If you watched President Obama give the State of the Union , you might be scratching your head over his failure to speak, except for a brief mention, about what will one day fill at least a chapter in history books as one of the worst financial crises since the Great Depression.
Instead, the president appeared to be taking his cue from the story The Emperor’s New Clothes. Much like the emperor, the American public has fallen victim to swindlers – in this case the banks – with everyone believing that the nation’s economy is as splendid as the emperor believed was his fine clothing.
If I were King For a Day, my State of the Union address would have gone a little differently:
Mr. Speaker, Mr. Vice President, members of Congress, fellow Americans:
Let me start by saying I know it appears on the surface that the economy is improving, but look around you. Who among your family, friends, co-workers or acquaintances hasn’t suffered at the hands of the banking industry?
Those with any savings to speak of continue to get a pittance worth of interest. Those who purchased homes at the height of the economic crisis remain underwater and continue to face the prospect of losing their home. Our housing market is not healing at the pace it should and homeowners do not enjoy the protections they were promised.
If you are going to grow the economy, then you have to determine what is holding it back. And, what is holding it back is, as I have mentioned time and time again , the monopolistic power exerted by the nation’s largest banks that control 50 percent of U.S. banking capital.
Imagine what our world would be like were it not for competition. Would we have the kind of technology we have today had Ma Bell not been broken up into Baby Bells during the Reagan administration? Monopolies are never good for the economy; they stifle competition, keep prices high and prevent our economic engine from moving full steam ahead.
What is holding us back now is the unbelievable concentration of wealth in the banks and their inability to truly compete with one another and provide innovative, cost-cutting and efficient services that will allow unbridled growth to re-emerge.
Even former TARP Watchdog Neil Barofsky has said that allowing the banks to remain concentrated is gumming up the system, corroding and corrupting the political process and impeding our economy.
The banks have been exacting a fraud on the American public for far too long with their abuse of Real Estate Mortgage Investment Conduits, or REMICS . These REMICs were created during the housing bubble to illegally disguise and manipulate the need to pay corporate income taxes. Some estimate the banks owe as much as one trillion dollars, that is equal to our annual deficit this past year.
An unfair tax code that favors one group over another has the ability to slowly corrupt and destroy our union. It creates the sense of unfairness and so negatively impacts our economy and our ability to run the nation
Small, community banks are vital to the health of a financial system. It should come as no surprise then that even the FDIC has reported that community banks fared far better than larger institutions when it comes to delinquency rates on residential mortgage loans, and they have taken on far fewer foreclosures.
My fellow Americans, I come to you tonight with the promise of change, not just words, but action. We will return to a time when banks were invested in their local communities, where people looked up to their local bankers. It has been, and will be again, what returns our country to the great nation it once was and can be again. Let the breakup begin.
Thank you and goodnight.
Real estate attorney Roy Oppenheim left Wall Street for Main Street, founding Oppenheim Law with his wife in 1989 in Fort Lauderdale, Fla. He is vice president of Weston Title and creator of the South Florida Law Blog, named the best business and technology blog by the South Florida Sun-Sentinel. Follow Roy on Twitter at @OpLaw or like Oppenheim Law on Facebook.
Tags: banking in the united states, economy of the united states, financial crisis, Obama, President Obama, presidents, real estate mortgage investment conduit, state of the union speech, Troubled Asset Relief Program, united states department of the treasury