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New economy: Banking is Us

Lending money,

Was my game;

Chiseling profits,

Now my aim.

America used to make a lot of stuff. Indeed, we made much of the world's stuff. Every region of the country had its own economic engines. I went to college next to (and blessedly upwind of) a giant steel mill. Now it's a vacant hulk, except for the part that's been converted into a grand casino.

But manufacturing and processing of every sort have now commonly been shifted abroad, and whatever is still made in this country is getting ready to follow. These days we're mostly a service and maintenance shop.

The two chief economic engines that have taken over our economy in 2009 are health care and banking. You may have read about them. Both have contrived elaborate systems designed to generate enormous rewards for company bosses by means of overcharging customers and other innocents. No, this approach has never been a rare bird in the United States, but these two industries have raised chiseling to championship levels.

Which of course is one reason we have a Congress, to stop such ignoble greed. Also a Federal Reserve, a Controller of the Currency, a Federal Deposit Insurance Corporation, a Treasury Department, a Securities and Exchange Commission, and 50 state banking departments. This array of agencies we might collectively term as "The Kennel of the Sleeping Watchdogs." Can't you visualize the movie? Michael Moore would produce it.

The two additional snoozing hounds that are actually elected to public office are the Senate and House Banking committees. These were recently roused from their torpor by the nagging fleas of bad publicity. It seems that debit and credit card issuers have grown so avaricious in their usury that even the press has taken note. This in turn has provoked tardy legislation that will eventually tamp down the greed a bit, but the law leaves plenty of time for the banks to ferret out new loopholes first.

Such disturbingly timid moves by Congress and our president hardly come as a shock. Perhaps Wall Street's most profitable investment ever has been to pay off politicians. Candidate campaign treasuries swell with contributions from bankers, while wing-tipped lobbyists clog up Capitol hallways. Banks also dispense tasty VIP mortgages to lawmakers and pay tidy speaking fees for congressional remarks at elegant conventions.

These doggie treats for the Watchdog Kennel have paid a handsome return. No regulator moved to pull the plug on the subprime mortgage scam; no regulator is overseeing derivatives; and no regulator is yet putting the clamps on the latest life-insurance packaging scheme.

Nor, in this era of "anything goes," when the public is clamoring for action, has President Barack Obama shown any fervor for such a course. Sure, he inherited Ben Bernanke at the Federal Reserve, but now he is reappointing him. By that simple act he is adopting the Great Recession as his own. In fact, all of Obama's financial appointees have been good old boys. The "Change You Can Believe In" turned out to be mostly fairies and leprechauns.

Unfortunately, the banking meltdown isn't over. Honest lending and honest trading are no longer looked upon as sufficient sources of investment return. Now Wall Street tries to bloat its profits with giant mergers, hedge funds, derivatives, private capital firms and superfast computer trades, as well as stinging customers with hidden fees and interest rates.

Maybe the whole world is like this now. I'm not sure. Or maybe the U.S. is just way out ahead. Probably the latter, world leaders that we are. But the season may finally have arrived for a resurgence of credit unions and mutual insurance companies, and maybe for all of us to refrain from buying quite so much stuff.

Remember, our greatest financial danger lies less in failed banks than in the banks that are still going great guns.

Minuteman Media columnist William A. Collins is a former state representative and a former mayor of Norwalk, Conn.