Breaking Free From Wall Street

Public banking: Breaking free of Wall Street and the boom-bust cycle


By Mike Krauss
Bucks County Courier Times

The Bucks County Commissioners have unveiled a preliminary budget for 2013, and like county, city and state elected officials across the nation, they are looking at a deficit. In this case, $2.7 million.

The cause of the deficits is largely the same everywhere: in the wake of the man-made catastrophe of the collapse and bailout of Wall Street, the economy remains in recession, unemployment high and tax revenues decreased, combined with cutbacks in state and federal funding.

State funding has been cut back because of the same declining revenues, no relief in sight. And with Washington focused on what many consider a propaganda-induced crisis — the “fiscal cliff” — there will be no relief there.

The options touted to close the gap are about the same in Bucks County as across the nation: raise taxes, reduce services (when unemployment and foreclosures increase the demand for those vital services), lay off employees and add to unemployment or borrow, adding yet more debt to already burdened taxpayers.

Those are the only tools state and local governments have, tools to share the pain. Or are they?

While Americans view the economic contraction and recession as global, it isn’t. It is highly localized to the economies of the United States and Europe, which are most closely tied to the central bank cartel of Wall Street and Federal Reserve private banking system. But in many other nations, where on the average 40 percent of the market is in public banks, economies are growing.

These are the so called BRIC nations (Brazil, Russia, India and China), as well as Australia, New Zealand, Canada, Iceland, South Africa and Japan; and the healthiest economy in Europe, Germany, where public banks have existed for decades and provided much of the credit and investment for West Germany’s recovery from World War II. The public “Post Office Bank” in Japan played the same role there.

This is not to say that these nations have not felt the impact of declining exports to the sick economies of the U.S. and Europe. They have. But no one in China, or Brazil or India is talking austerity.

Just the failed central bankers and the 1 percent in the U.S. and Europe who caused the catastrophe.

But there are cracks in the wall. Iceland told the predatory bankers to get lost, prosecuted, went after the money they stole and now its economy is recovering while the U.S. and Europe languish. Members of the English Parliament are considering real limits on the private banks.

And last week in Scotland, the finance minister, members of Parliament and civil servants heard from advocates of a public bank as they consider legislation to create a public bank on a national scale.

But public banks are unknown in the U.S., except for one state, North Dakota, where the Bank of North Dakota (BND) has played a major role in sustaining the strongest economy and banking industry in the nation: lowest unemployment, rising wages, continued budget surpluses and no bank failures.

In addition to a current loan portfolio of $2.9 billion invested throughout the state’s economy (businesses, mortgages, student loans), the BND invests in municipal infrastructure, supports disaster relief and has returned an annual average profit of $30 million a year over 10 years to the state’s general fund — revenue without taxes.

The BND is also partnering in North Dakota’s strong energy and agriculture sectors — for example, helping to finance the first new refinery in the United States in decades — multiplying those sectors’ contributions to the economy.

So what about Pennsylvania, which has energy and agriculture and a whole lot more, in a far more diversified economy than North Dakota? The impacts of a state public bank in Pennsylvania could well exceed those of North Dakota. And a public bank of Bucks County could help diversify its economy and end its decades long dependence on residential real estate taxes and state and federal handouts.

Small wonder that now 20 states and a growing number of municipalities across the country. are exploring how public banking can grow their economies, create jobs, boost tax revenues in an expanding economy, halt cuts to vital services, end layoffs and reduce taxpayer debt.

Of course, the benefits of any new public bank will not be felt immediately. The best studies to date (by the Center for State Innovation) project a three to five year period until public bank profits begin to flow, depending on how the bank is capitalized. But the creation of affordable credit to invest in the local economy can begin almost immediately.

The Commonwealth of Pennsylvania and counties like Bucks have more than sufficient assets and access to capital to form a public bank. This innovation deserves the attention of our elected officials.

Because one thing is certain. As long as the creation and cost of credit is controlled by Wall Street and the Fed, recessions will come and go and come again. The time to begin breaking free of that cycle is now, so we don’t get stuck again in a few years with the same bad choices.

