- The Washington Times - Wednesday, May 5, 2010


An old saying goes, “When the elephants are fighting, the mice are at risk. But when the elephants are making love, the mice aren’t much safer.”

Sometimes Washington and Wall Street make whoopee — other times, war.

Right now, Americans are witnessing the sorry spectacle of government battling Wall Street, and regardless of the winner, Americans will find themselves squashed or taxed to death. Some choice.

Republicans are yelling, “Permanent bailout!” Democrats are yelling “Parade of bamboozlement!” The mice simply shake their heads.

They know that unchanged, the outcome — even a compromise — will result in an even greater concentration of unprecedented power in Washington and on Wall Street, all at the expense of the people.

The elite of both parties and both cities’ power centers are trapped in the unhelpful choices of their cultures. Many don’t want to really solve anything but rather protect their favored friends and win plaudits from the media for “solving the problem.”

Americans know that under President George W. Bush, his Troubled Asset Relief Program bailout of Wall Street bankers was the largest wealth transfer in the history of Americans, more than $700 billion taken from Middle America and plopped into midtown Manhattan.

They also know that in the past year under President Obama, the four biggest banks including Wells Fargo now control more than 50 percent of all private lending in America. This unhealthy concentration of banking power came directly from government intervention. Power is being concentrated even more and more at the top and the United States is more and more taking on a European style-corporatist-socialist-elitist caste.

Despite all the corruption in both New York and Washington since the beginning of the financial crisis, there has been nary a cry of “foul,” only the barest of investigations — Goldman Sachs notwithstanding — and Washington and Mr. Obama are poised to put the American taxpayer right back into the soup, forcing them to underwrite future corrupt schemes of Wall Street.

The so-called “common people” know what is going down. Corrupt lobbyists, on behalf of dishonest bankers, are lobbying unethical regulators and politicians to look the other way. So what if new “reforms” are passed and signed into law? Does anyone really think it is going to change anything?

Americans are rightly asking themselves what’s in it for them when the U.S. government lends billions of dollars to Citibank, only to see their own money lent back to them in criminal 29 percent interest rate charges on their Citibank credit cards. They are also rightly asking themselves why it is that big banks have been bailed out and will be again under the current scheme devised by Mr. Obama, but neither Americans who lost their 401(k) plans were bailed out nor was the lost equity in their homes. Wells Fargo deducted billions of losses on its corporate taxes, yet citizens could not, by law, deduct their own investment losses.

New thinking and new approaches are required. The system is so rife with a self-protecting bureaucracy, it is impossible to reform. So bypass it.

Baseball’s “Wee” Willie Keeler advised, “Hit ‘em where they ain’t.” Douglas MacArthurs brilliant tactics avoided frontal assaults and instead cut his enemies supplies lines, forcing early surrender while saving soldiers’ lives on both sides. What is needed in the case of banking reform — real banking reform — is to bypass New York and Washington and put the diffused power back where it will do the most good while being subjected to the least corruption — with the local community bankers of America.

It has become a truism that our policies are now guided by the mantra, “too big to fail,” but it stands to reason that “too big” is also “too dangerous” and to save the American people from further financial harm, money, lending authority and power should be diffused among the thousands of small community banks, where lending policies can do the most good. When, if one failed, a domino effect will be prevented, as it would in the current scheme. Again.

It doesn’t take much imagination to come up with incentives in tax and regulatory policies to create more incentives for the community banking system. Keeping money in the states would reduce corruption and the power of the big banks and increase the power of the citizenry. The Obama administration says America is in a “jobless recovery.” If this is true, then isn’t it time to consider new policies that would produce a “jobs economy?” Clearly, the system is not creating jobs, just a lot of corporate welfare queens on Wall Street.

Worse, the current proposal being served up by Mr. Obama would reward incompetence, greed and avarice on Wall Street and with the big banks. Guess who gets the bill for a plan to, in perpetuity, bail out big banks?

The American people — the long suffering mice in this debate — are beginning to roar and the elite elephants ought to be nervous.

They hate nothing more than common sense.

Craig Shirley is the president of Shirley & Banister Public Affairs and the author of two books on Ronald Reagan including the newly released, “Rendezvous With Destiny: Ronald Reagan and the Campaign That Changed America.”

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