Tag Archives: digital age

Dear Banker, The End is Nigh

(First Published in The Huffigton Post September 11, 2017)

In one of the clearest signs of how pathological the banking industry has become, this past week Texas Republican Congressman Jeb Hensarling escalated his party’s rhetoric on how government regulation gets in the way of freedom and how the banking industry’s crusade to kill the Consumer Financial Protection Bureau (the CFPB) is a patriotic duty. How ironic that this comes at a time when Texas needs billions in taxpayer dollars to rebuild in the aftermath of hurricane Harvey.

On his official website, the Congressman declares that his next legislative step is to repeal the law that brought the CFPB into existence, the Dodd-Frank Act. Like the Affordable Care Act, Dodd-Frank has been a thorn in the side of Republicans since its creation. The warped repeal logic is the same; anyone who comes in the way of corporate greed must be neutralized before they cause an outright psychotic meltdown to a system seeking self-preservation while on life support.

So, why is it at a time when the unemployment rate is at historic lows and stock markets are at historic highs, are Republicans still blindly pursuing a deregulation agenda? The short answer is that the political infrastructure for deregulation is far more developed and well funded than the weak voices of the 99% advocating for regulation and fairness. In an era of low interest rates and slow growth, the only way for bankers to stay alive is by inventing new fees and penalties, and engaging in predatory lending. In short, the banking industry has become an entire system of Tony Sopranos in designer suites made more brazen by the 2008 bailout and a refusal to accept new economic realities. They own politicians who want the world to believe that any protection of the consumer is a despicable violation of freedom. This is the very definition of predatory capitalism that has run amuck in an economy that has gotten used to a passive, nonexistent, incompetent and impotent-by-design regulatory structure.

The CFPB is the brainchild of Senator Elizabeth Warren, who many believe represents a new breed of politicians on Capitol Hill. She thinks in terms of the generational run of democracy, not its exploitation for short-term gain. Her believes, while representing the emerging values of humanity, are a clear threat to bankers and their lobbyists who think only of the quarterly bottom line. While wealth continues to shift away from Main Street due to this well-established deregulatory infrastructure, bankers and their representatives in Congress seem to be hell-bend on making sure no regulation whatsoever gets in the way of their bottom line as they repeatedly called this agency undemocratic, freedom hating, and a destroyer of jobs and consumer choice.

This rhetoric about the evil effects of regulations on the private sector was borne out of Ronald Reagan’s declaration that government is the enemy of capitalism. Forty years later and this pathology has continued to grow. It has given America a fresh crop of ill-informed lawmakers who know nothing but obstructionism and the dying belief in the powers of the free market. At the behest of their lobbyists who control their destiny, they have successfully blocked the evolutionary pulse of our institutions and our culture. They have wrapped themselves in Old Glory while doing the ugly deeds of a predatory private sector. Who would point to such raw display of patriotism and freedom and accuse it of wrongdoing?

To see this battle play out from an ideological lifecycles perspective gives us hope that the end to predatory private sector behavior is near. The emerging system of values is rightfully angry and has no tolerance for incompetent and corrupt politicians. It recognizes the toxicity of an untamed private sector. As part of its natural manifestation it seeks to undo the inequalities caused by the dying ideology. What’s next for the US is a system of social democracy with a capitalist expression that can only thrive on collective fairness. While its current advocate, Bernie Sanders might seem abrasive to many the merits of its values speak volumes to millions of people.

This social evolution is being helped by two factors. The first is that history shows when an environment of unregulated greed is accelerated, which is the case under the Trump Administration, it spawns the seeds of its own destruction. The current White House is full of advisors who see the current pathology as truth. It is now just a matter of when President Trump appoints a new head of the CFPB. It will very likely be someone similar to the rest of his appointees, grossly incompetent, and fanatically intentional in his/her actions to destroy whatever is left of the power entrusted to our government institutions. It seems inevitable that the Dodd-Frank Act will be repealed. This will result in a new financial crisis for which there will be no bailout, which will hasten the end of the current system and help usher in the new.

The second and far more ominous factor is the confluence of the disruptive forces of the digital economy. The driving dynamism behind this technological revolution is the quantification of each and every industry. Banking is no exception. Neither is healthcare or is the carbon fuel industry. Here’s what we know about the patterns of this revolution: Once an industry is quantified it becomes digitized, and once it’s digitized it goes through a profound structural disruption. After the disruption comes the industry’s democratization. This last stage is the nightmare that haunts traditional CEOs since it violates so many of the tenets of the traditional capitalist model.

So as bankers and CEOs of old model industries continue in their myopic vision of lining up political stooges to deregulate and lobby for their outdated and outmoded products and services, something far bigger is emerging that terrified them. The real possibility that this game we call capitalism can no longer be rigged.