Friday, October 7, 2011

When Did We Declare War On Bank Of America?

Lucas:       Your mission is to proceed up the Nung River in a Navy patrol boat.  Pick up Colonel Kurtz’ path at Nu Mung Ba, follow it and learn what you can along the way.  When you find the Colonel, infiltrate his team by whatever means available and terminate the Colonel’s command.
Willard:    Terminate the Colonel?
Corman:   He’s out there operating without any decent restraint, totally beyond the pale of any acceptable human conduct.  And he is still in the field commanding troops.
Civilian:    Terminate . . . with extreme prejudice.
—Harrison Ford as Colonel Lucas, Martin Sheen as Captain Benjamin L. Willard, G.D. Spradlin as General Corman, and Jerry Ziesmer as the Civilian in Apocalypse Now           

I’m confused.

I thought we were in an economic crisis in which everyone’s highest priority was supposed to be getting 14.5 million unemployed Americans back to work.  In fact, I seem to recall someone in a position of authority constantly demanding that Congress put Obama’s $447 billion “jobs” bill—read: Son of Stimulus—up for a vote now (never mind, of course, that it’s Senate Majority Leader Harry Reid (D-NV) blocking a Republican proposal to do just that in the Senate).

You should pass it right away.

As if the point needs emphasizing, Senate Democrats have been in front of the cameras, repeatedly reminding us that it’s got to be all about jobs, jobs, jobs.  Senate Majority Whip Richard Durbin (D-IL) told CNBC September 22:

“We can’t just stand back and allow these jobs to continue to be lost in America.  We have to create jobs.  We have to create a climate for economic growth.” 

Senator Brad Miller (D-NC) told MSNBC less than a month ago:

“What Americans want is for jobs to be the top priority.” 

Oh, really.

Flashback to 2008, when I thought we were in an environment in the United States where certain institutions—like the larger banks—were deemed “too big to fail.”  So we had the TARP bailout program (for which Durbin, then-Representative Miller, and then-Senator Barack Obama all voted “Yea”) that included some $45 billion in assistance to Bank of America.

My, how things have changed.

Fast-forward to Tuesday, where we had Senator Durbin urging Americans to pull their money out and stop doing business with Bank of America altogether (I guess it’s a good thing BOA has already paid back the bailout money).  Somewhere along the way BOA went from “too big to fail” to having the #2 ranking member of the Senate advocating it be chloroformed.  I have no way to verify that this kind of an attack is unprecedented, but I certainly don’t recall a Senator ever taking to the floor of the Senate to actively pursue the extermination of an American business (in this case, it’s only a business that traces its history back to 1784).   

Covering Durbin’s flank was Senator Miller, introducing a bill to bar banks from charging exit fees on people taking Durbin up on his challenge and closing their accounts.  According to Miller:

“As megabanks flirt with menus of new fees, an increasing number of Americans will want to switch banks.  That is the way things work in a competitive free market, as unrepentant banks are still trying to rake in vulgar profits.”

Vulgar profits?

I know that Bank of America is only headquartered in Miller’s home state of North Carolina, but perhaps he’s missed out on recent news.  BOA reported a net loss in 2010 of $2.2 billion.  Its profits for the first quarter of this year missed projections and were off 36% from the first quarter of 2010.  It posted a net loss of $3.1 billion in the second quarter of this year, and its revenues dropped 54% versus the same period last year.  In August, BOA had to be propped up with a $5 billion cash infusion from Warren Buffett.  It is now in the process of laying off as many as 40,000 employees, a figure cited as a major contributing factor in last month showing the highest planned layoffs since April 2009.

I guess if you’re in better shape than Solyndra, that counts as “vulgar” profits in Miller’s world.

At issue is a Durbin-sponsored amendment to the Dodd-Frank bill capping the transaction charges (so-called “swipe fees”) banks and credit card companies charge retailers every time their card is used.  Despite the universal market acceptance of these fees, Durbin in his infinite wisdom decided they were too high and needed to be capped through force of federal regulation by the Federal Reserve.  As enacted by the Fed, the Durbin Amendment, which takes effect this month, caps those transaction fees at a maximum of 24 cents each.  It is estimated that the cap will reduce bank revenues by nearly $10 billion annually.

Predictably, banks like Bank of America have responded by shifting that cost to their customers through a $5 monthly usage fee.  This is exactly what they and everyone else told Durbin would happen when he was pushing his amendment.  But no matter, we must regulate, regulate, regulate, and damn the consequences.

The irony here is that BOA’s situation and the monthly fee that prompted Durbin to call for a nationwide boycott are the result of policies and regulations imposed by the Left, including Durbin himself.  As I’ve discussed here and here, the problems in the banking industry that led to the TARP bailout and ultimately the overreaching oversight of Dodd-Frank were caused by regulations compelling banks like BOA to make high-risk home loans to people who wouldn’t have qualified under normal risk-assessment protocols.  And with the Left having regulated banks onto fiscal thin ice, Durbin himself handed them an anvil by artificially capping the fees they can charge, rather than allowing the market to determine the economically efficient distribution of capital.

So what we have is a situation created by Leftist regulation in the first instance, made worse by additional regulation, and then we have one of the authors of the very regulation causing the immediate problem going on the attack when BOA tries to defend itself.

In this time of desperate need to focus on creating (or at least saving) jobs, the disconnect with the actions of people like Durbin and Miller is deafening.  BOA presently employs approximately 280,000 people.  Here we have a major employer of people struggling, and Durbin and Miller are basically holding a pillow over its face.

This is how we focus on creating jobs?

Editor's Note:  I understand some of you have been having trouble posting comments.  Try changing your internet browser to Google Chrome (free download at Google's home page) and see if that solves it.


No comments:

Post a Comment