In the wake of last year’s Bank Transfer Day protests more than 700,000 people have withdrawn funds from for-profit banks and deposited $5.3 billion in newly opened credit union accounts. Bank Transfer Day may be one of the most unprecedented, largest consumer transfers of wealth in American history. It may also ultimately go down in the annals of social justice movements as one of the world’s most successful acts of nonviolent civic resistance.
As the spectre of another election is upon us, the candidates scramble to position themselves as mouthpieces for the common man against the perceived thieves and idiots who caused the banking/housing debacle and the continued tanking of our economy. All the while, these same politicians are dependent upon the almost unfettered cash that these corporate pals and lobbyists provide them.
To find out what’s really behind this disenchantment (bordering on anger) with bankers, Rock Cellar Magazine spoke with journalist/corporate muckraker Greg Palast.
Palast is sort of a combination trench-coat-wearing private eye and feisty investigative reporter in the Woodward/Bernstein tradition. His writing style has been described as “pulp non-fiction.”
Palast’s exposés are deemed too hot to handle for most American mainstream media so much of his reportage appears in British outlets, such as the BBC and The Guardian. Palast is also a documentary filmmaker and author of The Best Democracy Money Can Buy, Armed Madhouse and most recently Vultures’ Picnic, In Pursuit of Petroleum Pigs, Power Pirates, and High Finance Carnivores.
Rock Cellar Magazine: Why do you think so many people move their deposits from for-profit banks to not-for-profit credit unions?
Greg Palast: Because they understand the game: If banks see they can crap all over you, they can eat you alive. They cannot give you loans and can conduct predatory lending. We have about 5 million Americans losing their homes this year – if you want to support that, give J.P. Morgan your money, give Bank of America your money.
RCM: How did the banks consolidate so much power?
GP: It goes back to 1997, 1998. Robert Rubin, who was the CEO of Goldman Sachs when President Clinton appointed him Treasury Secretary in 1992, Sanford Weill of Travelers Group, and a bunch of bankers decided to decriminalize some of their questionable activities. We use the term “bank deregulation,” but it used to be a crime to take public money and gamble it away, and that’s what these guys had in mind.
It starts with the breakdown of the Glass-Steagall Act, created by President Franklin Roosevelt [in 1933] to say… “if you’re an investment bank – which is basically a gambling house that gambles in securities – go off and do whatever you want.
“But if you’re a commercial bank, that is the piggyback of America, where we put our savings or pension fund, and where we get loans to run businesses: No, no, no gambling with that.
“And what we’ll do in return – you’re not going to make lots of money, because you can’t gamble – but, if you keep it safe, we – the Federal government – will guarantee all of your customers’ money, and in effect, guarantee you as a business.”
That’s a simple deal: you keep it safe, you don’t gamble, you don’t go to Vegas with our money. Fine.
RCM: Then what happened?
GP: It was just too tempting to break into our piggybanks for Robert Rubin, Sandy Weill and these characters. They said, “Let’s smash the Glass-Steagall wall – and we have to do it worldwide.” So they smashed down the wall, and suddenly commercial banks and investment banks, which are casinos, are now mixed.
Your piggybank now can go to Vegas, and they went to Vegas. The first time they rolled the dice in the late 1990s, they looked like winners, and everyone thought they were geniuses and there was nothing wrong with decriminalizing gambling with public money.
RCM: What went wrong?
GP: So Robert Rubin’s on the inside, he’s Secretary of the Treasury. He decriminalizes banking, he allows Sandy Weill, head of Travelers Group, to illegally – it was a complete crime. They took an investment bank run by Travelers Group, and took over Citibank – just about the biggest bank in America, which had your piggybank money.
It was before the deregulation, the decriminalization of banks, so it was u>illegal. But the Secretary of the Treasury didn’t step in. Why? Because Robert Rubin then quit as Secretary of the Treasury and six months later became the head of that illegal combine.
The day that combine was done its value went up $40 billion, because that’s what it was worth to them. And sure enough, when they went to Vegas one too many times with your money, they collapsed. And we gave that company $40 billion. The stockholders were right: Your money was worth $40 billion on this stock. We ponied up; we put up the $40 billion cash for these guys. We put up over a trillion dollars in loan guarantees to Citibank and its gambling operation, and Travelers. They were never required to split apart; the game continued.
