Too Big to Fail vs. Too Small To Notice?

Go ahead; I dare you.
Name me 3 of the 16 Illinois banks that collapsed in 2009 and have been taken over by the government [no fair googling!]. Or how about a few of the 91 banks taken over across the country so far this year? That's right, 91.

Today's news has a piece about Corus Bank being taken over by the government. It caught our attention because it was in the news as the 4th largest failure in the country so far this year.

A $7 Billion institution is nothing to sneeze at. But what seems most important to note is that not a single insured depositor will lose a dime, and all the bank branches will be open (under MB Financial) on the next regular business day. Practically the only thing that most people would notice is the new name on the buildings. Business as usual.

That's how the federal regulatory system is supposed to work, and in most cases, the way it does work. The Federal Deposit Insurance Corporation (FDIC) takes over banks that were run into the ground by executives/boards, makes sure the regular folks are OK and keeps the overall system running. Even in the biggest bank take-overs, it only takes a few days for the shop to reopen under a new structure. But the investors and owners, the ones that made all the profits when the casino was going their way, get wiped out. As they should.

But what about CitiBank, Bank of America, Wells Fargo, Chase and the rest of the "bailout bandits"?

Oh ... they were 'too big to fail.'

So big (which really means they are so politically powerful that Congress and the Administration caved in to their demands) that they got Congress to free them up to gamble with other people's money, allowing their executives got to pocket tens of millions of dollars in (false) profits during the heyday of the destructive housing and speculation bubble, a frenzy that drove the economy to ruin.

So big that, rather than taking their lumps for their recklessness, they got bailed out to the tune of over $4 Trillion (yes, with a 'T', far more than the $700 Billion in the TARP) and now many of these same bad actors are making money cleaning up the mess they made money on in the first place.

They were "Too Big to Fail". Most bank failures are too small to notice. And "too big to fail" is simply too big.

To be clear, taking over Citicorp and the other 'zombie' banks would not be simple. Since when is cleaning up a crime scene ever tidy? But it was and is very doable.

It is long past time to break up the banks, re-establish meaningful regulation and create publicly-controlled alternatives, ranging from a publicly owned national community investment bank to community development credit unions.

If you want to see an end to the corporate crimes of these financial giants, come to the protest at Wells Fargo, Thursday, September 24, 12 noon at Monroe & Franklin.

Action for Justice members will be there, helping other groups in the Chicago Jobs with Justice coalition put Wells Fargo on trial for its corporate crimes, and calling for jobs and housing.

And next month, we'll be back to give some hell to the American Bankers Association annual convention, downtown from October 25-27.

PS: To keep up on the list of bank failures, visit here.