Why we need to battle the banks

by Vaughan Gunson

The recession is taking grip in New Zealand. People are losing their jobs. In some grassroots communities unemployment is already turning into a social crisis.

138,000 people are officially unemployed. Thousands more will be desperately looking for work. And the situation is going to get grimmer as the economy slumps further.

Job losses and income cuts are putting many homeowners in a terrible situation. They can’t meet their mortgage payments. The banks are knocking at the door.

And with property values falling some people are left owing more money to the banks than their home is worth. They face financial ruin.

For grassroots people, this is all very frightening and unfair.

Grassroots mood against the banks

Jobs and homes are gut issues for people. Rising concern about these gut issues is intersecting with a mass mood against the banks.

Last year, RAM activists took a survey out on to the streets, which questioned people about the operations of the banks in this country. Over 90% of people thought the banks were doing no good.

That sentiment has probably hardened. It can be picked up in everyday conversations. It’s reflected in the stories being carried in the media.

You know there’s a mass mood on an issue in New Zealand when two things happen. The first is when it becomes a storyline on Shortland Street. Scotty and Shanti are in trouble with the bank, owing more than their house is worth.

The second indicator of a mass mood is when you start hearing calls for a public enquiry.

This is what the Green, Labour and Progressive parties have been voicing. They want an independent public enquiry into the banks. They’ve sensed the mood and the political opportunities that it presents.

Not right

In the eyes of grassroots people it’s not right that in these times of increasing hardship the banks are continuing their profit run.

The Big Four Australian-owned banks, ANZ National Bank, BNZ, Westpac and ASB, control 90% of the banking industry in New Zealand, putting them in a near-monopoly position.

With so much market control, there’s no pressure to lower interest rates. In 2008, the income the Big Four banks received from loan interest went up a whopping $4.6 million.

As a result the profits of these Aussie-owned banks totalled over $3 billion in 2008, up 3.7% on the year before.

To add fuel to the fire, the Big Four are trying to avoid paying a tax bill of $2.25 billion. BNZ has been convicted by the High Court and told to pay up. Undaunted, the banks are using their extreme wealth to hire teams of lawyers to fight the ruling.

The feelings people have towards the banks has been heading South for sometime. This was before the banks started turfing people out of their homes.

To maintain their own equity position the banks are getting tough and forcing mortgage sales in rapidly increasing numbers. In April this year, there were 250 foreclosures. The numbers are only going to escalate as mortgage pressures worsen with further waves of job losses.

The banks are the bad guys. They could become public enemy number one.

A Bad Banks campaign

In isolation grassroots people have no power against the banks and the laws written to protect the money men. But mass feelings are strong.

It is the job of mass Marxists to tap into those mass feelings. That’s why Socialist Worker is launching a “Bad Banks” campaign.

We believe the Aussie banks are vulnerable to a broad and inclusive campaign that connects with the anger ordinary people feel towards these mega-rich interest gauges.

A campaign to expose and shame the banks must be out on the streets. We’ll produce mass leaflets and posters. There will be street stalls. We can build towards publicity pickets outside targeted banks.

We will organise public meetings. Send out media releases, write submissions. We will liaise with others on the left about organising jointly hosted campaign conventions.

The campaign will have a web presence (www.badbanks.co.nz). A Bad Banks Facebook group is up and running (log into Facebook and search for “Bad Banks”).

We will pursue multiple publicity strands that aim to connect with masses of grassroots people.

The first stage of the campaign will be educative. We’ll tell people what the banks are up to. We’ll even explain in popular language “fractional reserve lending”, the credit creation mechanism which literally allows the banks to make money out of thin air.

Our leaflets and other publicity will connect the operations of the banks to the Great Implosion. Explaining what’s happening globally and pointing the finger at who’s responsible. Knowledge, as they say, is the first step to empowerment.

As the Bad Banks campaign evolves we begin to put forward concrete demands and campaign goals. These will emerge through dialogue with other leftists and through listening to grassroots people themselves.

