What do you think?
Rate this book
The Myth of Democracy and the Rule of the Banks
Richard Becker reveals that democracy in the United States is a myth, that it is the richest shareholders of the global banking conglomerates and other giant corporations that rule over the 99%. These banks were called "too big to fail" in 2008, but today have amassed even greater wealth through bailouts and mergers. Their greedy and predatory practices have resulted in millions unemployed and millions in foreclosure, while they amass record profits and pay out huge bonuses.
The case is made for seizing the banks. Not the money of individual depositors, but rather the accumulated super profits that have enabled them to become a critical lever of the modern economy and its political superstructure.
In their place could be a People's Bank, publicly owned with a democratically elected leadership. This new entity could then wield its power not for the rule of a tiny clique of bankers and other capitalists, but for the rule of the majority.
The case is made for seizing the banks. Not the money of individual depositors, but rather the accumulated super profits that have enabled them to become a critical lever of the modern economy and its political superstructure.
In their place could be a People's Bank, publicly owned with a democratically elected leadership. This new entity could then wield its power not for the rule of a tiny clique of bankers and other capitalists, but for the rule of the majority.
30 pages, Paperback
First published January 1, 2012
1 person is currently reading
36 people want to read
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 4 of 4 reviews
October 16, 2023
quotes:
Not one of the bailed-out banks would disclose any information on what they had actually done with the biggest bailout in history… They got $700 billion of the people’s money—plus trillions more in loan guarantees and other forms of government backing—and would not even say what they did with it! Remarkably, they did not have to. When Congress appropriated the funds for the bailout, they did not bother including a requirement that the banks had to report what they did with the money. Compare this to standard practice where even the smallest grants from the federal government to social service agencies require considerable documentation of how every last dollar is spent
In just the past 30 years, the 10 largest banks in the United States have increased their share of total bank assets from 22 percent to more than 60 percent. Ninety-five percent of all trade in derivatives is controlled by five banks: JPMorgan Chase, Goldman Sachs, Bank of America, Citibank, and Wells Fargo
Just four—JPMorgan Chase, Bank of America, Citibank and Wells Fargo—issue half of all home mortgages and two-thirds of all credit cards. Each of the five biggest banks holds assets of more than a trillion (a million million) dollars.
The Bush and Obama administrations’ rationale for the bailout was that the largest banks were “too big to fail,” meaning that their collapse would threaten to bring down the entire economy. Today the same “too big to fail” banks that survived the crash are much bigger. As has been happening since crises of generalized capitalist overproduction first began, the latest economic crisis saw the strong devour their weaker competitors. Among the swallowed-up were some of the most famous names in the finance world, like Bear Stearns, Merrill-Lynch, Countrywide Finance, Wachovia, Washington Mutual and more
Aided by massive government intervention, the biggest banks grew much bigger in the midst of the “Great Recession.” Between 2007 and 2009, Bank of America’s assets grew from $1.7 trillion to $2.3 trillion, as it absorbed Merrill Lynch, Countrywide Finance and more. JPMorgan Chase went from $1.6 trillion to $2.0 trillion, and Wells Fargo doubled in size, from $600 billion to $1.2 trillion.
From the big banks’ perspective, the “too big to fail” doctrine is an open invitation to take even wilder risks in the future. Profits belong to the banks; losses will be covered by the public. To put it another way, profits are privatized, losses are socialized. The increased concentration of wealth in banks, which federal officials already regarded as “too big to fail” before the 2008 crisis, means that even more costly disasters loom in the future.
The process of obtaining a traditional, fixed-rate mortgage is bad enough. The borrower will typically end up paying the bank twice the face value of the mortgage due to interest on the loan. For the first several years, the borrower is mostly paying interest, meaning that he or she has very little if any equity in the house. Along with the mortgage comes an array of fees and closing costs.
In the boom phase of the capitalist economic cycle that ended in 2007, millions of people bought homes. Many were sold “subprime” adjustable-rate mortgages by the bankers. These are loans that initially have lower interest rates and thus lower monthly mortgage payments than fixed-rate mortgages—for the first few years. Then the mortgage payment resets or balloons, with monthly payments increasing by 50 percent or more. Many mortgage bankers paid bonuses to sellers of subprime loans because in the long run they are much more profitable for the lenders and, of course, much more expensive for the borrower
By late 2006, the prices of houses had stopped rising and began to fall. Millions of people who had subprime loans as well as traditional mortgages began losing their jobs. At the same time, the market value of their houses fell below what was owed on their mortgages, so there was no possibility of refinancing. This situation is known as being “underwater.” As the market value of houses shrank, so too did the number of homebuyers who could refinance
As millions of people stopped making mortgage payments, the massive decline in the value of mortgage-backed securities nearly brought down the banking system. For instance, Merrill Lynch was holding $30 billion in these securities, which it ended up selling—just before it went under—for $7.5 billion
These severely devalued bonds, some of which were completely unsalable—that is, no one wanted to buy them at any price—became known by another oxymoronic term: “toxic assets.” Another way of saying that is: “Assets that are no longer assets.” And in yet another act of “generosity” to the banks, the Federal Reserve and government accepted “toxic assets” as collateral for near interest-free loans. The executives of these banks were the same ones who for many years had posed as rugged individualists, reciting the mantra, “get government off our back.” But when they got in trouble, they ran to the same government crying, “Save us.” And their government did.
