Fed President: Too Big Banks Are Just Crony Capitalists

Big Banks Destroy Real American Style Capitalism

Reuters notes that the president of the Federal Reserve Bank of Dallas – Richard Fisher –  said yesterday:

The largest U.S. banks are “practitioners of crony capitalism,” need to be broken up to ensure they are no longer considered too big to fail, and continue to threaten financial stability, a top Federal Reserve official said on Saturday.


Fisher said the existence of banks that are seen as likely to receive government bailouts if they fail gives them an unfair advantage, hurting economic competitiveness.

“These institutions operate under a privileged status that exacts an unfair tax upon the American people,” he said on the last day of the annual Conservative Political Action Conference (CPAC).

They represent not only a threat to financial stability but to fair and open competition … (and) are the practitioners of crony capitalism and not the agents of democratic capitalism that makes our country great” ….

He’s right.  The top economists, financial experts, and bankers say the big banks need to be broken up in order to save the economy.   Why?  Gee … I don’t know.

Modern American conservatives and liberals both passionately hate crony capitalism – the malignant symbiotic relationship between governmental leaders and their cronies.

The Boston Tea Party in 1773 was largely a protest against crony capitalism.

And it’s not just Western governments which fall prey to crony capitalism. (For example, Egypt’s Mubarak family raked in between U.S. $40 and $70 billion dollars through cronyism.)

Indeed, people all over the world are starting to demand an end to crony corruption.

As Reuters global editor at large Chrystia Freeland noted, the “Arab Spring” and other protests around the world are really protests against crony capitalism:

Across the globe, this was a year when people took to the streets, often overthrowing their leaders in the process. That was true in the Arab world, in Russia, in India, in Western Europe, in the United States and even in China.


The unifying complaint is crony capitalism. That’s a broad term, to be sure, and its bloody Libyan manifestation bears little resemblance to complaints about the Troubled Asset Relief Programin the United States or allegations of corrupt auctions for telecommunications licenses in India. But the notion that the rules of the economic game are rigged to benefit the elites at the expense of the middle class has had remarkable resonance this year around the world and across the political spectrum. Could the failure of the experts to anticipate this anger be connected to the fact that the analysts are usually part of the 1 percent, or at least the 10 percent, at the top?


As for crony capitalism, this slogan of the street is both a challenge for the state and an opportunity. For some regimes, of course, crony capitalism, with a side order of repression, is the only dish on the menu. For them, the trends of 2011 do not bode well.

But most of today’s troubled market democracies don’t need a revolution to sweep away their cronies. What they do need is a new version of capitalism, designed for the 21st century. That is what the world’s protesters, in their different ways, are all asking for. Here’s hoping that 2012 provides some politicians with some answers.

Note: Don’t get confused by the word “capitalism” in the phrase “crony capitalism”. Crony capitalism is not at all free market capitalism. Instead, it is actually the same thing as fascism, communist style socialism, kleptocracy, oligarchy or banana republic style corruption.

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  • Chris

    I like this post! It’s really cool.


  • nveric

    The People are too important to ignore – Start / Create your own Local Money.

    People out work? Money is lacking? Then fix it now! – Create a local currency.

    Why be held hostage to outside forces who control all human activity by controlling the money supply? People who want to work, BUT can’t because there’s no money can still work and their work is turned into funds for local use.

    Is Not Work The Source of Money and Wealth??? Or is it someone else’s abstract idea? to be controlled by outside forces for their protection, exclusively?

    Did the World stand still before money was created? No!

    People want to work and there’s work to be done, so why not employ them and pay them? Why must today’s World be held hostage when the excessive profit thieves cause booms and then equal sized busts with the Worker a disposable item? Do Not Accept This Crap Anymore. Your value is too great to be dismissed by others who treat you like excrement.

    This current bloodthirstiness of the so-called Capitalist system imposed from above has not your interests as a concern, but rather is there to extract from you what it wants. As it extracts your rightful share, it leaves the services of governments to fate or more so to tax increases hitting the meager local property owner with the bill. So, to balance today with what was required in the past, your future is robbed – all the while the source of all wealth remains frozen by being unemployed – with the wealth extractors sucking up what they can.

    End their insane ways. Banks extract but never create a damn cent. All of their wealth is extracted from you – the Citizen. These shameless middlemen rob you, your children, and our futures. End their rein of Terror.

  • gozounlimited

    Here’s hoping that 2012 provides some politicians with some answers…….

    When You Weren’t Looking, Democrat Bank Stooges Launch Bills to Permit Bailouts, Deregulate Derivatives – 03/19/2013 – Yves Smith

    Americans for Financial Reform

    March 15, 2013
    Dear Representative,

    On behalf of Americans for Financial Reform, we are writing to express our opposition to H.R.992, the “Swaps Regulatory Improvement Act”. It is important to be clear about exactly what this bill would do: it would change the law to permit public bailouts of swaps dealing activities at some of the largest banks on Wall Street. A vote for H.R. 992 is a vote to expressly allow bailouts of our largest Wall Street banks. At a time when there is bipartisan agreement that subsidies to too-big-to-fail banks must end, this legislation moves in exactly the wrong direction. If the experience of the financial crisis was not enough, the recent derivatives losses at JP Morgan’s London affiliate should remind us again that a taxpayer backstop to derivatives speculation at giant financial institutions is a bad idea. That is what H.R. 992 would permit and that is why it must be rejected.If H.R. 992 passes, it would almost completely eliminate Section 716 of the Dodd-Frank Act.Section 716 bans taxpayer bailouts of a broad range of derivatives dealing and speculative derivatives activities. read more: http://www.nakedcapitalism.com/2013/03/when-you-werent-looking-democrat-bank-stooges-launch-bills-to-permit-bailouts-deregulate-derivatives.html

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