A solid banking system requires trust. Trust is the grease that keeps the banking industry running smoothly, not money. That is to say: Having trust in one’s bank is more important than having money in one’s bank.
Depositors must have faith in the bank’s ability and trustworthiness to manage their money wisely and profitably. Borrowers must trust a bank’s integrity and have confidence that loans will not only be made available but will be managed honestly and justly.
Of course, banks are first and foremost a business. They expect to make a profit from their services. Yet, bankers provide necessary and fundamental financial services to a community, all of which presumes a great deal of trust and integrity.
Because banks deal with huge amounts of money, their trustworthiness must be independently verifiable. That is, there must be regulatory oversight on our banking system. Why? Because: banks are run and managed by humans and humans are not to be trusted with excessive amounts of money (or power)—not without a good amount of oversight, checks and balances.
This is why it was and is dangerous to allow banking and other financial institutions to become “too big to fail.”
In fact, no business or corporation, financial or otherwise, should ever be allowed to become bigger than a community’s ability to keep it accountable through independent oversight. Note: “community” may be defined as either local, state, national, or even international.
To put it another way: the bigger a corporation or financial institution gets, the easier it becomes for that entity to escape healthy monitoring and to side-step fundamental rules of honesty, integrity, and accountability. And so the more threatening and dangerous it becomes to the very community it is supposed to serve, the very same community from which it also happens to be reaping a good amount of profit and gain.
In that sense, bigger is not always better—for the community. Who is monitoring our huge interstate and international corporations and financial institutions? How is it even possible? We want large industries to succeed because they provide jobs. But, are we going back to “selling our soul to the company store” just to have job security again?
Now let us consider the political landscape. The average American citizen is frustrated with the politics of the day. Our two parties are often deadlocked in impasse after impasse. But who “owns” the political machinery these days? Is it not large special interest groups? And by “large,” I mean corporations and financial institutions that effectively have an unlimited amount of money to spend on political campaigns, along with their kissing cousins, the collective wealthy-set of individuals who also have vast amounts of money to spend on political campaigns. Is it no wonder that the people no longer “trust” the political system and have always distrusted the mysteriously well-financed politician?
Here we are again, talking about “trust.” As it turns out, both a healthy financial system, as well as a healthy political system, demands the ability to trust. This is why a good working democratic system, and/or financial institution, is an “open” system rather than a “closed” system; which is to say they are transparent—are held accountable and readily submit to independent and verifiable oversight. Yet, sadly, our two most important national systems, the financial and the political, are losing, or have already lost, the people’s trust—and for good reason.
What will it take for the people to regain their trust in our great systems? The answer is obvious. Open up! Full disclosure! Our major political and financial institutions must have open books to public scrutiny, if, that is, we are to trust them. Transparency is what makes both a strong and healthy democracy as well as a strong and healthy capitalistic system. A healthy capitalistic democracy will not allow powerful influential institutions to hide behind walls of secrecy.
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