It’s Good To Be The Big
And Big Wants To Be King.
If a bank was accused of thumbing their nose at regulators for years, systematically breaking the law and knowingly aiding terrorists, they would lose their license, right? Only if they were a small bank. The law doesn’t apply to the Bigs. If this wasn’t happening in America, you would believe these stories were coming out of some corrupt third world kleptocracy.
According to U.S. bank regulators, HSBC (the world’s second largest bank) “spent years committing serious crimes” by knowingly laundering money for terrorists and drug cartels. Regulators said these kinds of crimes should automatically have resulted in the loss of HSBC’s U.S. banking license.
But the bank will not face prosecution. A few weeks ago, Assistant Attorney General Lanny Breuer told the press, “Had the US authorities decided to press criminal charges, HSBC would almost certainly have lost its banking license in the US, the future of the institution would have been under threat and the entire banking system would have been destabilized.”
Smalls Need Not Apply (for special treatment)
But small banks live under a different judicial system. In November 2011, tiny SunFirst Bank in St. George, Utah was put out of business for connections with Internet poker. In 2012, the Feds charged miniscule Abacas bank in Brooklyn with mortgage fraud, after the banks officers themselves proactively reported suspicious activity of one of their loan officers. No bank officers were involved in the problem, and Abacus’ mortgage loans are performing 10xs better the big banks. They’ve been forced out of business by the Feds.
Big Loves Big
One of the illusions is that big business is at odds with big government and vice versa, but more often they recognize the advantage of propping each other up, for the sake of keeping both Bigs large and in charge.
In late 2008, Big Government gifted $850 billion to a very few elite, giant banks without so much as an I.O.U. Free money with no strings attached. Big government said they had to do it because big banks were holding the government and the entire country hostage by virtue of being “too big to fail”. In 2009, the National Security Agency rated our own homegrown giant businesses as our top national security threat, above terrorism.
Let The Show Begin
So the Big politicians huffed and puffed and created Dodd-Frank to ensure they would never be too big to fail again. Within 18 months, those 15 or so giant banks that had been gifted the $850 billion now had a LARGER percentage of the banking industry then before Dodd-Frank. Who did that legislation actually destroy? You guessed it, the small banks.
The Smalls Get the Shaft
A recent report shows the Bigs are buying up the Smalls in 2013 at an accelerating clip. Jim Chessen, of the American Bankers Association, said, “We have seen an avalanche of new regulations, and while the impression was that the legislation was targeted at the largest institutions, the fact is that it’s had a widespread impact on the smallest banks in the country,” Dodd-Frank is making it easier for the Bigs to get bigger by eating the Smalls, who are the roadkill being crushed by the politicians.
This isn’t about banks. GM and decades of other giant failures in many industries have been bailed out of long-term, epically bad management practices, while the Smalls are crushed by big banks and big regulations.
Don’t kid yourself. No one is looking out for Small, regardless of what form it takes. Do you believe all the noise big business makes about hating regulations? (Hint: they help write them to make sure they come out like Dodd-Frank). Or are you a fan of the noise politicians on both sides of the aisle make about loving small business and reining in the Bigs? That rhetoric plays well on the news, and politicians know that most people just don’t check in later to see how it all worked out.
What Can You Do?
1) Stop choosing sides with one or the other of the Bigs. Neither big business or big government (on either side of the aisle) has your best interests at heart.
2) Stop believing them when they say, “we love small business”. They love using it.
3) Become a “Smallist”. There are now two classes of people in America. The Bigs and the Smalls. Those are the two choices left. Which one do you choose?
4) If you choose to be a Small, start demanding that big business and big government stop colluding with each other to get and be Big at the expense of Small.
“Anyone who thinks they are too small to make a difference never went to bed with a mosquito.” Mahatma Ghandi
Your voice matters. Make a difference. Become a Smallist.