so much tax money that it will burden the people for generations. Yet, apparently, fees – like taxes, are just for the little people.