Mike Krauss, formerly of Levittown, is a former officer of Bucks County and Pennsylvania government and chair of the Pennsylvania Project. www.papublicbankproject.org Email: mike@mikekrausscomments.com

The fiscal cliff sell out

The thanks of a grateful 1 percent

By Mike Krauss

Bucks County Courier Times

Many weeks ago in this column I forecasted an Obama victory. It was an obvious call.

Mr. Romney was and is a poster boy for Wall Street and the 1 percent. He represented a party – at least those who have done its talking for thirty years – that veers between indifference and hostility to gays, Hispanics, African Americans, the unemployed, uninsured, homeless and women.

Who was left to disdain?  

So Obama’s victory was assured. Now the question is, what will he do with that victory? The answer is again obvious. He will do as he did after his first election, and protect the interests of the 1 percent.

Obama came to the presidency with more good will and political capital among the American people than any new president in modern times. But even before he took office, he and House Speaker Pelosi ran to Wall Street’s rescue and rounded up the votes to pass the bail out.

Then as president, Mr. Obama stood up for Wall Street. He surrounded himself with Wall Street’s minders and errand boys, legitimized Wall Street’s greed and fraud, put Wall Street’s boys at Treasury, Justice and the Fed. He stood up for Wall Street as he sat down on unemployment and foreclosure, and instead led the nation off into the health care wilderness.

Not that health care is unimportant. But even a second rate political strategist could have told you that if Obama had gone after Wall Street, put the barons on the run and in the dock, his approval rating would have gone from 60 plus percent to about, well, about 99 percent.

The president could then have gotten any jobs and foreclosure bills he wanted, the American people and economy would have come roaring back, and he could finally have gotten the health care reform most Americans have long supported - a single payer system for all Americans.

He didn’t want to. His re-election should have been impossible. But the GOP and the 1 percent served up Romney and Obama won – big.

And it was a big victory. Not just the contest for president, but across the board in the Senate and House, the GOP got hammered, and Obama immediately stepped up to talk  - compromise.

It is as if, when the treaties were signed to end World War II, the U.S. had then asked the Germans and Japanese how much of Europe and Asia they would like back.

Do you think, if Romney and the GOP had won, they would be talking compromise? Of course not.  They would be talking “mandate” 24/7. And there would be bills tomorrow to “save” what is left of the safety net by cutting more holes in it, complete with continued historic low taxes for the already wealthy and more corporate subsidies.

And there will be such bills and soon. Mr. Obama will give cover to those Democrats in Congress who Wall Street and the 1 percent have already purchased, and an opportunity for the true believing predators in the GOP to push for cuts in the safety net that will make the coming sell out sound reasonable.

It is the same drill that got the bail out through Congress in 2008, led by Democrats Obama and Pelosi and a national media that hectored the American people night and day with the specter of a “credit freeze” and collapse of the economy.

The bail out was enacted and Americans got – an economic collapse. This time it is the even more ominous sounding “fiscal cliff” which is trotted out day and night to frighten Americans into burning down their own house. And the result will be more hardship and poverty for most Americans, and more wealth for the already wealthy.

It is time to ask, if you have not yet, whether the two major national political parties in the U.S. any longer can make a claim to represent average Americans; or whether both have been reduced to puppet parties, the strings of each pulled by Wall Street and the 1 percent, going through election “extravaganzas” as scripted as any professional wrestling match, outcome predetermined: the 1 percent win and the 99 percent lose.

There were some hopeful signs in the elections for Congress, most notably the election of Elizabeth Warren as Senator from Massachusetts. But that is one reason why Wall Street and the 1 percent are trying to stampede the nation now, and get this deal done with the lame duck Congress, before anybody is in place to head them off.

It does not take a political genius to forecast harder times still for most Americans. Likewise, it is obvious that the fight for simple justice and the prosperity of the 99 percent will not be led from Washington. It will be led from America’s municipalities, counties and states, rebuilding an American community, or it will not be led at all.

And four years from now Mr. Obama will retire with the thanks of a grateful 1 percent and we can try again to elect a president of the people, by the people and for the people.

