Financial giant Goldman Sachs pulled out of a fundraiser for a small Lower East Side bank that caters to poor people after it learned the event was honoring the protesters at Occupy Wall Street. The investment bank withdrew its name from the fundraiser and also canceled a $5,000 pledge.
Greg Palast talking:
It’s not about $5,000 donation. First of all, it’s not a donation. The issue is about a multi-billion-dollar battle over TARP money and the finance community. Back in 2008, Goldman Sachs, which is an investment bank—that meant that all their losses were there—was turned into a commercial bank, within 24 hours, so they could qualify for $10 billion in bailout funds.
commercial bank is the types where you put in your savings, and we, the taxpayers, and the government guarantees the profits, or guarantees the solvency of that bank. So, for Goldman to get into the $10 billion—to get their $10 billion check for bailout, they had to become—go from a gambling house, an investment bank, into a nice commercial bank. But they had to agree that they would then be subject to what’s called the Community Reinvestment Act and return some of that money, a chunk of it—most banks put in a billion dollars—return a chunk of it back into low-income communities. Well, Goldman doesn’t have any branches, so they gave money to the designated low-income bank of New York, Lower East Side People’s Federal Credit Union, and—but they’ve been giving out the money in eyedroppers, like this $5,000. Now remember, it’s not a donation. It’s a required payment under the law that they got in return for our $10 billion, OK? So it’s not a donation. This is mischaracterized. It’s a payment required by law, with an eyedropper.
But what they are doing is starting off something very dangerous and new, which is to say—there are literally tens of billions of dollars in these funds for community reinvestment, boosted by the bailout funds. They see this as a political weapon, as a hammer to control the political discussion. These community development credit unions have been joining the Occupy Wall Street movement nationwide. It’s about moving your money from the big banks to the small banks. And they’re not worried about losing little deposits. What they are worried about is losing political control of the discussion. Right now, people like Paul Volcker are calling for removing the rights of banks like Goldman, now a commercial bank, to stay in the gambling trading business. Well, Goldman is very much afraid of that. So the Occupy Wall Street movement has put back on the table these issues of bank deregulation, these issues of community reinvestment.
And Goldman, I think they’re actually quite smart. They figured out, “Well, we’ve got—there’s like a hundred billion dollars on the table here. Why don’t we start saying, ’You’re not going to get any of it unless you dance to our tune?’” And I have to tell you, from inside, it wasn’t minor. It wasn’t just, “Oh, take—give us back our donation money.” It was legal threats saying, if you—you cannot—if you’re going to get our money, you may not back Occupy Wall Street and the “move your money” movement, without getting approval from us at Goldman Sachs. That’s a whole new business. So, it’s very dangerous, because it involves billions of dollars in public money. It’s not Goldman’s money. It’s our money. And that’s what they’re doing with it.
Lower East Side People’s Federal Credit Union has been designated by federal charter to be the bank for all New Yorkers of low income, if you own—if you earn less than $38,000 or work or live on the Lower East Side. What’s happened is, is that the big banks give Lower East Side a few dollars and then send all the poor people to that bank. You walk in poor, you say, “I’m in a housing project and on public assistance,” “Oh, go down to Lower East Side.” So they dump the poor there. They can’t even open bank accounts, let alone get loans at these big banks. So it’s a dumping ground so that the—it’s a brilliant bank. It does very well, and it serves all the entire poor community of New York. It’s got branches in Harlem.
But what the banks now want to do is say, as this bank is growing not only as an economic force, but a political force, in the low-income communities in New York, and they are being used as the model nationwide, they are taking a political stance, saying, “We honor Occupy Wall Street, because we are against people putting their money in these commercial banks. It’s time that banking become for the people, not for the money.” And that message is a no-go with the banking community.
So it’s not, by the way, just Goldman Sachs. Capital One said, “Take our name off.” You’ve had basically Goldman has started a kind of run on low-income banks that will associate with Occupy Wall Street. This is a dangerous use of public money. I’ve got to emphasize this: it’s TARP money, that is bailout money that we gave these banks in 2008. They were required, as part of the deal—in Goldman Sachs’ case, explicit—that they give back some of the money to low-income communities and reinvest there. It’s our money. It’s not a donation. And this is just little bits. And they’re withholding these payments. I haven’t seen Goldman put out—they’ve put out less than half a cent on the dollar we gave them, the lowest of any bank. But they are setting a—they’re basically setting a course that all of the other banks are now following, saying, “Hey, you want our money? You have to clear your political positions with us at the big banks.” This is a very dangerous new business. And I hope that with this report here on Democracy Now!, that the regulators are going to step in and say, “No, no. This is not your money. This is our money. This is not a political weapon.” It’s a very dangerous new thing that the banks are doing.
What has to happen right now is that the regulators in the Obama administration, the Federal Reserve Board, has to step in and tell Goldman, “No, it’s not your money. You may not use the community reinvestment funds as a political hammer to beat up the small community groups, credit unions, community banks, to which you’re giving this money.” It’s a very dangerous thing to be saying, “We’re going to be giving out money based on your political positions and based on whether you are telling people that the banking system has to change,” because community banks like Lower East Side People’s Federal Credit Union are taking the position that the commercial banking system is rotten and should be replaced by a people’s banking system. So it’s not just—they don’t want to be the little safety valve, “Just send us your poor people.” They want to replace the banking system. And believe me, Goldman, and the other banks following them, don’t want to hear that message.
– from democracynow.org. Donate