That the big banks have engaged in widespread and repeated criminal acts is beyond doubt. But in the country with the biggest prison system in the world—both in absolute and relative terms—none of the cells are occupied by Wall Street bankers. In fact, virtually none of the executives of any big Wall Street bank have even been charged with crimes since the crisis began.
The famous Wall Street exception that proves the rule is former Ponzi scheme king Bernard Madoff, who ran a fake investment firm. Madoff was aggressively prosecuted, convicted and jailed because he defrauded the super-rich, along with many others.
But the massive fraud and other blatant crimes committed by the banks against the rest of us do not get quite the same attention from prosecutors. A CBS News report on Dec. 4, 2011, began: “It’s been three years since the financial crisis crippled the American economy, and much to the consternation of the general public and the demonstrators on Wall Street [Occupy Wall Street], there has not been a single prosecution of a high-ranking Wall Street executive of a major financial firm.”
In March 2010, Wachovia executives admitted to having laundered at least $378 billion (yes, billion with a “b”) in drug money from 2004 to 2007 for Mexican drug cartels, the same gangs that have wreaked murder and misery on much of Mexico, leaving more than 40,000 dead. Without money launderers, the big-time drug cartels cannot function. In U.S. federal court, conviction of possession of crack cocaine with a street value of only $378 can result in a minimum sentence of 5-10 years in prison. The majority of the 2.3 million jailed people in the United States are there for small-time drug offenses, while the big criminals making millions in drug money get immunity. So, the Wachovia executives, who admitted their guilt, must have gotten really long sentences for their $378 billion drug business, right? Not exactly. No Wachovia executive spent a night or even an hour in jail. The federal prosecutors, after making strong-sounding speeches for public relations purposes, settled the case by fining Wachovia, which by then had been acquired by Wells Fargo, only $110 million and penalizing them an additional $50 million. That amounts to about .04 percent of the $378 billion they laundered.
Another source of enormous profits for the banks is student loans. Accumulated student debt stands at more than $1 trillion—$1,000,000,000,000—as of June 2012, and is growing fast. It is not unusual today for graduates to owe as much as $100,000 or more. Student loans are from private banks, which currently charge 6.8 percent interest, half of which is currently—as of June 2012—covered by the government. This is another government subsidy to the banks. People over the age of 60 collectively owe more than $36 billion in student debt. Barring revolutionary regime change in the United States, some people will be paying until the day they die.
No one—including the banks themselves—challenge the fact that there was massive, often systemic, fraud during the run-up to the 2008 crash. A Nov. 7, 2011, New York Times article reported on one such settlement going to court that day, regarding fraudulent practices by Citigroup, one of the biggest banks:
Citigroup is far from the only such repeat offender—in the eyes of the SEC—on Wall Street. Nearly all of the biggest financial companies, Goldman Sachs, Morgan Stanley, JPMorgan Chase and Bank of America among them, have settled fraud cases by promising the SEC that they would never again violate an antifraud law, only to do it again in another case a few years later. A New York Times analysis of enforcement actions during the last 15 years found at least 51 cases in which 19 Wall Street firms had broken antifraud laws they had agreed never to breach.
But the trillion-dollar question is: How exactly do you do it? How do you get big money out of politics when the ones writing the laws owe their positions to big money? The banks and other big corporations spend billions every year, not just on election campaigns, but also to maintain an army of tens of thousands of lobbyists in Washington, D.C. These lobbyists wine, dine and enrich our so-called representatives in the House and Senate. And, they bankroll their election campaigns, as well as those of virtually all offices from city councils to the presidency. Lobbyists not only buy influence, they actually write much of the legislation that ends up becoming law.
The idea that the capitalist system can be fundamentally reformed is an illusion. A fundamental law of capitalism, driven by the cut-throat competition inherent in the system, is maximization of profits regardless of the cost to people or the planet. It is a law that cannot be repealed by Congress or anyone else, since any bank or corporation that falls behind in the competitive race risks going bankrupt or being swallowed up by rivals. That is why the program of the Party for Socialism and Liberation is not “restore Glass-Steagall” or “better regulations.” It is “Seize the Banks.”
