That’s saying a lot—or maybe not.
Not given that the financial wizards of Wall Street ripped off the country for tens-of-billions of dollars, caused millions of people to lose their home, drove the economy into a deep recession and still walked away with millions of dollars in bonuses and their companies intact.
But Americans have pretty short memories.
So maybe what’s got people still worked up about banks is that instead of making loans to small businesses and consumers so the economy can grow more briskly, they’re holding on to the hundreds-of-billions of dollars of cheap money the Federal Reserve’s made available to them.
It seems banks are more intent on nickel-and- diming their customers with unjustifiable service fees than offering them mortgages or loans.
But why should banks bother to do what they are supposed to be doing – deploying capital where it can be used to help the economy – when they can simply deliver billions of dollars to shareholders, including many of their own executives?
In 2011, just a couple years after being bailed out by the government, while middle class and unemployed were struggling to make ends meet, the top 19 banks paid out nearly $40 billion in dividends.
That’s not the least (or rather most) of it. The top seven banks, Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase, Morgan Stanley, US Bank, and Well Fargo paid a record breaking $156 billion in total compensation in 2011, a 3.7% increase from the previous year.
Don’t get me wrong. The financial sector plays an important role in a well- functioning economy, but not to the extent that it accounts for 8.4% (an all time high) of the U.S. economy and makes more than 30% of all corporate profits.
The captains of the financial services industry – more dependent than ever on (mostly- useless- to- the- rest- of- us) trading profits – are more like Mafia dons overseeing Las Vegas casinos.
No wonder bank lobbyists worked so hard to get regulators to water-down Dodd-Frank financial reform provisions that limited banks’ ability to trade.
To add insult to injury, the federal government has filed few criminal or civil cases tied to the 2008 financial crash despite the fact that firms on Wall Street and around the country overwhelming created the conditions that led to the catastrophe.
Certainly a few successful criminal prosecutions would give bankers pause the next time they come up with quasi-legal schemes to pump up their revenue and bonuses.
So what’s stopping prosecutors from going after the miscreants who brought the country’s economy to its knees? Not public opinion. Half those surveyed in a recent Pew Research Opinion poll said Wall Street hurts the economy more than it helps it, and three-quarters said that government policies helped financial institutions while the middle class received little help.
It’s seems that even when government authorities attempt to hold banks accountable – as in the recently announced settlement over dubious mortgage practices and foreclosure abuses – that it’s half-hearted at best.
It’s not difficult to figure out why the government doesn’t do more. It’s called “K Street” and the tens-of-millions of dollars the financial services industry spends lobbying every year. Even the historically apolitical lightly regulated hedge fund industry has President Obama kowtowing in his quest to raise at least $500 million for his re-election campaign.
If it was just a matter of financial firms simply treating their customers cavalierly as former Goldman Sachs banker Greg Smith complains in his career ending New York Times op-ed than perhaps we could live with their shenanigans.
But as it still stands (thanks to the half-baked attempt at reform called Dodd-Frank) we need to be concerned since banks’ actions will continue to put people’s life savings and the economy at risk.
After the housing bubble’s public relations debacle you’d think bankers would be a bit savvier. But maybe they don’t have to be since they have the people they need to be most concerned about – politicians and financial services regulators – in their back pockets.