The Banks are Made of Marble

I've traveled round this country
From shore to shining shore
It really made me wonder
The things I heard and saw.

I saw the weary farmer
Plowing sod and loam
l heard the auction hammer
A knocking down his home

But the banks are made of marble
With a guard at every door
And the vaults are stuffed with silver
That the farmer sweated for

l saw the seaman standing
Idly by the shore
l heard the bosses saying
Got no work for you no more

But the banks are made of marble
With a guard at every door
And the vaults are stuffed with silver
That the seaman sweated for

I saw the weary miner
Scrubbing coal dust from his back
I heard his children cryin
Got no coal to heat the shack

But the banks are made of marble
With a guard at every door
And the vaults are stuffed with silver
That the miner sweated for

I've seen my brothers working
Throughout this mighty land
l prayed we'd get together
And together make a stand

Final Chorus
Then we'd own those banks of marble
With a guard at every door
And we'd share those vaults of silver
That we have sweated for

This song is taken from the Union Songs website. Banks of Marble sounds like a “depression song” from the 1930s but was composed around 1948-1949 by Les Rice, “a New York State apple farmer and one-time president of the Ulster County chapter of the Farmers Union. His songs have made him well-known to farmers throughout the northeast. … his most well-known composition … achieved great popularity among union members throughout the country and even in Canada”.

The website adds the comment “The song has gained new resonance since the 2008-2009 financial meltdown!”. What a terrible misunderstanding; the song today has lost whatever resonance may have had before 2008. For while banks are still of marble, with a guard at every door, their vaults are stuffed with toxic assets, not silver. Their depositors - when they have not been swindled by the banks themselves or other financial intermediaries - often have had to queue in the street to recover their own money, which they got back only to the extent that governments took on banks liabilities, including those towards bank bondholders and perhaps even shareholders. Over the last three years government rescue of banks and financial institutions has added to government debt and lowered bond prices raising their yield and the cost of rolling over debt. Ireland, for instance, spent about 20% of GDP in the rescue of a single bank, Anglo-Irish. The fall in value of the government bonds in their vaults, in turn, added to the problems of banks. The entire banking system of some countries, like Ireland, is regarded as largely insolvent.

In Europe, in 2010 banks' balance sheets were white-washed by perfunctory “stress tests” that gave a clean bill of health even to Anglo-Irish and the Bank of Ireland, that a few months later required €113bn public money for their rescue. The newly-born EBA European Banking Authority (1 January 2011, London) is about to subject European banks to another round of stress tests; their severity is still partly unknown but the danger of another white-washing exercise is not negligible. The discussion of tests is made opaque by technicalities involving capitalisation requirements dictated by Basel 2 versus Basel 3 (Bank of International Settlements, applicable from 2013), tier 1 versus core tier 1 primary assets, RWA (risk-weighted-assets), differential treatment for troubled government bonds marked to market or held to maturity in banking books at their face value. The bottom line is that the re-capitalisation needed by European banks, estimated to be of the order of €7.5bn in the 2010 round of stress tests, has now reached the order of magnitude of €100bn (on top of the re-capitalisation occurred in the meantime, like the €113bn mentioned above). The provision of this additional capital may well slow down economic recovery.

The chances of working brothers making a stand - and taking over those banks that are still worth owing thus making them their own - are zero, as they are made completely powerless by worldwide competition in the global labour market – through de-localisation, globalization of trade and investment, migrations – and the resulting mass unemployment. Their brotherhood is in question, and they have to contend with the overwhelming, almost complete dominance of conservative governments in Europe. Sad, and bad enough, but to pretend otherwise is outright tragic.