New Orleans Are you kidding me? The Chinese Premier Wen Jiabao called for breaking up the banks because they are making too much money and charging too much interest. It turned out he was actually calling for breaking up banks in China, rather than elsewhere, but how refreshing to have a head of state calling for accountability and economic contribution from state owned banks.
We forget sometimes in the handwringing impotence of US government officials before Wall Street and big banks and the problems they have wrought that in fact banks only exist as a matter of state and federal charter, are extensively regulated by numerous branches of state and federal government, have money supply and interest controlled by the U.S. Federal Reserve System, and therefore operate in this country as private institutions within the structure of governmental forbearance. And, I’m not even talking about the fact that there has not been so much as a thank you note for gazillions of dollars in bailouts for the banks after they triggered the Great Recession! So much power in the hands of US governmental officials and so much impotence when required to use it, that it simply boggles the mind.
Meanwhile every layer peeled back on the recent $25+ billion foreclosure settlement with the bank indicates more sweet deals and credits received, and therefore less real progress on mortgage loan modifications or principal adjustments. The latest outrage is the fact that banks will get credit for minimal community service and upkeep on some of their properties if done in the name of community service or marketing.
In the richest and cruelest irony yet in the emerging Presidential campaign, Mitt Romney in celebrating his victory in Wisconsin accused President Obama of being “out of touch” and cited the ineffective action on foreclosures as one of the prime pieces of evidence for the charge. Thank Larry Summers, Tim Geithner, Jamie Daemon, and a host of others for this emerging debacle, Mr. President.
And, speaking wholesale erosion of citizen wealth, how can we not look at a similar inability to meaningfully deal with student debt in the heavily governmentally subsidized higher educational institutions of the US. We have now crossed $1 Trillion in student debt. The average student debt is now $25,000 per person. 30% of all student loans are past 30 days due (that’s $300+ Billion, sports fans!). $36 billion of the total student debt is owed by borrowers over 60 years of age and by law 25% of social security checks can be taken to repay that debt when they are 65. 80% of the loans are guaranteed by the government.
Meanwhile Republican candidates for President are complaining that the system was taken away from private banks in what Romney called a “government takeover.” What?!? 80% of the debt is guaranteed by the government, yet the government should have continued to allow banks to make billions just for mailing out envelopes. What rock does he live under?!? Nonetheless, any proposals for making real progress on this issue including practical plans for creating repayment alternatives for students faced with a declining job market have gone nowhere with the divided Congress, so thanks to compounding interest, penalties, etc, the debt will continue to soar.
Might be time for Obama to go all “Chinese” on banks and Wall Street now, and take a couple of licks at college and university costs while doing so!