Vin Suprynowicz

Man, what a mess those jokers on Wall Street have gotten themselves into, hey?

Now, I know it’s unseemly to gloat. On top of that, columnists are supposed to make like we share the suffering of the “little guy,” put on our Pierre Cardin suit pants one leg at a time, that kind of thing.

But my buddy Todd the banker and I just couldn’t help but laugh the other day as we split a pitcher of Bombay martinis and watched the sun set over the fairway from his spread in Summerlin.

You see, Todd and his depositors — I’m pleased to count myself among them — are totally unaffected by the big financial meltdown that’s gotten everybody so upset.

“What a bunch of idiots,” Todd chortled as he handed me one of his fat Havana cigars. “Didn’t they know enough to take advantage of the big de-regulation?”

It was shortly after our old buddy Ron Reagan took office in 1981 and got rid of all the banking regulations in America that my buddy founded Todd’s Free Market Bank, with main offices on East Charleston Boulevard. He’s got a big framed photo in his living room of the huge banner they unfurled across the front of the building that day, “Unregulated Bank. Not FDIC or FSLIC Insured. No State or Federal Charter. All the Money’s in the Vault. Inquire Within About Your Free Toaster.”

Todd declared from day one he wasn’t going to practice any of this fraudulent “fractional reserve banking.” You could either deposit money in his vault — in which case he charged you the Vault Storage Fee (VSF) and guaranteed your money would always be there, meaning there was zero worry of any “run on the bank” — or else TFMB would sell you one of their certificates of deposit, on which you could choose the general areas in which your money would be invested, and with that your rates of risk and return. My own CDs are all in overseas gold, silver and platinum mines, and I can tell you I’m pretty darned happy about that right now.

It was in 1995 after Barney Frank and the Democrats ordered the regulated banks to start issuing mortgages to minority-type people who didn’t actually qualify — ordered them to count welfare and unemployment checks as “income,” that kind of thing — that TFMB took the next obvious step, announcing they weren’t going to hold any government paper at all, including Federal Reserve so-called “dollars.” If you wanted to deposit money in TFMB you had to come in with gold or silver coin, and they paid your annual CD interest in coin as well. I’m sure you read in the papers how the bank won their court case against the IRS over that.

After all, a pre-1964 silver quarter is now worth $2.50, thanks to the 1000 percent inflation purposely created by the Federal Reserve since 1964. When I invest $1,000 worth of silver in Todd’s bank I get paid annual interest in silver coin currently exchangeable at any pawn shop in town for $40. But the face value of that little stack of coins is just $4, so that’s what I declare to the IRS as my interest income — $4.

The IRS sure didn’t like that. But the courts ruled a contract is a contract, and if the coins came from the U.S. mint with a face value stamped on them, that was that.

So Todd and I had a good laugh about all those suckers who still have their money in those other banks, in Federal Reserve greenback “dollars” currently melting away like sugar in the rain, banks with upside-down balance sheets clogged with those now-worthless “mortgage-based securities.”
Too bad Reagan and the Republicans got rid of all banking regulation in 1981, hey? If there were still any federal banking regulators, I bet their never would have allowed THAT to go on.

Not.

None of the above is true, nor could it be, any more than you should believe a word you see on the commentary pages of the big left-wing dailies out of New York and Washington these days, moaning that the current Wall Street meltdown in a result of the banking industry having been “deregulated” over the past 27 years.

If my imaginary friend Todd had tried to open his bank with the “Not Insured; Not Chartered” banner across the front in 1981 or 1991 or 2001 or even last year, he would have been lucky to last a week before being raided by squads of federal goons with shotguns and machine pistols, hauling him away in chains for “fraudulently engaging in unregulated banking activity without a charter or license.”

Furthermore, the federal courts have actually refused to enforce contracts with so-called “gold clauses.” If your debtor promised to pay you in gold but now hands you fast-depreciating greenbacks instead, you’re plumb out of luck.

Yes, as part of their banking “reforms,” Congress lifted the Savings & Loan interest ceiling in the 1980s, demanded that bankers start making loans to unqualified low-income borrowers in the 1990s, and additionally got rid of the firewall that used to keep the big investment banks out of the mortgage business.

I think we could now say that combination of moves proved to be a “minor miscalculation.”

Folks are free to debate whether they’d like to go back to pre-1913 free market banking, where you had to do some “due diligence” and proprietors who didn’t have enough reserves in the vault to cover a “run” by customers with “demand deposits” could be arrested and tried for fraud — the very “fractional reserve” fraud that the Fed and the FDIC now make legal.

But please: When anyone tries to tell you the current financial meltdown is because the American system of “bank regulation” was shut down sometime back in the 1980s, advise them to do a Web search for the Board of Governors of the Federal Reserve System; the Federal Deposit Insurance Corporation; the Office of Thrift Supervision, and the Office of the Comptroller of the Currency.

These are “federal bank regulatory agencies.” Despite some name changes, they’re all bigger than they were in 1981. And each state has its own, parallel regulatory bureaucracy.

Regulation has actually spread the current disaster by causing uniformity in investment portfolios as bankers rushed to concentrate their investments in whatever the regulators insisted was “safe” — government paper and bundled mortgage derivatives, in recent years.

Meantime, this month’s George Orwell “Newspeak” award goes to the commentators who tell us Congress will now try to determine the “free market value” of these collapsing banks’ essentially worthless assets. The only one way to determine a “free market value” is to auction something off. Congress setting a price is the opposite of that.

The real problem with “bank regulation” — which is very much alive — is the problem with almost any government ”regulation.” While designed to give the public the impression that independent watchdogs are keeping an eye on things, such schemes usually end up as protection rackets, keeping out unwelcome competitors while the watchtower is manned by fellow foxes who encourage their brethren to “loot and shoot” to their hearts’ content.

After all, if there’s any problem, they and their buddies in Congress can just pull out the taxpayers’ credit card, and say “Charge it!”

Haw haw haw.