The banksters are back – and define America

By Joseph Farah

It’s the same old story. Why do people rob banks? Because “that’s where the money is.”

Now, of course, it’s just the method that has changed. They don’t use guns, and they don’t get punished. The banksters today are inside the gates. They use the excuse that they’re just too big to fail. Remember?

This is how it works now.

The government bailed out the banks last time around. That was controversial, but bipartisan and, at the time, they told us in bipartisan fashion that they were “saving capitalism.” But they were actually playing a different game. It all basically started for real in 2009.

They got to “privatize their gains, while socializing their risks,” as Tucker Carlson noted Monday night. They got a lot richer this way and totally avoided the risks of the traditional bank robbers. When things went well, they got rich. When things went not so well, they still got rich.

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Nobody complained back in 2009, or noticed the sleight of hand that had taken place.

In a normal, non-distorted capitalist economy, companies become more valuable when they produce more goods and services that people want to buy. But in an economy controlled by monetary policy run by the Federal Reserve, companies become valuable when interest rates decline.

That’s pretty much what happened. For 13 years, interest rates remained near zero, due to emergency measures declared by the Federal Reserve after 2008. But they never ended. And after 13 years, the American economy was distorted beyond recognition in ways too numerous to count.

“There was an ocean of money flooding the system, and the people who pay half the tax rate you do benefited the most,” said Carlson. “They started buying third houses and flying private. But there was also a problem that you didn’t hear a lot about with low interest rates. If interest rates were at zero, how do you get meaningful returns on your money? This was a problem that virtually every investor faced for more than a decade, very much including the banks. At some point, investors became tempted to make very risky bets.” And why not? They were invulnerable. They were gods. They had to produce returns.

Silicon Valley Bank failed last Friday, the second-biggest bank failure in our history, followed by New York’s Signature Bank on Sunday, America’s third-biggest bank failure ever. On Monday, trading in a bunch of regional banks was halted for a time.

It was a potential catastrophe. Then out walked Joe Biden. That was a real catastrophe. He spoke for 60 seconds. He lied. He said the banking system was safe. He didn’t take any questions. He couldn’t.

People with long memories will recall that, after 2008, Eric Holder imposed DEI – diversity, equity and inclusion standards – on the entire financial sector. It was no coincidence. He killed the meritocracy. Consolidation. Every hear about it? Big banks eating little banks. That spells less competition. More consolidation means more government control. That could mean less competition. Almost always does.

The bankster cartel will do more of the same. It’s back to doing what worked. They’ll turn to their geniuses in the Democratic Party as they did in 2008. Their geniuses are Barney Frank and Sen. Elizabeth Warren – two key architects of the post-2008 system of Wall Street regulation.

Frank, who chaired the House Financial Services Committee in the wake of the global financial crisis and wrote sweeping new rules enacted in 2010, most recently served on the board of New York’s Signature Bank, which regulators shut down Sunday.

From his front-row seat, he blames Signature’s failure on a panic that began with last year’s cryptocurrency collapse – his bank was one of few that served the industry – compounded by a run triggered by the failure of tech-focused Silicon Valley Bank late last week. Frank disputes that a bipartisan regulatory rollback signed into law by former President Donald Trump in 2018 had anything to do with it, even if it was driven by a desire to ease regulation of mid-size and regional banks like his own.

“I don’t think that had any impact,” Frank said in an interview. “They hadn’t stopped examining banks.”

But Warren, a fellow Massachusetts Democrat who designed landmark consumer safeguards that ended up in Frank’s 2010 banking law, is placing the blame firmly on the Trump-era changes that relaxed oversight of some banks and says Signature is a prime example of the fallout. Warren argues that, had Congress and the Federal Reserve not rolled back stricter oversight, Silicon Valley Bank and Signature would have been better able to withstand financial shocks.

“They should have to meet higher capital standards, they should be subject to stress tests and they should have regular supervision that would catch exactly the kind of mistake that SVB made, mistakes about the failure to hedge risk and mistakes about concentrating in one industry,” Warren said in an interview Monday.

The Dems are not sure – can they blame Trump for this or not?

I’d bet on diversity, equity and inclusion standards. I think Warren will play the Democrat’s reliable Trump card. Geeesh!

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