Thom Hartmann: How Cities are Fighting back against the Banksters

[thomhartmann]

How can cities and towns across the country bring an end to the brutal reign of Wall Street big banks and their influence over the American economy? Just follow in the footsteps of Oakland, California. We all know that big banks screwing over their customers is nothing new. They routinely steered investors into junk mortgages and investments, which the banks knew were destined to fail. They hired day laborers, falsely gave them "vice president" titles to sign tens of thousands of fraudulent foreclosure documents, so they could illegally kick millions of Americans out of their homes. And all the while - they paid their executives record-breaking salaries - while sucking more and more cash out of their customers through fine-print, hidden fees, and deceptive practices. This is nothing new - and we all know someone who has been directly effected by these abuses. Or we've heard about their stories on the news - like Norman Rousseau who battled with Wells Fargo for years to keep his home, before finally giving up and shooting himself. Or Sgt. Robert Bales - who received a lot of media attention after he went on a shooting rampage in Afghanistan - murdering 17 Afghan civilians. What's talked about less in his story is that three days before the massacre - Bank of America was close to foreclosing on the home Sgt. Bales' and his wife owned in California with their two kids - and so she was forced to put it up for sale as the family was $50,000 underwater on their mortgage.

The personal stories of banks ruining families are too numerous to count in the years since 2000 when multimillionaire Republican Senator Phil Gramm, to help out Enron where his wife was on the board of directors, led the charge to deregulate banks in America, setting the stage for this disaster. But families and individuals aren't the only ones targeted by these greedy banksters - entire cities and counties have been as well. Last year - Jefferson County, Alabama filed what, at the time, was the largest municipal bankruptcy in American history. Why'd they go broke? Basically because they were screwed by JP Morgan Chase - and a slew of other banks including Goldman Sachs. The city needed a new sewer system - which was estimated to cost $250 million. But thanks to a crummy financing deal with the banksters - and the corruption of a handful of elected officials - the cost of the sewer project swelled to $3 billion. Like they've done to so many unsuspecting homeowners - the bank sold the county a loan for the sewer that came with one of those adjustable - or exploding - interest rates. The county would pay a low interest rate that it could afford for a few years - then the rate would just shoot up. And, surprise!, that's exactly what happened - and when the rates went up - the city couldn't afford to make the payments on the loan - and they were wiped out by the millions in fees that the bank charged just to do the deal. So after furloughing city workers, cutting back cops on the street, and turning off city lights trying to pay the banksters - Jefferson County eventually filed for bankruptcy - one of the first American counties officially looted by Wall Street. Other cities have followed.

But now, one city is fighting back. Back in 1998 - Goldman Sachs gave the city of Oakland a deal on its debt - saying it would convert the city's $187 million in debt to a new fixed-rate of 5.6%. Over the nest decade though - thanks to the economy tanking - interest rates plummeted - meaning the city of Oakland was now paying a much higher-interest rate that it would have been before Goldman Sachs stepped in. Oakland has now paid $26 million more than it should have - and Goldman Sachs is demanding more than $15 million in fees and penalties. But rather than rolling over and becoming a municipal salve to Wall Street - Oakland is fighting back. Last week - the Oakland City Council voted unanimously to terminate the bad deal the city had with Goldman Sachs. The resolution was simple - yet strongly worded - saying: “if Goldman Sachs refuses to terminate the swap agreement without termination fees or penalty within 60 days, then they will be excluded from any future business with the City of Oakland.” Basically - if Goldman Sachs doesn't do what the city says, then the city will pull all of its business out of the bank, which is a whole heck of a lot of money. It's a threat that the bank has to listen to - and a threat that other cities need to issue on their own.

The point is - no city in America should be doing business with the banksters on Wall Street - who have proven time and time again they're only interested in looting. Instead - cities across the nation should be investing their assets in local banks and credit unions - institutions that actually care about the communities they belong to - and not just short-term profits for foreign shareholders. This has been a central theme coming out of the Occupy Movement since last Fall - calling on citizens and communities to move their money out of the big banks and into local credit unions. Millions of people have moved their money since last year - sucking billions of dollars of wealth out of the big banks and moving it into community banking institutions. And according to some reports on Wall Street - the big banks could lose as much as $185 billion by the end of the year if the defections continue. And if cities like Oakland get into the game, too - then Wall Street's giants will lose even more money. That's the best way to put an end to "Too Big To Fail" - for all of us to walk away from these giant, predatory institutions. Let's keep it up - move your money and encourage your city to do the same - and transform banking back into the safe, useful, and boring industry it was for most of the 20th century.

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