MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT
Santa Cruz County, California, recently figured out a way to hold big banks who engage in illegal and destructive behavior accountable: Don't do business with them.
According to AllGov California, the Santa Cruz County Board of Supervisors,
acting on a request from Supervisor Ryan Coonerty, voted to “not do new business for a period of five years with Citigroup, JP Morgan Chase, Barclays, Royal Bank of Scotland and UBS as specified, and further direct that the County unwind existing relationships with these five banks to the greatest extent feasible.”
That means the county won’t buy the banks’ commercial paper or investment services, and will withdraw whatever funds it can from them.
Coonerty, and others, are not happy with the way big banks savaged the global economy and paid a pittance for their misdeeds.
As BuzzFlash documented yesterday, the Department of Justice under Eric Holder chose to only go through the motions of appearing to punish egregiously errant "banks too big to fail" without legally mandating structural or executive changes. Holder and his top leadership used the revolving door of the Department of Justice to end up with enhanced salaries and "rainmaking" connections at posh DC corporate and financial services law firms such as Covington & Burling. The fines and charges that they imposed were generally nothing more than public relations stunts; they made no meaningful impact.
Not much has changed in the swaggering illicit behavior of large financial institutions, partially because neither the Department of Justice nor the regulatory Securities and Exchange Commission has legally compelled significant transformation.
The Santa Cruz County Board of Supervisors is hopefully setting a precedent by hitting banks who engage in risky and harmful activity right in the pocketbook.
On his blog, Robert Reich praised Santa Cruz County for an innovative act of leadership that other governmental bodies - as well as individuals, organizations and companies - can follow:
The county won’t use the banks’ investment services or buy their commercial paper, and will pull its money out of the banks to the extent it can.
"We have a sacred obligation to protect the public's tax dollars and these banks can’t be trusted. Santa Cruz County should not be involved with those who rigged the world’s biggest financial markets," says supervisor Ryan Coonerty.
The banks will hardly notice. Santa Cruz County’s portfolio is valued at about $650 million.
But what if every county, city, and state in America followed Santa Cruz County’s example, and held the big banks accountable for their felonies?
Large cities, counties, states and the federal government could force big banks to alter their greedy behavior by simply severing ties. The $650 million at stake in Santa Cruz County could grow into hundreds of billions of dollars lost in government banking relationships if the Santa Cruz action gains momentum.
There is nothing that catches the attention of Wall Street financial institutions like the loss of revenue and profit.
Of course, in the long term, the current banking system needs to be completely restructured. However, in the short term, if the Santa Cruz action were to go viral across the nation, Reich speculates that the resultant financial losses might cause the monstrously large banks "to clean up their acts."
The creation of public banks across the US, based on the model in North Dakota, is a more desirable long-term goal - but for the moment, governmental entities severing their ties to Wall Street would be a salutary step.
Not to be reposted without the permission of Truthout.