Road to Ruin

Only jobs can stop the drift

By Mike Krauss
Bucks County Courier Times

It was a throw away, seven words in a sentence at the end of a recent editorial in this newspaper encouraging a write in vote for former Pennsylvania Gov. Ed Rendell for U.S. Senate.


The editors found insufficient reason to endorse either incumbent U.S. Senator Bob Casey or his GOP challenger Tom Smith, and suggested that Rendell could bring much needed leadership to a dysfunctional U.S. Senate, immobilized by partisanship — and here are the seven words — “even as the nation drifts toward ruin.”

And there it is: the truth, the whole truth and nothing but the truth, in black and white and right between the eyes.

We are drifting toward ruin.

It begins at the beginning, with the oath the president took to “preserve, protect and defend the Constitution of the United States against all enemies, foreign and domestic.”

Mr. Obama has foresworn that oath and is trashing our constitution, shredding the rights to due process, habeus corpus and the protection against unreasonable search and seizure.

The war on terror has become a war on liberty.

Americans may now be arrested at will — that of the president, urged on by some nameless functionary, and imprisoned indefinitely without evidence before a judge or a warrant. The president has taken upon himself the power to execute alleged “bad guys,” including American citizens, without recourse to any judge or trial.

His opponent, Mr. Romney has had this to say about this Caesar-like power grab by the nation’s chief executive — nothing.

So we drift away from our constitution, as we drift away from our democracy.

The election for president and members of Congress will hit new spending records, of itself not all that surprising. It takes a lot of money to stage a two year circus.

But there is almost no way to know where all the money comes from and no way to limit the influence of the corporate elite that now buy elections as they buy votes in Congress.

The nation drifts as the unemployed and homeless drift. God only knows how this faceless army is faring in the aftermath of “The Storm.” It was bad enough before the storm hit.

Better Markets (www.bettermarkets.com) is a non-profit and non-partisan organization that promotes transparency, efficiency and integrity in the nation’s finance industry and markets. Its director is a high power lobbyist, Dennis M Kelleher, who has been described as “Occupy’s suit wearing cousin.”

In late September they released a report that quantified the damage inflicted on the nation in the other catastrophic storm of recent memory, the collapse of Wall Street. The report puts its message in its title: “The Cost of the Wall Street-Caused Financial Collapse and Ongoing Economic Crisis Is More Than $12.8 Trillion.”

The report describes the reality of America: five years since Wall Street failed and was rescued, the nation is stuck in “the worst economy since the Great Depression, which touches every corner of our country.”

The $12.8 trillion represents the losses that can be quantified: “destruction of human capital from long-term unemployment, lost household wealth, foreclosures, government bailouts, emergency spending measures, and the other actions that were necessary to prevent a second Great Depression.”

But the report also notes the difficult to quantify, but very real losses that all the “feel good” propaganda in the world cannot mask: the “widespread human suffering that has resulted from the surge in poverty, homelessness, and hunger.”

“Surge.” Like the tide that hit Lower Manhattan and the Jersey shore, with similarly devastating consequences.

The report concludes that this suffering and deprivation will continue “for many years to come.” Or, as another report put it some months ago, the nation is in the midst of a “slow moving social catastrophe.”

Drifting toward ruin.

What will arrest the drift and get the nation moving forward again?

A psychological lift would help, something we could all cheer, like jailing some of the banskters on Wall Street or a moratorium on home foreclosures. But more is needed: jobs — good paying jobs.

Jobs are everything. Jobs for the middle aged Americans now out of work for years, unemployment exhausted, home foreclosed, future bleak, winter coming on.

Jobs for the debt shackled and unemployed recent college grad. Jobs for the 50 percent unemployed minority youth. Jobs for the laid off teachers, cops and firefighters. Jobs.

It is so achingly obvious.

Jobs eliminate the need for public assistance and create taxpayers, economic activity, local tax revenue and hope. Jobs create buyers for products and services and the need to increase production, capacity and employment that all the tax breaks and corporate profit serving deregulation in the world can never produce.

Where will those jobs come from? Washington? Wall Street? The Federal Reserve?

