Yesterday, Bank of America put out this press release, obviously wanting to score points for some kind of charitable work. But as I read the piece I can’t tell if this is really doing good or doing well. How does “providing” loans count as a gift for a bank that makes money by loaning it out? If they are expecting to take a loss, why not just give the money away? Or is the government backing the play?
Bank of America seems to encourage such confusion. Recently, Reuters interviewed BOA CEO Brian Moynihan, and asked his opinion about the economy and what was needed to avoid future risks. My first response was the same as whenever I see the mainstream media deal with BOA: How can they ignore the stampeding herd of mammoths in the room? BOA has many tens of trillions of dollars of exposure to derivatives. They, along with the other big banks, could take the entire US economy into a crash any time.
But let’s just ignore that like everyone else does and move on to my second response: I’ve never seen such a pure instance of the fox being interviewed on how best to keep the hen house safe. When asked how the US economy was doing, Moynihan’s main point was that all talk about debt ceilings and fiscal cliffs might scare off consumer spending. He even mentioned that chunk of this spending is done on BOA debit cards and BOA credit cards.
So, a major credit card business is asked for their “expert” opinion on the economy, and the reply (surprise, surprise) is that the key to the economy is the use of credit cards. Furthermore, he basically indicates that all discussion about the real problems in our economy is dangerous because we must not risk frightening off the “consumer” from his debt/spending spree.
The seventeenth-century philosopher, Voltaire once wrote, “To learn who rules over you, simply find out who you are not allowed to criticize.” I offer a derivative rule: “To learn who rules over you, simply find out who you are supposed to regard as an expert.” No matter how immense an obvious conflict of interest is involved, Reuters is going to treat the CEO of Bank of America as a wise ruler who pronounces what is good for society.
Can you imagine someone from Reuters treating a CEO of a gun manufacturer as the best person from which to get advice about gun regulations? Yet this kind of thing happens all the time in the media when it comes to banks.
So when Moynihan said that we needed to stop telling people that there is a fiscal crisis so that they will keep spending money and using their credit cards, the reporter doesn’t ask if he is denying that there is such a crisis or if he simply wants to hide the truth about it from the American people. She could have said, “Many Sandy victims are regretting that they didn’t prepare better for the hurricanes. Shouldn’t Americans be informed about impending economic storms so that they can better prepare for them?”
What would Moynihan say? I have to wonder if the reporter would keep her job if she asked him that question.
Our economy is not suffering because of scared consumers. Our economy is suffering because we have way too much debt at every level of both government and private society. Encouraging increased spending will only make the problem worse, not better.