The biggest banks get bigger

By Rap Lewis

Trouble – deep trouble – ahead for the economy.

In the wake of the trillion-dollar taxpayer bank bailout, the nation’s four largest bank holding companies now control nearly half of the bank assets in the country. That’s almost double the amount they controlled in 2002.

The behemoth banks are Bank of America, JP Morgan Chase, Citigroup and Wells Fargo. Market control by this few players is called “oligopoly.”

These four banks now issue one of every two mortgages and about two of every three credit cards. The Washington Post reports:

“No consequences of the crisis alarms top regulators more than having banks that were already too big to fail grow even larger and more interconnected,” the Post said.

Sheila C. Bair, who chairs the Federal Deposit Insurance Corporation, says this unprecedented market domination “is at the top of the list of things that need to be fixed. It fed the crisis, and it has gotten worse because of the crisis.”

Damon Silvers, the AFL-CIO’s associated general counsel, is also deputy chair of the Congressional Oversight Panel (COP), charged with monitoring the post-bailout activities of the financial sector.

Silvers warns that the banks are not playing their traditional role of financing the real economy by lending to businesses that create jobs. Instead, he says, they are going full bore into high interest, high fee credit card lending and high risk financial products, relying on the government to bail them out again if they fail.

All four banks are carrying billions of dollars in bad debt. Their weak balance sheets make them reluctant to lend at a time them lending is essential to prime the economic pump.

They’re leaving behind homeowners facing foreclosure, small businesses that need capital to grow, and above all, millions of unemployed workers who won’t get jobs until the economy expands, Silvers said.

But they’re not leaving behind the serried ranks of banking executives. In a scathing editorial, The Nation assails “the spectacle of financial titans harvesting swollen personal fortunes from the great wreckage they themselves caused for the country.”

A few figures suggest the scale of this robbery. The five highest-ranking executives and the 20 financial firms receiving the most bailout dollars took home 3.2 billion from 2006 through 2008 – an average of $32 million per banker.

Meanwhile, some of these same bankers at these same 20 firms have turned out 160,000 of their employees into the unemployment lines.