President Obama has chastised several big banks for their recent record profits and
the continuation of their executive bonus and compensation policies. The President spouts
populist drivel such as, and I’m paraphrasing, “When the average American is hurting, the
fat cat bankers are bringing home millions in bonuses. When the banks needed help the
American people came to the rescue, now the American people want their money back!”

Okay, a couple problems here. One, the banks that are making the huge profits have
already paid back their bailout money, with interest. Two, in reality, the bailout money
never came from the American people. It was borrowed from China and other countries. (Of
course, the American taxpayer will have to pay that back.)

The President wants to instate a windfall profit tax on banks. He is also upset with the
banks for not increasing their lending to businesses. These are the same banks that
weren’t making any profit last year and the Government deemed too big to fail. Now—here
are two dirty little secrets of banking in an Obama-world:

One: large and small businesses are not crying out for capital, because they are not
certain they can afford to expand with all the uncertainties the Obama Administration
presents. Who is going to commit to huge business loans with healthcare, carbon taxes and
union card-check as the priorities of this administration? Businesses simply don’t know
what rules they are going to have to operate under in the near future. They don’t know
what their taxes and other obligations will be. Only an idiot bets money on a game he
does not understand.

Two: The policies of the Federal Reserve and this Administration allow banks to make
record profits without loaning anything to anyone. How is this possible? The banks can
borrow money from the Federal Reserve at something like .1% interest. They, in turn, take
the cash and buy treasury bonds earning 3%.  The banks are making almost 3% profit with
absolutely no risk. They don’t even have to manage a loan. It is a way to bring money
from the Federal Reserve into the coffers of the Federal Government using banks as a
vehicle. When this money gets spent by Government, it will cause inflation because there
are no goods or services to back it up. It was printed. No wealth was created in the

So, once again, the President is disingenuous. He spouts populist drivel denouncing the
banks in an effort to drive public opinion against them and give himself cover in the
process, all the while using the banks to launder his money. You can bet every time
Congress votes to raise the debt ceiling another trillion dollars, the banks show up on
the Fed’s doorstep with their hands out—and Obama meets them in the back alley to get
his 97% of the take.

As a Conservative I am generally supportive of profits and I do not play the class envy
game of begrudging executive bonuses for banks or other companies. However, I cannot
support the bank CEOs’ current actions. They seem to be taking a chapter from the Al
Capone School of Money-Management by colluding with the Federal Reserve and the Obama
Administration in the biggest money laundering operation in history.

Jim Clonts