Whoa, it's Thursday already? And I haven't written a single blog post yet this week? And there's seriously football on tonight? Like, real actual football? Man, what happened to my summer? And why do I have 38 unfinished blog drafts sitting in my queue? I mean seriously, 38?
Alright, it's time to get back to work around here, starting with your belated Quote of the Week. This one comes from an article that I came across while I was on vacation, and it follows in a theme that I first teed up in this blog post, and then briefly followed up on at the end of this blog post. On multiple occasions I've called for people to boycott the big banks because of their continued criminal behavior, because the banks won't get the message until we hit them in the pocket with it.
There have been a few consumer-led move-your-money campaigns over the past few years, but the simple fact is that large institutions (governments and corporations) can single-handedly keep these banks in business even if the consumer depositors don't. Not only can they do so, but they're almost guaranteed to do so, in large part because they need the banks in order to remain solvent (who else is going to finance their ever-increasing debts?).
But sooner or later, even those governments and corporations are going to say "enough is enough" (whether as a result of taxpayer pressure or their own decision-making process), and we may be nearing that tipping point. The LIBOR-fixing scandal and the bid-rigging scandal were both instances where banks boldly conspired to effectively (or directly) steal money from local governments, indicating a brash assumption on their parts that they are completely above the law and have governments in the palms of their hands (not a bad assumption, frankly, but almost certainly taken too far).
This is a severe miscalculation on the banks' part, a banking equivalent to biting the hand that feeds them. City and local governments are seriously pissed, and they're starting to fight back. How appropriate, then, that one of the first cities to come out swinging was Brockton, Massachusetts, the so-called "City of Champions", home to Rocky Marciano and Marvin Hagler. From The Boston Globe, via Naked Capitalism's Yves Smith:
This week's QUOTE OF THE WEEK
"Brockton will move its $170 million payroll account out of Bank of
America, a move the city says makes good business sense but which
advocates for residents facing foreclosure see as a just response to the
national lender’s role in the subprime mortgage crisis."
- The Boston Globe
For what it's worth, Brockton's City Treasurer went out of his way to stress that this was a strictly business decision, motivated by a better offer from local bank Eastern Bank. But he also admitted that he was sending a message to Bank of America with this move, and that he is revisiting the city's other working relationships with the bank (including school lunch accounts and health care trust funds) to see if they might be better served elsewhere.
Politicians and governments are funny beasts, and they have a tendency to change their tunes very quickly when public opinion shifts. Banks have been able to count on the support of government policies for many decades now, but it's clear that they've taken advantage of that support and in many cases betrayed the governments' trust. If at any point in the future any city government believes that there is more to be gained politically from leaving a bank than from continuing to support it, you can bet that those governments will make the politically popular move, banks' bottom lines be damned.
Might this Brockton decision be just an isolated incident in an otherwise unchanged environment? Quite possibly. But I'm wondering if this might be a warning shot, and if a tipping point might be nearer than many people (and banks) think. We'll see.
(h/t Naked Capitalism)