Some friendly reminders why the legacy financial system needs to be replaced
As crypto continues to become more widely adopted, there will continue to be push back and negative media coverage about the “evils” of cryptocurrency. The common talking points revolve around crypto being a scam, an enabler of international criminal organizations, a shady dark web tool, and an environmental catastrophe.
The purpose of CryptoAltruism is to highlight the good being done in the crypto and blockchain world, guided by the belief that there is far more good happening in the space than bad, and that the potential for good far outweighs any downsides to the technology.
Another motivation behind this work is the fact that traditional banks have historically engaged in highly unethical, unfair, and criminal practices that have often had the biggest impact on the most vulnerable. These actions have resulted in banks racking up hundreds of billions of dollars of fines since the 2008 financial crisis. It’s important not to forget about this, because crypto has the potential to present a more socially just alternative.
That being said, here are some friendly reminders why the legacy financial system needs to be replaced:
1. Legacy banks have laundered money for criminal organizations
There have been numerous occasions in which legacy banks have been accused of or found to have laundered money for international criminal organizations. One of the most well-known examples of this is when HSBC paid 1.92 billion in fines after allegations of laundering hundreds of millions of dollars for drug cartels, but this is certainly not the only example.
2. Big banks collected billions in overdraft fees during the pandemic
During the pandemic, millions in the U.S. faced job loss, income loss, and other hardship. A study by Human Rights Watch found that the pandemic disproportionately impacted lower income Americans. Despite this, and despite regulators urging banks to cancel the collection of overdraft fees during the pandemic, banks still collected billions in overdraft fees from American’s who were clearly struggling, as is evident by the fact that they were in a position in which they were charged overdraft fees in the first place.
JPMorgan Chase, the biggest bank in the U.S., collected 1.5 billion in overdraft fees alone during the pandemic. At a time when food bank lines were kilometres long, and when millions lost their jobs, the largest bank in the U.S. decided it was necessary to rub salt in the wounds of those experiencing hardship by taking 1.5 billion from them. That’s pretty messed up.
3. Banks caused the devastating 2008 economic crisis
Although it is more than ten years in the past, it is important not to forget about what fuelled the 2008 financial crisis. Although regulators are partially to blame for the lax regulations that allowed for the issuance of NINJA and Jumbo loans, banks largely caused the crisis through their trading, holding, and issuance of risky mortgage-backed securities and collateralized debt obligations. Through these high-risk investments, the banks were highly vulnerable to a potential drop in housing prices, which created a domino effect, ultimately leading to the financial crisis.
These are just three of the many examples of some of the terrible behaviours of the big banks, which exemplify the need to kick them to the curb and embrace a new system that truly operates in the interest of the people and not the interest of financial executives and shareholders.
What are some of the other reasons that legacy banks need to be replaced? Tweet us at @Crypto_Altruism to let us know what you think, we’d love to hear from you!