Doubtful.

Perhaps, in the aftermath of “The Storm” there will be funds to rebuild and some will be put to work in the areas affected. But expect the Congress to cry poor, as cover to legislate a windfall for major donors and the one percent. It’s the new American Way.

Maybe, by some miracle, the elections will produce a president and a Congress who are on fire to put America back to work, the deficit be damned. But again, don’t hold your breath.

To arrest the drift, jobs must be created on a massive scale. New models are needed. The old and failed must be discarded.

Prophet of profit

Why Romney won't win

Bucks County Courier Times

I promised myself I would not write about the GOP and Democratic conventions until both were over. But then I figured, since I am writing about U.S. politics, where all promises are made to be broken and no one seems to care, what the hell.

Mitt Romney is headed to defeat.

It should not be possible. Most Americans now realize that the election of Mr. Obama was the result of the greatest “bait and switch” marketing campaign in the history of American politics, but he will be re-elected.

Mr. Obama drove Wall Street’s get-away car, his attorney general riding shotgun. He chose to stand aside while millions lost their homes. He has proved unable/incompetent/unwilling (Pick one) to put Americans back to work. His big domestic initiative has not made health care more affordable, and so it is less available when and where it is needed. He has kept America at war.

Mr. Obama swore the great oath to “preserve, protect and defend the Constitution of the United States against all enemies, foreign and domestic,” but is quite possibly the greatest threat to that Constitution in the history of the nation.

He has assumed powers and trashed constitutional protections in the manner of a Roman Caesar or a Tudor king.

The president and his apologists are compelled to embarrass themselves and argue that Americans are better off today than they were four years ago; and if they are not, well, he had nothing to do with that.

Mr. Obama should go down in a landslide. But he won’t. How is that possible?

For the answer, you need look no further than Mr. Romney’s acceptance speech.

The Nielson Agency says about 800,000 more Americans watched the GOP Convention than did so in 2008. It also reports that the audience was overwhelmingly 55 years or older. It did not say, and did not need to say, that the audience was also overwhelmingly white.

That is the GOP base. And Gallup reports that Romney’s speech got “the lowest ratings of any Gallup has measured since 1996.”

Trouble in River City. Why?

No one trusts the man. He has changed positions on issues more frequently than most men change underwear. And while he has strengths, they cannot be spoken.

He was a reasonably effective governor. But he has disavowed almost every policy he championed then, in an effort to hide out among the tea party that would impress a chameleon.

And his other strength — that of a deal making businessman — only serves to remind Americans that in the U.S. today, it is often only the deal maker who wins. Romney could only allude to it, and he had to rewrite history to do it.

Romney said, “He (Mr. Obama) took office without the basic qualification that most Americans have and one that was essential to his task. He had almost no experience working in a business.”

The most effective presidents in modern time had no experience with business. Teddy Roosevelt, FDR, Eisenhower, Johnson and Nixon spent their entire adult lives in public service, and Reagan’s only brush with business was as a sportscaster and actor.

There is a vast difference between a life devoted to public service and a life devoted to profit, which is all that business is about. Period. And most Americans know it.

Maybe not the latter day Republicans who now dominate that party, but most Americans know that a life organized around profit will be fundamentally different that a life organized around service, and that while each has its place in America, neither can be successfully directed like the other.

Mr. Obama has failed not because he has no business experience, but because he had insufficient experience of American government, perhaps even insufficient experience of America, and got rolled by Wall Street.

And Mr. Romney appears to fit right in with that same crowd of parasites in pinstripes. I don’t see Americans jumping from the frying pan into the fire.

Mike Krauss is chairman of the Pennsylvania Project and was executive director of the Pennsylvania Republican State Committee in the Thornburgh administration. Email: mike@mikekrausscomments.com

The LIBOR Scandal

Coming Economic Armageddon?

It was variously reported as the “Wall Street Heist of the Century,” “Biggest Fraud of All Time,” and “Mother of All Scandals.”

“It” is the fixing of the LIBOR (London Interbank Offered Rate) which sets the interest paid on hundreds of trillions of dollars of financial transactions.

