In one of his last pieces for Rolling Stone, the brilliant Matt Taibbi writes about a piece of legislation in the US that has probably equalled and even surpassed India in cronyism: The Gramm-Leach-Bailey act, or the Financial Services Modernization Act of 1999.
The key was repealing – or "modifying," as bill proponents put it – the famed Glass-Steagall Act separating bankers and brokers, which had been passed in 1933 to prevent conflicts of interest within the finance sector that had led to the Great Depression. Now, commercial banks would be allowed to merge with investment banks and insurance companies, creating financial megafirms potentially far more powerful than had ever existed in America.
All of this was big enough news in itself. But it would take half a generation – till now, basically – to understand the most explosive part of the bill, which additionally legalized new forms of monopoly, allowing banks to merge with heavy industry. A tiny provision in the bill also permitted commercial banks to delve into any activity that is "complementary to a financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally."
Complementary to a financial activity. What the hell did that mean?
The piece is incredible. It’s in five parts, so don’t miss the little links at the bottom.
Matt writes about how large entities like Goldman and Morgan Stanley have become huge banks, but also exert tremendous control on the commodities markets. Goldman reportedly controls a lot of the warehouses that store the metal that’s traded on commodities exchanges, and in order to charge higher rents, just kept moving them between warehouses. And they get away because, well because.
The banks have colluded time and time over to screw the rest of the US and the world, and they repeatedly get away.
This isn’t unfamiliar to us in India. We hear of the big guys – be it Lanco or Reliance or Praful Patel or whoever – allegedly twisting the system to their advantage. And we’re used to it. The government, it does things to its own advantage, like bailing out Air India with taxpayer money and then abusing it to help themselves. The big guys have the power, and we’re outraged when we hear of it, and when some "party” decides to fix things all they do is forgive a hundred defaulters their electricity bills and run off into the distance.
It is a shame, a disgrace, that we allow this to happen. That we will not debate our laws, like we didn’t debate the internet law that allows any random joker to take down anything because he’s frikking offended, the maker of which should have been fed to the wolves. That we stand by when the supreme court says it can’t decriminalize gay behaviour because the lawmakers have to remove that law – and the lawmakers are the elected doofuses who won’t. That we let those deaths of the RTI-using whistleblowers just go by. That we refuse to jail the bankers who lent those bad loans to Vijay Mallya, but want Mallya to go to jail. That we believe the government should subsidize fuel even though the leakage through those subsidies lines the pockets of those people we call corrupt. That we rail against black money, but won’t dream of selling our houses without “black”. We allow these big people to manipulate the system because we are manipulating the system ourselves, in our small little ways.
We don’t give a rats ass about our own behaviour, or for fighting against a wrong, and we fully deserve what we get. And it seems like America, it’s going down the same way if it doesn’t protest. The banks, they will rule that country if they do not do so already.