Not one of the bailed-out banks would disclose any information on what they had actually done with the biggest bailout in history… They got $700 billion of the people’s money—plus trillions more in loan guarantees and other forms of government backing—and would not even say what they did with it! Remarkably, they did not have to. When Congress appropriated the funds for the bailout, they did not bother including a requirement that the banks had to report what they did with the money. Compare this to standard practice where even the smallest grants from the federal government to social service agencies require considerable documentation of how every last dollar is spent
In just the past 30 years, the 10 largest banks in the United States have increased their share of total bank assets from 22 percent to more than 60 percent. Ninety-five percent of all trade in derivatives is controlled by five banks: JPMorgan Chase, Goldman Sachs, Bank of America, Citibank, and Wells Fargo
Just four—JPMorgan Chase, Bank of America, Citibank and Wells Fargo—issue half of all home mortgages and two-thirds of all credit cards. Each of the five biggest banks holds assets of more than a trillion (a million million) dollars.
The Bush and Obama administrations’ rationale for the bailout was that the largest banks were “too big to fail,” meaning that their collapse would threaten to bring down the entire economy. Today the same “too big to fail” banks that survived the crash are much bigger. As has been happening since crises of generalized capitalist overproduction first began, the latest economic crisis saw the strong devour their weaker competitors. Among the swallowed-up were some of the most famous names in the finance world, like Bear Stearns, Merrill-Lynch, Countrywide Finance, Wachovia, Washington Mutual and more
Aided by massive government intervention, the biggest banks grew much bigger in the midst of the “Great Recession.” Between 2007 and 2009, Bank of America’s assets grew from $1.7 trillion to $2.3 trillion, as it absorbed Merrill Lynch, Countrywide Finance and more. JPMorgan Chase went from $1.6 trillion to $2.0 trillion, and Wells Fargo doubled in size, from $600 billion to $1.2 trillion.
From the big banks’ perspective, the “too big to fail” doctrine is an open invitation to take even wilder risks in the future. Profits belong to the banks; losses will be covered by the public. To put it another way, profits are privatized, losses are socialized. The increased concentration of wealth in banks, which federal officials already regarded as “too big to fail” before the 2008 crisis, means that even more costly disasters loom in the future.
The process of obtaining a traditional, fixed-rate mortgage is bad enough. The borrower will typically end up paying the bank twice the face value of the mortgage due to interest on the loan. For the first several years, the borrower is mostly paying interest, meaning that he or she has very little if any equity in the house. Along with the mortgage comes an array of fees and closing costs.
In the boom phase of the capitalist economic cycle that ended in 2007, millions of people bought homes. Many were sold “subprime” adjustable-rate mortgages by the bankers. These are loans that initially have lower interest rates and thus lower monthly mortgage payments than fixed-rate mortgages—for the first few years. Then the mortgage payment resets or balloons, with monthly payments increasing by 50 percent or more. Many mortgage bankers paid bonuses to sellers of subprime loans because in the long run they are much more profitable for the lenders and, of course, much more expensive for the borrower
By late 2006, the prices of houses had stopped rising and began to fall. Millions of people who had subprime loans as well as traditional mortgages began losing their jobs. At the same time, the market value of their houses fell below what was owed on their mortgages, so there was no possibility of refinancing. This situation is known as being “underwater.” As the market value of houses shrank, so too did the number of homebuyers who could refinance
As millions of people stopped making mortgage payments, the massive decline in the value of mortgage-backed securities nearly brought down the banking system. For instance, Merrill Lynch was holding $30 billion in these securities, which it ended up selling—just before it went under—for $7.5 billion
These severely devalued bonds, some of which were completely unsalable—that is, no one wanted to buy them at any price—became known by another oxymoronic term: “toxic assets.” Another way of saying that is: “Assets that are no longer assets.” And in yet another act of “generosity” to the banks, the Federal Reserve and government accepted “toxic assets” as collateral for near interest-free loans. The executives of these banks were the same ones who for many years had posed as rugged individualists, reciting the mantra, “get government off our back.” But when they got in trouble, they ran to the same government crying, “Save us.” And their government did.
That the big banks have engaged in widespread and repeated criminal acts is beyond doubt. But in the country with the biggest prison system in the world—both in absolute and relative terms—none of the cells are occupied by Wall Street bankers. In fact, virtually none of the executives of any big Wall Street bank have even been charged with crimes since the crisis began.