By most reports, all the Wall Street and major European banks were in on the deal, conspiring for years to defraud not only consumers, but businesses, investors and municipal governments (taxpayers) of untold billions. Municipalities — maybe yours — took the hit in interest rate swaps.

Wall Street watchdog Pam Martens explains the scam.

“A typical deal involved the municipality issuing variable rate municipal bonds and simultaneously signing a contract (interest rate swap) with a Wall Street bank that locked it into paying the bank a fixed rate while it received from the bank a floating interest rate tied to one of two indices. One index, LIBOR, was operated by an international bankers’ trade group, the British Bankers Association. The other index, SIFMA, was operated by a Wall Street trade association...When the two sets of cash flows are calculated, the side that generates the larger payments receives the difference between the sums. In many cases, continuing to this day, the municipality ended up receiving a fraction of 1 percent, while contractually bound to pay Wall Street firms as much as 3 to 6 percent in a fixed rate for 20 years or longer. If the local or state governments or school boards wanted out of the deal, a multimillion dollar penalty fee could be charged based on the rate structure and notional (face amount) of the swap.”

In only a preliminary investigation, Pennsylvania Auditor General Jack Wagner identified more than 600 swaps entered into between October 2003 and June 2009, by 107 of Pennsylvania’s 500 school districts and 86 other local governments, for more than $14.9 billion in municipal bonds.

Huge losses have been reported nationwide, including nearby Philadelphia, Bethlehem and Reading. Many may still be unreported, concealed by municipal officials, wary of voters’ wrath.

So the fixing of the LIBOR involves fantastic losses by the American people. Very big news, indeed. For two days, And then — nothing.

Nothing in the New York Times, Wall Street Journal or Washington Post. No damning expose by CNN, or anyone else in the major media. No outrage from the president, attorney general or secretary of the Treasury. No legislation in Congress to take back the stolen billions. Only silence. Why?

The answer was provided in a recent essay by former Reagan Deputy Treasury Secretary Paul Craig Roberts. Not only were all the major banks in on the fix, so too were the Federal Reserve and the Bank of England.

“As the Federal Reserve and the Bank of England are themselves fixing interest rates at historic lows in order to mask the insolvency of their respective banking systems, they naturally do not object that the banks themselves contribute to the success of this policy by fixing the LIBOR rate and by selling massive amounts of interest rate swaps, a way of shorting interest rates and driving them down… The lower is LIBOR, the higher is the price or evaluations of floating-rate debt instruments… and thus the stronger the banks’ balance sheets appear.”

Roberts asks if the only way the U.S. and U.K. financial systems can be kept afloat is by systemic fraud, and concludes, “The answer is yes.” He explains.

“Imagine the Federal Reserve called before Congress or the Department of Justice to answer why it did not report on the fraud perpetrated by private banks, fraud that was supporting the Federal Reserve’s own rigging of interest rates (and the same in the UK.)

“The Federal Reserve will reply: “So, you want us to let interest rates go up? Are you prepared to come up with the money to bail out the FDIC-insured depositors of JP Morgan Chase, Bank of America, Citibank, Wells Fargo, etc.? Are you prepared for U.S. Treasury prices to collapse, wiping out bond funds and the remaining wealth in the US and driving up interest rates, making the interest rate on new federal debt necessary to finance the huge budget deficits impossible to pay, and finishing off what is left of the real estate market? Are you prepared to take responsibility, you who deregulated the financial system, for this economic Armageddon?

“Obviously, the politicians will say NO, continue with the fraud.”

So here is where the American people have been led by the deregulators, “The Market Knows Best” wizards of the Clinton years — Rubin, Greenspan, Summers and their acolytes, Presidents Bush and Obama and current Treasury Secretary Geithner: into a trap.

Either the American people acquiesce to massive fraud and the skimming of countless billions by Wall Street, or we collapse the dollar, or we wait for the rest of the world — even now decoupling from the dollar — to collapse its value, and destroy what is left of the wealth of the American people.

The U.S. governing elite have nothing to say because they are terrified. Like Mickey Mouse in the movie Fantasia, vainly trying to stop the flood let loose by the mops and buckets he brought to life, they don’t know what to do.

