C.R. “Rusty” Cloutier, chief executive officer at MidSouth Bank, talks with Bloomberg’s Carol Massar about President Barack Obama’s proposal to limit U.S. banks’ size and trading activities. Cloutier also discusses the outlook for financial regulation. Mr. Cloutier debunks the argument that America needs massive banks to be globally competitive…
America is being strangled by its largest banks.
I was at a hearing of the House Financial Services Committee today and Chairman Frank described TBTF banks as they decline to lend $200,000 to a small business and compete voraciously to lend $100,000,000 to a large corporation.
The concentration of financial activity in this nation among the largest corporations, Wall Street banks and wealthiest Americans is increasingly debasing the middle and lower classes.
Banks didn’t earn record profits in 2009 loaning funds to small businesses or underwriting mortgages. The biggest banks earned record profits trading with the Federal Reserve.
It is the reliance of the Federal Reserve on the largest banks that allowed Wall Street to earn so much money in 2009.
The Federal Reserve needs these banks to mediate credit into the economy.
The tag team of primary dealers and System Open Market Account at the Federal Reserve Bank of New York is a money machine for Wall Street. It is commonly known that Wall Street games the traders at the SOMA… Wall Street profits at the expense of the taxpayer.
As long as Ben Bernanke remains chairman of the Fed this policy will not change. And the Main Street economy will not recover.
All sectors of the economy are overladen with debt… consumers and banks piled on leverage for much of the 2000′s and local, state and federal government all have issued far too much debt given their taxing capacity.
Every bond holder must take a haircut… and the real evil lurking in the woods is the derivatives exposure of the major banks… this toxic brew of risk will not just go away if we sit quietly… this enormous risk to our financial stability must be addressed.
We need fresh blood for this effort. I call on President Obama to withdraw the reconfirmation of Ben Bernanke as a down payment on a new approach.
Saving the economy of our country will require confidence and a willingness to try new approaches.
There are men who possess this ability… who understand global financial markets… there are men who did not participate in bailing out AIG, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup… there are men who genuinely believe in transparency and it’s ability to undergird true markets and investor confidence…
We need more men like Rusty Cloutier … men who talk plainly and straight about the condition of our nation. We need more Main Street and less Wall Street.
We must restore the balance between the people and the moneyed interests.