Democracy for Vancouver

An example of corporate consolidation in the financial industry:

In 1991, North Carolina National Bank (NCNB) bought C&S/Sovran and became NationsBank.

Seven years later, NationsBank bought Bank of America for $64.8 billion (the largest bank acquisition in American history at the time) and became Bank of America.

In 2004, Bank of America bought National Processing Company – a credit card services company – and renamed it BA Merchant Services.

That same year, Bank of America bought FleetBoston Financial.

The next year Bank of America bought MBNA.

The year after that, Bank of America bought The United States Trust Company.

In 2007, Bank of America bought ABN AMRO North America, LaSalle Bank Corporation and LaSalle Corporate Finance, bringing its assets to $1.7 trillion.

Later that same year Bank of America purchased the troubled Countrywide Financial.

And just last week, Bank of America announced its plan to buy Merrill Lynch. In just 10 years, it will have grown from simply a top-10 player in the U.S. to the largest bank in the world.

Each new acquisition had to be approved by the SEC. And with the single exception of requiring Bank of America to divest itself of 14 branches in New Mexico, the FEC has blessed each of these mergers without concern or complaint.

And this is the problem.

A.I.G. isn’t so much an insurance and financial services company as it is a giant holding company. But the cumulative losses of each of its constituent parts put it on the ropes, putting the insurance and investments of millions of people at risk.

If these had each been individual companies with individual boards, not only would the losses have been spread more thinly across the industry, but each of those constituent parts would have had boards to answer to. And at least some of those boards would have rejected the bundled sub-prime loan securities and seen - as stupid old me saw 3 years ago - that selling people mortgages with no income and no assets was the dumbest goddamn thing since this country elected George W. Bush.

I remember arguing with people about this, people who were thrilled that their home values were skyrocketing and they could refinance every other month - they refused to believe the inevitability of the crash we are now experiencing.

They believed in the all-powerful, infinite tit of the market.

But the market is people, and people are greedy, and the smaller the group of people making the decisions the greater chance that greed and not common sense will win the day.

We need to reinstate the separation of banks and insurance companies, enforce anti-trust laws in finance and in media (so we can finally hear what’s truly going on), and limit the number of corporate boards any one person can serve on anytime.

Otherwise, the small, finite number of people that cross-pollinate the boards of the major corporations in this country will continue to treat us as simply pieces on their personal monopoly board, dragging us all down with them when their greed exceeds their grasp of reality.

UPDATE - Steve Fraser gives this great wrap-up over at TomDispatch:

The times call for a new departure. The next administration, which will surely enter office under the greatest economic pressure in memory, must confront reality. The financial system is out of control and has led the economy into a wildly turbulent sea of heavily leveraged speculation.

It’s time for a reversal of course. Stringent re-regulation of FIRE is not enough anymore. Washington’s mission may, at this late date, be an even greater one than Roosevelt’s New Deal faced. The government must figure out how to deploy its power to shift the flow of investment capital out of the mine-fields of speculative paper transactions and back into productive channels that will help meet the material needs of American society. Real value must be created in place of chimeras. In the meantime, we all have ringside seats — in fact, far too close to the action for comfort — as another gilded age is ending. What comes after is, in part, up to us.