In my next column, some modest suggestions.

The Banksters

Adding compound fraud to compound interest


By Mike Krauss
Bucks County Courier Times

The vastness of the fraud and criminality at the heart of the international private banking cartel can no longer be denied or explained away.

Let’s look at the news of only the past two weeks.

In a courtroom in New York, a long investigation culminated in the prosecution of three wheeler-dealers for their role in rigging the U.S. municipal bond market. The scope of the scam and cost to ordinary Americans are extraordinary. Here is how it was reported by Matt Taibbi, the investigative journalist writing for Rolling Stone.

“The defendants in the case… worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America… By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from ‘virtually every state, district and territory in the United States,’ according to one settlement. And they did it so cleverly that the victims never even knew they were being ¬cheated.”

Unbelievable? Hold on to your hat and let’s look in on the news last week from London.

LIBOR is the London Interbank Offered Rate. It is a key interest rate set daily by the biggest banks. It affects the cost of, by some estimates, more than $800 trillion of “financial instruments” worldwide: credit cards, consumer and business loans, mortgages, corporate bonds and more.

Investigators have established that the rate has for years been fixed to enhance the profits of the banks that set the rate. One bank, Barclays, has admitted its culpability. More are under investigation.

The rigging was reported (in the Wall Street Journal, no less) almost five years ago. But it has taken the underfunded and understaffed regulators this long to uncover the evidence.

More tellingly, even with an investigation underway, the banksters felt secure enough to continue running the scam.

And as the veteran Wall Street watchdog Pam Martens explains, the LIBOR fraud is directly connected to the magnitude of the multi million dollar losses suffered by individual municipalities large and small across America, in the interest rates swaps peddled by Wall Street con men.

“The Libor rate was used to manipulate, not just tens of trillions of consumer loans, but hundreds of trillions in interest rate contracts (swaps) with municipalities across America and around the globe.”

The banksters added compound fraud to their compound interest.

How can ordinary mortals who don’t hold an MBA from Harvard or the London School of Economics make sense of this?

Here is how Robert Scheer summed it up. “Modern international bankers form a class of thieves the likes of which the world has never before seen. Or, indeed, imagined. The scandal over Libor… reveals that behind the world’s financial edifice lies a reeking cesspool of unprecedented corruption. The modern-day robber barons pillage with a destructive abandon totally unfettered by law or conscience and on a scale that is almost impossible to comprehend.”

And they get away with it on both sides of the Atlantic in exactly the same way: a bought and paid for political and governing elite.

President Obama should be vowing to put the likes of JP Morgan CEO Jamie Diamon in jail. Mitt Romney should be all over the administration for its failure to go after the banksters. Legislation to break up the big banks, and a constitutional amendment to end corporate campaign contributions should be flying through Congress.

Instead, much of the political elite in Washington are sucking up to the barons for campaign cash and post Washington payoffs, while they gear up for another Obamacare sideshow. Another diversion.

There is an obvious alternative to allowing our money, credit and public finances to be controlled by a corrupt and rapacious private banking cartel: public control. And it will fall to the American people to make it a reality.

States, municipalities, unions, school districts, foundations, churches and charities control perhaps trillions of dollars, much on deposit with Wall Street. That money needs to be moved to Main Street, into local banks, and a significant portion set aside to capitalize the public banks which can guarantee the sustainable and affordable credit required to rebuild American prosperity, and re-establish the accountability and transparency necessary to the finances of a democracy.

But more is needed. While the scale of the fraud is international, the impacts are local - touching your family, your neighbors and your community. It is time for state and municipal officers to take action to begin to recover the stolen wealth of their citizens.

And such actions have begun - from Milan, Italy to Baltimore, MD, New Britain, CT and Oakland, CA.

For too long, the people of the United States and Europe have been the servants of finance. Now, finance must serve the people. We can begin with a simple action at the local level: take the money back.

What happened to banking?