The famous Wall Street exception that proves the rule is former Ponzi scheme king Bernard Madoff, who ran a fake investment firm. Madoff was aggressively prosecuted, convicted and jailed because he defrauded the super-rich, along with many others.
But the massive fraud and other blatant crimes committed by the banks against the rest of us do not get quite the same attention from prosecutors. A CBS News report on Dec. 4, 2011, began: “It’s been three years since the financial crisis crippled the American economy, and much to the consternation of the general public and the demonstrators on Wall Street [Occupy Wall Street], there has not been a single prosecution of a high-ranking Wall Street executive of a major financial firm.”
In March 2010, Wachovia executives admitted to having laundered at least $378 billion (yes, billion with a “b”) in drug money from 2004 to 2007 for Mexican drug cartels, the same gangs that have wreaked murder and misery on much of Mexico, leaving more than 40,000 dead. Without money launderers, the big-time drug cartels cannot function. In U.S. federal court, conviction of possession of crack cocaine with a street value of only $378 can result in a minimum sentence of 5-10 years in prison. The majority of the 2.3 million jailed people in the United States are there for small-time drug offenses, while the big criminals making millions in drug money get immunity. So, the Wachovia executives, who admitted their guilt, must have gotten really long sentences for their $378 billion drug business, right? Not exactly. No Wachovia executive spent a night or even an hour in jail. The federal prosecutors, after making strong-sounding speeches for public relations purposes, settled the case by fining Wachovia, which by then had been acquired by Wells Fargo, only $110 million and penalizing them an additional $50 million. That amounts to about .04 percent of the $378 billion they laundered.
Another source of enormous profits for the banks is student loans. Accumulated student debt stands at more than $1 trillion—$1,000,000,000,000—as of June 2012, and is growing fast. It is not unusual today for graduates to owe as much as $100,000 or more. Student loans are from private banks, which currently charge 6.8 percent interest, half of which is currently—as of June 2012—covered by the government. This is another government subsidy to the banks. People over the age of 60 collectively owe more than $36 billion in student debt. Barring revolutionary regime change in the United States, some people will be paying until the day they die.
No one—including the banks themselves—challenge the fact that there was massive, often systemic, fraud during the run-up to the 2008 crash. A Nov. 7, 2011, New York Times article reported on one such settlement going to court that day, regarding fraudulent practices by Citigroup, one of the biggest banks:
Citigroup is far from the only such repeat offender—in the eyes of the SEC—on Wall Street. Nearly all of the biggest financial companies, Goldman Sachs, Morgan Stanley, JPMorgan Chase and Bank of America among them, have settled fraud cases by promising the SEC that they would never again violate an antifraud law, only to do it again in another case a few years later. A New York Times analysis of enforcement actions during the last 15 years found at least 51 cases in which 19 Wall Street firms had broken antifraud laws they had agreed never to breach.
But the trillion-dollar question is: How exactly do you do it? How do you get big money out of politics when the ones writing the laws owe their positions to big money? The banks and other big corporations spend billions every year, not just on election campaigns, but also to maintain an army of tens of thousands of lobbyists in Washington, D.C. These lobbyists wine, dine and enrich our so-called representatives in the House and Senate. And, they bankroll their election campaigns, as well as those of virtually all offices from city councils to the presidency. Lobbyists not only buy influence, they actually write much of the legislation that ends up becoming law.
The idea that the capitalist system can be fundamentally reformed is an illusion. A fundamental law of capitalism, driven by the cut-throat competition inherent in the system, is maximization of profits regardless of the cost to people or the planet. It is a law that cannot be repealed by Congress or anyone else, since any bank or corporation that falls behind in the competitive race risks going bankrupt or being swallowed up by rivals. That is why the program of the Party for Socialism and Liberation is not “restore Glass-Steagall” or “better regulations.” It is “Seize the Banks.”
April 20, 2020
this is my second read through for this book, and it's extremely relevant with what's happening in the world today with covid-19 and the collapse of the economic system. I love the plans outlined in the back of the book that give steps that could be taken to change the financial system for the better
September 4, 2025
A great introduction to concepts like overproduction, bailouts, crises and failures of capitalism, the limits of reforms, as well as how socialism would address these issues. It is easy to follow and succinct with very accessible language and natural flow. This is a highly recommended primer for anyone new or looking to learn more about what really happened during the 2008 Financial Crisis and the aftermath in years to come.
August 16, 2021
succinct and urgent; strong case for nationalisation of banks - not just in the US; sordid evidence of malignant forces in western societies; sickening reading but essential to anyone who cares about democracy and anyone who is awake enough to realise that it is a mirage as currently lived
Displaying 1 - 4 of 4 reviews