We have a conundrum. Even while Goldman Sachs lurches from one obscene disclosure to another, while the Financial Crisis Inquiry Commission issues subpoenas to Moody’s for selling out their ratings, while TARP banks contract credit and increase pay, while the Eurozone fractures along economic lines with risk of contageon, while lobbyists swarm Capital Hill to keep the gravy train moving, the investing elites just keep buying banks.
Beginning in the 1960’s a movement began to change the face of Apartheid in South Africa. It did not gain steam until the 1980’s. When it finally did, the old power structures were forced to bow to the conscience of the world. That time has come again. The financial system is kicking and screaming this week, pouring money into campaign coffers, lobbying and trying to water down, build in loopholes, and otherwise disembowel the legislation before it finally passes in some form. Enraged as the public has been, it has few tools at it’s disposal.
Disinvestment, sometimes referred to as divestment, refers to the use of a concerted economic boycott, with specific emphasis on liquidating stock, to pressure a government, industry, or company towards a change in policy, or in the case of governments, even regime change. The term was first used in the 1980s, most commonly in the United States, to refer to the use of a concerted economic boycott designed to pressure the government of South Africa into abolishing its policy of apartheid.
If you have been invested in large banks, you have done reasonably well lately. Now sell them. Management will not change appreciably until they know the people will speak with a loud voice and hit them in the wallet. The same regimes run the banks in the same way. The same axis of power runs between New York and Washington. The revolving door turns. Regime change is a worthy goal.