Kill Wall Street before Wall Street kills America


By Mike Krauss
Bucks County Courier Times

Not so long ago, the words “banker” and” banking” were synonymous with prudence, probity and respectability. But say those words today, and across the U.S. and Europe tens of millions now react with anger and scorn.

What happened?

Political power flows from wealth. In the decades after World War II, the American people built up perhaps the greatest and (this is the important part) most broadly shared wealth the world had known. A democratic economics insured a democratic politics.

But beginning in the 1970s, federal tax, budget and economic policy began to favor the concentration of wealth in the hands of the already wealthy. As wealth was concentrated, so too was political power.

Until well after World War II, the finance industry accounted for no more than about 18 percent of U.S. domestic profit. It was one among many important industries. But as U.S. manufacturing was dismantled in order to maximize corporate profit, and as banking was allowed to consolidate into the “too-big-to-fail” banks, by 2010 the finance industry grew to account for 60 percent of U.S. domestic profit.

The power of that wealth was projected in Washington through legalized bribes that now make a mockery of democratic elections, and gutted the regulation that once protected homeowners, pensioners, savers and investors. Fraud became a business model. Wall Street exploded in a riot of greed, finding ever more clever ways to extract wealth from the American people.

So great is Wall Street’s power in Washington, that when its recklessly leveraged house of cards came tumbling down in 2008, two presidents and the Congress tried to put it back together, rather than let it die the death it had earned.

Instead of coming to the aid of the American people, and allowing the many thousands of responsible American banks and many more thousands of responsible bankers to retake their industry and market share from the con men and criminals, Washington caved to the wealth of Wall Street.

And the barons went right back at it, using every device known to man — and apparently taught in U.S. business schools for much of the past fifty years — to continue their campaign to extract every last nickel from anybody they could, any way they could.

Hyperbole? If only.

The mortgage market was a criminal enterprise. Deceit and double dealing were standard in the interest rate and credit default swaps markets. The municipal bond market was rigged. Wall Street wizards like former New Jersey governor and U.S. senator Jon Corzine gambled for their own account with huge sums of clients’ money without their consent or knowledge — and lost big.

It’s still going on. Now, the news from London. It is called the biggest scandal in history. The numbers are mind boggling.

LIBOR is the London Interbank Offered Rate. It is the interest rate set daily by the big banks and affects the cost of an estimated $800 trillion of “financial instruments,” including credit cards, mortgages, corporate bonds and bank loans worldwide. It has been rigged — and regulators have known it was rigged since at least 2008.

So blatant is the fraud and criminality, that even the British newspaper The Economist, a bastion of 1 percent capitalism, had to lead its coverage of this latest and greatest scandal with a headline it has so far tried to avoid: “Banksters.”

The storm now centers on Barclay’s Bank in London, but it is growing and will engulf all the big banks. And once again, regulators and governments on both sides of the Atlantic will bark, but they will not bite. There will be some fines and someone will get fired and walk away with a $20 million dollar severance package. Poor baby.

Finance has usurped our democracy. How do we take back it back?

In the United States, there is again a great hue and cry to break up the big banks and reinstate the Glass-Steagall Act, which separated the banks and investment houses after the Great Depression, but was repealed by Democratic President Clinton and a Republican Congress when they bowed to Wall Street a decade ago.

Great ideas. Don’t hold your breath; at least, not in the United States. The barons own this Congress, they will own the next and they are placing their markers with both Obama and Romney.

Rather, states and municipalities, unions, foundations, churches and not for profit organizations, which control perhaps trillions of dollars and much of it on deposit with Wall Street, can take those dollars out of the Wall Street banks, bank locally and set up a network of public banks, to put the money of the American people to work for the American people.

There may not be much time. When Merrill Lynch went down in 2008, it was leveraged 42 to 1. Today, of the $230 trillion derivatives market — 15 times larger than the entire U.S. economy — 97 percent is held by five banks. Those bets are insanely leveraged at 200 and 300 to 1. One more bad bet of the kind JP Morgan CEO Jamie Diamon could not explain to Congress (at least, not under oath), and the entire economy could go with it.

It is no longer enough to regulate Wall Street. We must take the money back. Americans must kill Wall Street, before Wall Street kills America.