A few weeks ago in the Albuquerque Journal’s business section, Winthrop Quigley discussed the sad case of Charter Bank’s seizure by the Office of Thrift Supervision — the federal bank regulator. While Quigley’s article was by and large on target and generated a tremendous response, I felt that it was important to clarify that what happened to Charter was not a result of “free markets.” I elaborated on this issue in a letter to the Business Journal that was published today.
The full letter can be found below:
It is no surprise that Winthrop Quigley received such a strong reaction from readers to his coverage of the closing of Charter Bank. After all, people have an intuitive revulsion to unfair policies. Few policies are more transparently unfair than those foisted on the banking industry by the federal government which have bailed out some “too big to fail” banks with billions of our taxpayer dollars, resulted in massive bonuses for corporate fat cats, and yet have driven smaller community banks like Charter out of business for relatively minor transgressions.
The fact is that while not always as obvious as the case of Charter, this is par for the course for the federal government. If you have the money to buy high-powered lobbyists, the government will come to your rescue. If you don’t, you are out of luck.
What average citizens need to understand is this: The current situation is corporate socialism, not capitalism! Banks were among the most tightly regulated industries even before this economic crisis. Factor in federal manipulation of the money supply, the creation and financing of Fannie Mae and Freddie Mac, and dozens of other interventions in the financial sector, and any semblance of capitalism are lost.
Charter may have made mistakes — humans are not perfect — but in the end the bank is a victim of unfair federal intervention and the nation’s rapid shift toward corporate socialism.