C.R.E.A.M. (“Cash Rules Everything Around Me”)
The year was 1971. I was eight years old. And the things I was into most were model car kits (My pride and joys were my Don “The Snake” Prudhomme dragster and a souped-up police-issue Plymouth Duster called the “Cop Out”), Star Trek TOS re-runs, and...finishing up a thirty-three volume series of books, an illustrated history of the United States. I'd blazed through Plymouth Rock, Colonial America, The Civil War, Lincoln, Woodrow Wilson's hushed-up stroke and the folly of Herbert Hoover, and the crash that snatched chickens out of a lot of American pots—and then repo-ed the cheap tin cookware itself.
I was now into the volume on the coming of FDR and The New Deal. Oh, the Huey Long stuff in that book was cool, as was the chapters on John L. Lewis and the flowering of the union movement in America, but it was The New Deal that utterly fascinated me. Those initials for country-changing agencies embedded themselves in my head—the TVA (Tennessee Valley Authority), the WPA (Works Progress Administration), the good NRA (National Recovery Administration: “We Do Our Part”). And mainly, it was the way FDR just handled things when he stepped into office. It was...a desperate time in America. Institutions we as a nation had put simple faith in were failing before our eyes and taking hope away with them.
And in many cases, “hope” equalled money, as the FDIC as we know it was not in place at the time, and banks having gambled with depositors' money found themselves being overrun by fearful account holders when news would leak out about them not being as solvent as they could have been. I remember reading about those frightening bank runs—long before “It's A Wonderful Life” became a TV staple depicting that panic. Almost 4000 banks went belly-up, and I remember the photos of people mobbing bank doors, crushing one another in a panic to get at their money that in many cases—was no longer there.
We haven't seen anything like that since those fateful Depression days where FDR closed all of the banks for a business week to settle things down. Your money's guaranteed these days, right? What can go wrong?
Cue Jimmy Stewart frantically explaining what a bank does:
Many investors are on edge after federal regulators seized the California lender, IndyMac Bank, one of the nation's largest savings and loans, last week. With $32 billion in assets, IndyMac, a spinoff of the Countrywide Financial Corporation, was the biggest American lender to fail in more than two decades.
Now, as the Bush administration grapples with the crisis at the nation's two largest mortgage finance companies, Fannie Mae and Freddie Mac, a rush of earnings reports in the coming days and weeks from some of the nation's largest financial companies are likely to provide more gloomy reminders about the sorry state of the industry.
The future of Fannie Mae and Freddie Mac is vital to the banks, savings and loans and credit unions, which own $1.3 trillion of securities issued or guaranteed by the two mortgage companies. If the mortgage giants ever defaulted on those obligations, banks might be forced to raise billions of dollars in additional capital.
The large institutions set to report results this week, including Citigroup and Merrill Lynch, are in no danger of failing, but some are expected to report more multibillion-dollar write-offs.
But time may be running out for some small and midsize lenders. They vary in size and location, but their common woe is the collapsed real estate market and souring mortgage loans.
And just a little more of ol' Jimmy going “Wa-wa-wa-wa-a-a-a-a-l-l-l-l-l, it's like this...”
Moving quickly to bring an end to its troubles, Wachovia, the U.S. banking giant, reported an $8.9 billion loss Tuesday and sharply reduced its dividend for its first quarter under new leadership.
Wachovia also said it would eliminate about 10,750 jobs, including about 6,350 positions in its mortgage business.
Wachovia's second quarter included a $6.1 billion write-off tied to overpaying for several deals. The bank set aside another $5.6 billion to cover current and future losses. It also cut its quarterly dividend by 87 percent, to 5 cents a share, to save about $2.8 billion a year.
That last little Wachovia tidbit of trouble echoes deeply. As usual, in those 10,000 or so jobs that are just going to “disappaear” it's going to be 90% “the little guy”—people that have nothing to do with the goof-ups that have cement-shoe-ed the company. But then, another piece of news hit closer to home. The kind of thing that makes John Q. Public gulp a little harder and consider the ol' Posturepedic as a safer alternative to the good ol' column-fronted bank. I was sitting in the atrium of the Austin Convention center on Thursday morning during Netroots, surfing a bit for fresh news beyond our little hothouse of progressivism when I clicked over to CNN Money.com on a lark and discovered a breaking news bulletin.
Wachovia's St. Louis securities headquarters had just been raided (later PR spin would dial this back to “inspected” in many news reports) by state regulators from six states over their decidedly peculiar handling of the auction-rate securities markets. Basically, that market had pretty much imploded, and Wachovia was stonewalling investors wanting to find out what had happened to their money. Ten aluminum briefcase-toting agents rolled in with subpoenas blazing, grabbing info and preventing what info that could not be grabbed from being destroyed by desperate execs looking to cover their big, doughy asses.
