Goddamn The Pusherman Don Quijone, Raging BS Blog
Released at the height of the 60′s counter-culture movement, Steppenwolf’s The Pusher was chosen as the opening song of Peter Fonda and Dennis Hopper’s explosive cult classic Easy Rider (to listen to the song, click here). As its title suggests, the song is about drug dealers who aggressively “push” their often tainted wares on unsuspecting users.
Put simply, the pusherman “don’t care if you live or if you die.”
The world today is arguably more afflicted than ever with the pusherman disease, as global networks of drug traffickers and pushers visit untold misery upon communities across each and every continent.
But this post is not about the drug business. It is about a far more insidious trade, a much more dangerous species of pusherman. You see, when it comes to abusing customers and spreading misery and destruction across the world, there is one class of trade that stands head and shoulders above all the rest, including even the arms business. And that is the banking industry.
“The Pusher Is a Monster, He’s Not a Natural Man”
In the last five years alone countless cases have emerged of banks knowingly unloading tainted products on unsuspecting customers. They include products that are essentially designed to fail or whose contingent risks are never fully divulged to their buyers. This widespread practice is rather affectionately termed in the industry as “misselling” and is typically punished with a token fine representing just a tiny fraction of the total revenues generated by the fraud.
Outside the industry, where outmoded concepts such as laws and decency still apply, such acts are called “fraud and deception” and are punishable with a prison sentence.
But in the financial sector, other rules apply. From U.S. banks’ misselling of subprime mortgages and mortgage-backed securities — which set the stage for the current crisis — to British banks’ recent selling of fraudulent card protection insurance and complex swap schemes, the financial pushermen have knowingly and repeatedly ripped off thousands, if not millions, of their own customers. And what’s more, they got away with it.
Targeting the Most Vulnerable and Gullible
One of the most egregious misselling scandals of this fledgling century took place in crisis-hit Spain. Between 1999 and 2011, the nation’s high street banks sold investment products called preferentes, or preferred shares, to hundreds of thousands of their own clients. Half-way between a bond and a share, the instruments provided the banks with much-needed liquidity, especially during the first stages of Europe’s sovereign debt crisis.
By offering yield-seeking savers and investors the best rates on the market, the banks and cajas (building societies) were able to sell some 30 billion euros worth of the instruments.
However, due to some (obviously innocent) oversight on the banks’ part, customers were not informed that what they were actually buying were essentially subordinated debt instruments. This meant that, should the company fall into liquidation — which is ultimately what happened to many of the savings banks — the holders of preferentes would be right at the bottom of the credit ladder.
In fact, not only did bank clerks and branch managers fail to inform their customers of the risks involved in the investment (which, in and of itself, is illegal, according to Spanish law), they actually marketed the preferred shares as fixed term deposits. They also forgot to mention that the preferentes, some of which had terms of 1,000 years, could never be cashed in.
And like any pusherman worth his salt, the banks intentionally targeted the most vulnerable and least resourceful customers, in particular the elderly. In extreme cases they even sold shares to customers who were illiterate (and not just in the financial sense) and who had to sign the papers with a makeshift cross or fingerprint.
Today most of those customers have lost the vast bulk of their life savings. With many of the former cajas now effectively bankrupt, the FROB (Spain’s bank reorganization agency) has imposed “haircuts” of between 39 and 90 percent on all preferentes holders. To rub salt in the wound, the EU announced that rescued banks would not be allowed to use funds from Europe to compensate victims of mis-selling — confirmation, if ever needed, that when it comes to receiving European welfare, the banks are at the front, middle and back of the queue. Their customers, meanwhile, are “bailed in” so as to cover the costs of the banks’ recklessness.
Pushing Back Against the Pusherman
In the last verse of The Pusher, Steppenwolf’s John Kay sings:
“If I were the president of this land,
I would declare total war on the pusherman.”
But here in Spain, like pretty much everywhere else in the Western world, the government does the exact opposite, rallying around to protect the pusherman from all potential rammifications of his manifold crimes. Indeed, as I wrote in “The Unthinkable Happens: TBTF Bank Chief Goes to Jail,” Rajoy’s administration is now doing all it can to derail Judge Elpidio José Silva’s attempts to prosecute the former president of Caja Madrid, Miguel Blesa.
In the face of wholesale government inaction and betrayal, the victims of the bankers’ scam have taken matters into their own hands, launching a series of protests in branch offices of the banks responsible.
For many branch staff members, going to work has become a living hell. While clearly not as much to blame as the senior and middle managers who designed and rolled out the fraudulent products, they are the pusherman’s public face. As such, it is they, and not the senior bank executives, who are drawing most of the flak from irate customers.
As one worker told El Mundo, “Neither the regulators nor the Ministry of the Economy, nor the Bank of Spain said anything. It was an authorized product. If they thought it was dangerous, why did they allow it to be sold?“
With the government offering nothing in the way of speedy resolution, customer agression towards bank workers seems set to intensify in the coming months. Just a few weeks ago a local police officer in Valencia was arrested after stabbing a retired bank manager who had sold him now-worthless preferentes.
Such explosions of violence are a symptom of a society that has been left with nowhere else to turn in its defence against the greed and depravations of an out-of-control financial sector. But violence is the ultimate act of desperation and is rarely, if ever, the solution. As the Pullitzer Prize-winning war reporter Chris Hedges put it, it is a disease that “corrupts all who use it regardless of the cause.”
That said, somehow or other the people of Europe, North America and elsewhere are going to have to find some way of pushing back against the pusherman. Because if one thing’s for sure, it’s that the senior pimps and kingpins of the financial sector are not for reforming. After all, why reform your ways when you have all but coopted the legislative and executive branches of most Western countries, as well as control pretty much all the national and regional central banks?