Toxic Meltdown Still Has Knock-on Effects on Banks
CRITICISM of the Obama administration still
continues, owing to its failure to prosecute Wall Street executives over their
responsibility for the bundling and structuring of dodgy mortgages on American
homes into sold to investors around the world, which became a highly profitable
business for the Wall Street banks as well as European banks before the
catastrophic 2008 meltdown. This represents the latest hangover of the sub-prime property market meltdown.
At the year end, some European banks did deals
with prosecutors over historic claims that they pushed toxic mortgage
securities in the years in run up to the financial crisis. Deutsche Bank and Credit Suisse will pay-out
nearly $13 billion combined to settle with the United States Justice
Department.
These banks have now settled and may, according
to the New York Times, have benefited from paying billions less than
was once anticipated. The $7.2 billion
settlement with Deutsche Bank produced relief among investors who had been
upset when it became clear in September that prosecutors were after a penalty
of something like $14 billion.
Deutsche Bank shares, on the news of the
settlement, rose by 5% in Frankfurt, before settling up 0.8%.
The UK bank, Barclays, was a smaller operator in
the mortgage backed securities market, and it seems to be prepared to wait and
take a chance on waiting to see how things work out once Donald Trump takes
over as President. Barclay's shares fell
in London trading last week as investors assessed the risk of forthcoming legal
action. Barclay has said it will 'vigorously defend' itself against a
complaint brought by the Justice Department after recent settlement talks
collapsed.
Holding banks accountable for the sub-prime
meltdown is still being debated in political discussions, books and films like 'The
Big Short' which came out last year.
The Banks, mostly American, have already paid out
over $100 billion in settlements with the US government. But though the banks have written cheques but
the Obama administration has been criticised for not prosecuting Wall Street
executives.
Last May, a federal appeals court over-turned a
$1.27 billion penalty against Bank of America over the sale of bad mortgages to Fannie Mae and Freddie
Mac. The appeals panel found
that prosecutors 'didn't provide enough
evidence that either the bank's
Countrywide unit or a former Countrywide executive had committed fraud in a
loan program known as “the hustle”.'
The Deutsche Bank settlement lifts the shadow
hanging over the bank. Since taking
over in mid-2015, John Cryan, Deutsche Bank's chief executive, has been trying
to break with the bank's legacy of the legal woes.
Banks, Values, & Corruption
In 1961, Philip Holgate wrote in Freedom,
which was then the main British Anarchist journal, an essay entitled
'CAPITALISM – The Image of the Truth' in which he noted: :
'In sentencing executives of two electrical
engineering companies, and twenty-one companies themselves, to fines of nearly
two million dollars, and terms of imprisonment, an American Federal judge
accused them of having “mocked the image” of the nation's free enterprise
system by their offences against the Anti-Trust Laws.'
James Pinkerton, a northern anarcho-syndicalist member
of the Syndicalist Worker's Federation (SWF)* and its
international secretary, used to say that by saying a society was 'corrupt' one hasn't even begun to
describe a society, because all societies are corrupt in so far as their
members in the nature of things would breach the salient values of that
society. Thus it ought not to surprise
us that the bankers in the USA and
Europe in 2008,.would shun banking ethics to stoop to either create dodgy
sub-prime packages; manipulate benchmark interest rates; or launder Russian
money, and that in the same way the electrical engineering companies in 1961
would 'mock' the values of free
enterprise by price-fixing to place high tenders to diddle the government's
Tennessee Valley Authority.
Mr. Holgate in his 1961 Freedom article, argues
that the electrical engineers are simply perpetuating a capitalistic myth of
free enterprise which they and other capitalists don't really believe in. Mr. Pinkerton the anarcho-syndicalist, would
I suspect suggest that despite their beliefs in the values of capitalism, the
real life capitalists are only human and would breach their own values for
practical advantages.
Big or small:
Social Change & the Economy
In an article entitled 'Unfree Enterprise' in Freedom
in January 1962, the paper's then 'Italian' anarchist editor, Vernon Richards,
wrote:
'We are always pointing out that the capitalist
economy is monopolistic, and that all this talk about free enterprise, and the
stimulus of competition is just a lot of talk with no basis in fact.'
Mr. Richards then ponders:
'.... from the point of view of those who seek to
completely reverse the values of society so far as production and distribution
are concerned – does the growth of monopoly make change more difficult or
easier? Are the chances of change
greater in a nation of small shop-keepers, small farmers, small industrialists,
small businessmen than in one of huge combines in which agriculture has been
industrialised, industry virtually internationalised and distribution
centralised?'
Vernon Richards' claims 'that the growth of huge
impersonal corporations tends to unite the ordinary people in a way which
“individualist capitalism” did not'.
It's strange that Mr. Richards in another essay
in the 1960s when comparing the Spanish workers with that of the American,
should say that the average U.S. worker usually 'hasn't two radical ideas to rub together'. Another Italian, Ignazio Silone wrote in
his book 'School for Dictators' that perhaps the lack of dynamism of the
industrial workers 'is a consequence of
the of the growth of big industry.' Developing this argument Silone argues
persuasively:
'Moving from the artisan's shop and the small plant to the great
factory, the worker in time undergoes a considerable transformation. His [sic] mental horizon is broadened and his
class consciousness increased, but at the same time he loses his taste for
freedom and his readiness for individual action. The worker in the great factory is apt to be
bolder and stronger in mass actions, whether peaceful or violent, whereas he he
is generally unable to act alone or in a small group.'
It's worth noting that in the May 1979 General
election about a third of British trade unionists voted Conservative. It was after this election that the communist
historian, Eric Hobsbawm, wrote his critique of the traditional labour movement entitled 'The
Forward March of Labour Halted', in which he argued that by itself trade
union militancy could not automatically create class-consciousness or organise
a radical socialist advance.