I'm sitting next to Jesse reading about this and I exhaled a breathy “Oh, shit.”
“What? What's going on? Your computer okay?”, he asked, his head deep into what he was composing on his laptop.
“My computer's fine. It's Wachovia that's fucked. The feds raided their St. Louis headquarters a few minutes ago.”
About forty minutes later, we were at a panel hosted by David Neiwert, Pach and the fine folks at FireDogLake when the subject of money and consumer confidence came up in the discussion.
I piped up and said “Well, it doesn't help when you have the feds kicking in the doors of places like Wachovia earlier today.”
It got so quiet you could hear a pin drop. There were a few gasps and “wha-a-a-a-ats?” of disbelief, (Folks had obviously been in on a few panels in a row and had missed the breaking news.) so I reiterated the story. The Feds had raided the joint—America's fourth largest bank.
There was that sound of uncomfortable shifting in chairs, like people wanted to get up right then and there and rush to the nearest ATM just to make sure their ducats were still there. More than a few sighs issued forth, and there were heads shaking in disgust.
“Wachovia?” one woman questioned in some disbelief.
“Wa-chovia”, I responded. Hitting every syllable so it couldn't possibly be mistaken for the much less prestigious Uncle Ned's Bank and Plumbing Supply of Sucka Falls.
It was then, over my left shoulder that FDL's / Our Future's Isaiah Poole ruefully muttered to no one in particular, “That's the perfect name for 'em. Wac-hovia. 'Cause that's what they do—walk-over-ya”.
It got me to thinking again about the pictures of all those panicked Depression folk clawing at the bank doors for the money they trusted to what they would find to be utterly compromised institutions.
We're in that situation again.
In 2008. Some seventy-five years after that rank avarice and callous disregard for the futures of millions of Americans. People are living in mortal fear of their once-trusted banks flying by night like a Five-O spotting three-card-monte dealer. What with the helpful-to-but-a-few banking de-regulation championed by the greediest among us, and the tax-break hand-outs to the selfsame few, while neglecting the backbone of the American economy—it's teeming middle, the working class, it's no wonder the people we see getting their hopes and dreams wood-chippered to bits are who they are.
These bank failures is the last of the Four Horsemen of the Bush Millenium™ now riding in to salt the earth with his blight.
Under the dominating, and unfeeling GOP over the last decade we've seen:
The Military—our defense—broken in a senseless conflict as if they were little plastic “Army Men” stomped under the foot of a petulant child.
The Application of the Law—what allegedly separates us from military juntas and dictatorships—twisted beyond comprehension with the hyper-politicization of the Justice Department and the craven embrace of torture as a part of what we will do.
Our Personal Rights—the expectation of a simple thing like privacy—evaporate under the heat of a false fear stoked to white hotness by an administration that barely hides its laughing contempt for the people under a gossamer mask of “caring” and “security”.
And finally...OUR MONEY—the thing no one can do without—mis-managed, mis-handled, and mis-appropriated for years. HealthSouth. Tyco. Enron. That so-called “corporate” malfeasance bled into (or more likely, upon being discovered, served to eventually highlight) the supposedly less-risky institutions we have come to blindly trust since those dark Depression days...our banking system.
People feel this stuff. They may not sense a tapped phone...or feel the immediate result of justice sneaking cheating glances from behind her supposed blindfold of equality. They may never even grasp the national security nightmare of a shattered defense with a military they rarely get to see. But when the ATM screen reads “Better luck next time—thanks for playing!” instead of doling out their grocery / rent / gas money—that's a hit the American public feels like a salted knife to the gut. The moment you fuck with people's money—THEIR ACTUAL MONEY!—what puts the food in the kids mouths and keeps a roof over their heads, you are messing with the people's tenous hold on what remains of “The American Dream”. Sparking a crisis of confidence in the banking system is the kind of thing that leads to people fighting in the Goddamned streets.
This is George Bush's legacy, folks. The very last thing he was half-way crowing about after eight miserable years—his precious economy—now is as big and sad a joke as that now Cheney-shredded, land-fill buried “Mission Accomplished” banner.
Government-fostered pocket-picking. People don't forget that sort of thing easily. Like who aided it, and who pooh-poohed it.
“Whiners.”, I believe the unfortunate word was? Yes...“whiners...”
Just another word that means, “What the hell do you mean all of my hard-earned money is gone?”
I don't envy the next president at all. “Hope” is going to have to carry a lot of people a lonooooooooonnnng way...especially since the present administration seems to be dead-assed set...on stealing every single piece of “change” folks have left.