Broad left cooperation

A multi-headed campaign against the banks has the potential to bring networks of indebted homeowners, political parties, unions, community groups and grassroots activists together.

The campaign on the streets should work in tandem with the good initiative of the Green, Labour and Progressive parties to set up their own independent public enquiry into the banks. Parliamentary and street campaigning can both work to build a movement. Linking these two essential political arenas will get the best out of each.

The Bad Banks campaign (or some other campaign name that emerges through discussions with others) could become an invigorating example of broad left political cooperation in practice. This would be extremely positive.

Joint work, sharing of ideas and on-the-ground collective organisation around this “flashpoint” political issue will hopefully encourage a further coming together of broad left forces. Such political cooperation is needed if the left is to rise to the challenge of the biggest economic meltdown since the Great Depression of the 1930s.

Banks and the “bubble economy”

The role the banks and international money men have played in the Great Implosion needs to be widely exposed. The banks are at the centre of the “bubble economy” built on trillions of dollars of debt and speculation.

The floundering of the real economy since the 1970s has seen workers, business and the state increasingly reliant on the extension of credit.

Over the last four decades debt has ballooned. This has allowed the banks and other money lenders, facilitated by governments, to assume a dynamic role within late capitalism.

So entwined are industry giants, big banks and governments, that when the credit crunch hit last year, following the bursting of the worldwide housing bubble, the leaders of the world’s big economies raced to save the banks.

In January this year, Oxfam calculated that $8.424 trillion had so far been raised by governments to bailout the banks and other financial institutions. That’s a vast sum, one which could easily put an end to world poverty.

And the bailouts haven’t stopped. In the US alone, the Obama administration’s bailout commitments could reach as high as $23.7 trillion, according to an official independent report.

However, the bailouts have not prevented the economy from nose-diving, far from it. There’s a global pandemic of job losses and other social miseries. Smaller banks and other financial institutions continue to go under.

Yet some of the big banks, like Goldman Sachs, one of the main players behind the housing bubble, are now posting record profits. With trillions and trillions of government money floating around, these experts at financial manipulation are creaming it.

Helped by government insiders the really big banks are now set on dominating like never before the creation of credit, the fragile base upon which the world economy rests.

The banks left standing are profiting out of lending to cash-strapped governments at high interest rates. They’re speculating again in financial markets. It’s “win-win” for them and “lose-lose” for the rest of us.

Given all the social and environmental problems besetting the world the bailout of bankers is a crime against humanity of obscene proportions.

Debating the nature of capitalism

A system that can divert trillions of dollars to a mega-rich minority and let the majority fend for themselves in an increasingly scary world is an unjust one.

Without a doubt the global economic crisis, and the response by governments, is eroding the legitimacy of the market. And it’s happening in the so called “first world” economies of Northern America and Europe. That’s significant.

A broad campaign against the banks in this country will, if successful, begin to expose the structures of power within monopoly finance capitalism that locks in place gross inequalities globally.

A mass-based campaign against Bad Banks has the potential to stimulate a nationwide debate about the nature of capitalism and the need for a human centred economy. Socialists and leftists from a number of political traditions will want to see this happen.

Lots to learn, lots to get excited about

The Bad Banks campaign that Socialist Worker is initiating will be a long term one. We will be trying things out as we search, hopefully alongside other activists, for a connection with a mass audience.

There’s lots to learn about the operations of the banks in this country and internationally, and how to connect their operations to a system in crisis. It’s going to be a big learning curve for everyone involved.

While the Bad Banks campaign is only just hitting the streets, it’s yet to be fully tested in practice, we do know there’s great resentment towards the banks amongst ordinary Kiwis. We should have confidence that this path will bear fruit for the left in this country. That prospect should be an exciting one.

Vaughan Gunson is the publicity coordinator for the Bad Banks campaign. To contact him with feedback or offers to help, email socialist-worker@pl.net or ph/txt 021-0415 082.