RCM: So bankers had a friend in government with Rubin.
GP: He was the capo dei capi, the godfather of the operation. He got a fee of over $110 million as this thing sank into the tar pits. But he was worth his money: Because he not only let them blow the money – I think that Robert Rubin was the most underpaid man in America – but because he got $40 billion of our money and a $1 trillion guarantee – that’s worth at least $110 million. I think he was robbed…!
Rubin became Obama’s economic overlord. Within one week of being elected, for the first time I think in American history somebody announced his financial cabinet, and he picked both of Rubin’s protégés: Larry Summers as economic czar [Director of the National Economic Council] and Timmy Geithner as Secretary of Treasury.”
[Reporter’s Note: In 1998, when he was Deputy Secretary of the Treasury, Summers -- along with his then-boss, Treasury Secretary Rubin -- helped stop the regulating of derivatives. In 1999, after becoming Clinton’s Treasury Secretary, Summers endorsed the Gramm-Leach-Bliley Act, which eliminated Glass-Steagall.]
RCM: So, what happened in Vegas didn’t stay in Vegas?
By the mid-2000s it started to go wrong. Not only were the gambles bad, but something else happened. Goldman Sachs was an investment bank; Citibank was a commercial bank mixed with investment banking. One of the deals they were supposed to do was, one of the commitments, besides being safe, was to lend money to us, right? That’s why we have banks. When Obama talks about saving the financial system, he hasn’t done that, because we’re not getting loans. He’s saving financiers – it’s a very big difference.
RCM: Do you support the intent behind Bank Transfer Day?
GP: Why should we feed them? Number one, it’s for your own self-protection; you’re not going to get a loan, unless there’s money in the community credit unions, they won’t have money to lend to you. If you’re not a member, you’re not going to get a loan.
These other banks charge you and scam you: part of deregulation was removing control over fees that were charged. When we give these guys a guarantee, we expect a few things in return. One is that they make loans; they stopped doing that. Number two, that they don’t charge usurious interest rate – they do that.
We used to have usury ceilings. ‘Oh, but I got a Citibank card and it says my APR, my interest rate, is only 14 percent.’ Read the entire 30 pages, schmoe, and how many of you have done that? Do not get a credit card from Citibank unless you read the entire 30 pages, and the other 30 it says you should read on its website.
And you will find that if you’re late one day on a payment, not only does your interest actually go up to nearly 30 percent – you’re better off going to Louie the Loan Shark! – but they go back six months and recalculate all the interest you owed, not at your 14 percent but at 30 percent.
Go to a community credit union; they do not charge these usurious rates.
RCM: But at least Bank Transfer day pressured BofA to rescind its debit card fee hikes?
GP: Bank of America didn’t stop charging fees, they just changed the name! If you have a BofA debit card, read the entire booklet, and go online and read the additional material. And you tell me that’s a free charge? It certainly ain’t. You make one mistake on a payment and they got you, they own you, they’ll ruin you.
RCM: Tell us how you really feel about the big banks…!
GP: When Countrywide lost billions and you and I had to make up for it in the Troubled Asset Relief Program (TARP), the CEO of Countrywide Angelo Mozilo was paid $600 million. I don’t mean that’s how much his company made; he personally was paid over half a billion dollars to lose billions and to destroy millions [of people].
Okay, go ahead and give Mozilo more of your money, schmuck! Then go out and hit yourself in the head with a hammer and you’ll feel better.
There’s no maybe about it; that’s why I wrote Vultures’ Picnic, to expose this 1 percent. Why would we feed the snakes that bite us? And these are the snakes that have bitten us.
ABOUT VULTURES’ PICNIC: In Pursuit of Petroleum Pigs, Power Pirates and High-Finance Predators.
“Greg Palast’s crew of journalist-detectives chase down British Petroleum bag men, CIA operatives, nuclear power con men, and “The Vultures” – billionaire financial speculators who, through bribery, flim-flam and political muscle, take entire nations hostage for mega-profits.”
“Reads like a spy thriller. The last of the great investigative reporters.” -Robert F. Kennedy Jr.
“Jack Kerouac meets Seymour Hersh.” - Buzzflash
“Up there with Woodward and Bernstein.” - The Guardian
For more information, and link to a free chapter, go to: Vultures’ Picnic Website