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Five Investment Banks Control $8.6 Trillion

February 18, 2011

The five largest financial institutions are 20 percent larger than they were before the crisis. They control $8.6 trillion in financial assets — the equivalent of nearly 60 percent of gross domestic product. Like it or not, these firms remain too big to fail.

– Thomas M. Hoenig, the president of the Federal Reserve Bank of Kansas City

Perhaps these five banks are too big to fail, but not too big to take down. To weaken their grip, Americans need to withdraw their money from these banks and related stock portfolios and place it in their community banks and credit unions. We must take control of our financial house.

In Hoenig’s article, Too Big to Succeed, he states:

In spite of the public assistance required to sustain the industry, little has changed on Wall Street. Two years later, the largest firms are again operating with bonus and compensation schemes that reflect success, not the reality of recent failures. Contrast this with the hundreds of smaller banks and businesses that failed and the millions of people who lost their jobs during the Wall Street-fueled recession.

These same banks have also infected the commodities markets artificially driving up prices through reckless speculation – through commodity swaps. These folks know no bounds. They are out of control because no one is controlling their behavior through financial regulation. There is only one answer and that is public pressure to stop this kind of activity or else we have lost control of our own lives. Investment banks control everything: sugar, coffee, coal, oil, cotton, etc.

It is a highly lucrative and profitable business as reported today in Bloomberg Business Week:

Citigroup Inc., the third-largest U.S. bank by assets, gave four top executives a total of $11.9 million in profit-sharing awards payable beginning in 2013.

JPMorgan Chase & Co., the second- largest U.S. bank by assets, boosted Chief Executive Officer Jamie Dimon’s 2010 restricted stock payout by 22 percent to $17.4 million.

So, while you and I are struggling to figure out how we will pay for gas at the pump or feeding our families, these folks are raking in millions in stock payouts and bonuses to keep the commodities swaps game going. They are controlling and influencing what you and I pay for the food and fuel we need to live. This is why I stress localization: grow your own food, buy from local farmers, install solar at your home or office, and invest in alternative energy vehicles. We must find ways to circumvent this globalisation that is taking over everything.

What is An Investment Bank?
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client’s agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provides ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities.

Unlike commercial banks and retail banks, investment banks do not take deposits. From 1933 (Glass–Steagall Act) until 1999 (Gramm–Leach–Bliley Act), the United States maintained a separation between investment banking and commercial banks. Other industrialized countries, including G8 countries, have historically not maintained such a separation.

What Is A Commodity Swap?
A commodity swap is an agreement whereby a floating (or market or spot) price is exchanged for a fixed price over a specified period. The vast majority of commodity swaps involve crude oil.

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