Trade Union Bosses & the Decline of Industry
In September 1982, the sociologist Tony Lane in a controversial
and important article in Marxism Today entitled 'The
Unions: caught on the Ebb Tide' wrote
criticizing the 'sectional interests' of the trade unions and their 'a lack of will to fight' causing a 'crisis of legitimacy', further explaining that this had caused a
schism between the trade union leaders (including shop stewards) and the
rank-and-file members feeling that there was little democracy in the
movement. In his critique Tony Lane wrote
censuring the trade union bureaucracy for failing to deal with the significant
changes to the manufacturing industry in the UK and decline in large-scale
urban factories where traditionally the organised trade union membership was
based, and he predicted, almost two years before the Miner's strike, that
unless there was clear leadership on how to tackle these problems with more
interactive democracy at the workplace, the rank-and-file membership would face 'uncertainty as to whether the unions are worth fighting for'.
For Tony Lane in his Ebb Tide essay, it was not so much
the Thatcher's anti-trade union legislation or the 'resurgent laissez-faire
Toryism', but the longer-term economic shifts that were having an
impact in undermining the influence of the labour movement. In the mid-1970s, Tony Lane, then at the
University of Liverpool, had been invited by Derek Pattison, now the current
President of Tameside TUC, to address a body of northern anarchists and in the
North West Worker's Alliance (NWWA) and some members of the Syndicalist
Worker's Federation (SWF)**, about the theme of his book 'The Union Makes Us Strong' at a pub on Union Street in Oldham, and Bob Holton had just written
his book 'British Syndicalism 1900 to 1914: Myths & Realities' in 1976.
But Tony Lane by 1982 had identified the dilemma in the British labour movement in so far as it lacked a strategy which proved fatal during the Miner's strike of 1984-85. It lack a strategy because on the shopfloor the workers during the periodic boom years from the late 1960s until the early 1970s had been able to depend on day-to-day tactics in dealing with their managements: if the worker's loss a fight with their boss one day they could always look forward to fighting another day under more favourable circumstances. This bumping along approach led to laziness with regard to a strategy for solidarity with other workers. In the 1980s when the rainy days came and didn't go away they were ill-fitted to take the employers and the state as Tony lane had predicted.
Curiously in the mid-1970s the northern anarchists in the North West Worker's Alliance around Manchester, were anxious to break with what some saw as the 'sectarian syndicalist' approach of the English anarchists who had failed to impact upon the British labour movement during the period of change from the Roberts Arundel dispute in Stockport in 1967 onwards, the anarchists who had been active on the ban the bomb demos failed to bring anything to the picket lines as was shown by their lack of involvement of either the anarchists or syndicalists in the Pilkington's glass-worker's strike of 1970.
In 1976, Bob Holton had written his book on 'British Syndicalism – 1900 to 1914: Myths & Realities' at a time when shop-floor syndicalism showed some promise . But Tony Lane by 1982 had identified the real dilemma in the British labour movement in so far as it lacked a strategy which proved fatal during the Miner's strike of 1984-85. It lack a strategy because on the shopfloor the workers during the periodic boom years from the late 1960s until the early 1970s had been able to depend tactics in dealing with their managements: if the workers loss a fight with their boss one day they could always look forward to fighting another day under more favourable circumstances. This bumping along approach led to laziness with regard to a strategy for solidarity with other workers. In the 1980s when the rainy days came and didn't go away they were ill-fitted to take the employers and the state as Tony lane had predicted.
Curiously in the mid-1970s the northern anarchists in the North West Worker's Alliance around Manchester, were anxious to break with what some saw as the 'sectarian' approach of the English anarchists who had failed to impact upon the British labour movement during the period of change. Despite valiant attempts this group failed to mobilise the dormant core of anarchists in the Syndicalist Worker's Federation (SWF) in Manchester who failed to interact with the struggles of working people in the region. As Tony Lane has shown in 1982, the British labour movement continues to lack a strategy but tiny groups like the SWF, the Solidarity Federation and the anarchists often show no signs of having any grasp of tactics either.
* The Syndicalist Worker's Federation was founded in 1954, when it emerged as an anarcho-syndicalist organization from the then Anarchist Federation of Great Britain. In 1994, it adopted its current name the Solidarity Federation, having previously been the Direct Action Movement since 1979.
** The rather London-centric Albert Meltzer, in his autobiography 'I Couldn't Paint Golden Angels' wrote: 'The SWF, anarcho-syndicalist but choked by weeds of the neo-leftism surrounding it, disappeared as an organised body soon after Tom Brown's death (Brown was seen as the main London theorist of the SWF), apart from the Manchester stalwarts.'
This shows Mr. Meltzer's parochial attitude in so far as the genuine anarcho-syndicalist activists in the North at the time were outside of Manchester in traditional industrial and mill towns like Oldham, Ashton-under-Lyne, Middleton, Rochdale, Bury, Burnley.and Bolton. In 1971, there had been the Arrow Mill strike at Courtaulds in Castleton, Rochdale, involving mostly Asian workers. During that dispute which included a sit-in strike, an anarcho-syndicalist 'work's counsellor' had been arrested. After this dispute and the trial that followed, the local publication Rochdale's Alternative Paper (RAP) was founded, and textile trade unionists and syndicalists in the National Union of Textile & Allied Worker's Union (NUTAWU) in the towns to the north of Manchester began a campaign for shop-stewards in textiles. This campaign was resisted by union bosses like Joe King at the NUTAWU headquarters in Accrington, and Albert Hilton, Arnold Belfield at the local office in Rochdalre and the local official in Oldham.
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