“I sincerely believe… that banking establishments are more dangerous than standing armies”– Thomas Jefferson
Western banks have a habit of embroiling themselves in scandals that involve large sums of money. Last week the FBI stated six global banks were involved in criminality “on a massive scale”. The banks will pay circa $5.6 billion for rigging foreign exchange markets. Announcing the settlement, the US Department of Justice said that between December 2007 and January 2013, traders at Citigroup, JPMorgan Chase, Barclays and Royal Bank of Scotland who described themselves as “The Cartel” used an exclusive chatroom and coded language to manipulate benchmark exchange rates, “in an effort to increase their profits”.
This is not the first banking scandal to come to light, since the onset of the global financial crisis in 2008. Global banks have been at the forefront of such scandals. In January 2013, the Bank of America known for corruption agreed to a settlement of more than $11 billion with US government mortgage lender for knowingly selling bad credit packages to Fannie Mae. In 2012, the EU Commission condemned Deutsche Bank, Swiss bank UBS, the Royal Bank of Scotland, and three other major banks with penalty payments totaling 1.7 billion euros for manipulating the Libor—a daily fixed reference rate for interbank transactions. Also during the same year HSBC, had to pay a record fine of $ 1.9 billion, after it was revealed that the bank had for several years laundered money for Mexican drug cartels and Iranian terrorists. These are just some of big banking scandals, and they only scratch the surface of the corruption that pervades the entire banking system.
Yet despite the glaring crimes committed by the global banks only low-level officials—known as rogue traders—are ever found guilty. Their bosses appear to be exempt from the prying eyes of the law and immune to any form of government oversight that can curtail their ability to generate obscene profits. Added to this, the global banks are beneficiaries of extraordinary financial support provided through a variety of financial instruments- such as quantitative easing, purchase of toxic assets, capital injections, low interest rates etc. – all courtesy of western governments.
The nexus between politicians and bankers is what keeps the banking system afloat to serve the interests of the super-rich. The manipulation of the banking system by bankers through dubious financial transactions legalized by government legislation enables the super-rich to make obscene profits-irrespective of whether the world economy is in depression or witnessing a boom. Earlier this year, Oxfam reported that the richest 80 individuals in the world had the same wealth as the poorest 50 percent of the entire population, some 3.5 billion people. This was an even bigger concentration at the top than a year ago, when half the world’s wealth was in the hands of 85 of the ultra-rich. Oxfam predicts by next year, that the combined wealth of the richest 1 per cent will overtake that of the other 99 per cent of people. Winnie Byanyima, Executive Director of Oxfam International, said: “Do we really want to live in a world where the one per cent own more than the rest of us combined? The scale of global inequality is quite simply staggering and despite the issues shooting up the global agenda, the gap between the richest and the rest is widening fast.”
Many thinkers foresaw this imbalance of wealth directed via the banking system to the pockets of the super-rich at the expense of the vast majority. Thomas Jefferson wrote, “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around (these banks) will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.” Overall, Americans are already bankrupt and owe a total of $58 trillion in debt. 35 years ago, that number was around $4.3 trillion. So the super-rich in America have not only concentrated the wealth in their hands but have transferred the debt burden to the average American taxpayer in the process. The same argument applies to the super rich on all the countries of the world.
So the question arises is there any mechanism that can be instituted, which not only prevents the wealth to be concentrated in the hands of a few individuals, but also distributes wealth fairly within society. Socialism does not merit a discussion as it has failed in this respect. Islam on the other hand is a proven system, which for centuries distributed wealth equitably within society and prohibited the concentration of wealth to circulate amongst a few people. The nexus of politicians, bankers and super-rich would simply not exist let alone flourish in an Islamic society. This is in response to the following verse of the Quran:
مَا أَفَاءَ اللَّهُ عَلَى رَسُولِهِ مِنْ أَهْلِ الْقُرَى فَلِلَّهِ وَلِلرَّسُولِ وَلِذِي الْقُرْبَى وَالْيَتَامَى وَالْمَسَاكِينِ وَابْنِ السَّبِيلِ كَيْ لَا يَكُونَ دُولَةً بَيْنَ الْأَغْنِيَاءِ مِنْكُمْ وَمَا آتَاكُمُ الرَّسُولُ فَخُذُوهُ وَمَا نَهَاكُمْ عَنْهُ فَانْتَهُوا وَاتَّقُوا اللَّهَ إِنَّ اللَّهَ شَدِيدُ الْعِقَابِ
“What Allah has bestowed on His Messenger (and taken away) from the people of the townships, belongs to Allah,- to His Messenger and to kindred and orphans, the needy and the wayfarer; In order that it may not (merely) make a circuit between the wealthy among you.”
(Al-Hashr: 59)
Unlike capitalism, which exploits the masses for the benefit of the super-rich, Islam guarantees that every human-being is entitled to shelter, clothing and food. Uthman bin ‘Affan reported that the Messenger of Allah ﷺ said,
«لَيْسَ لِابْنِ آدَمَ حَقٌّ فِي سِوَى هَذِهِ الْخِصَالِ بَيْتٌ يَسْكُنُهُ وَثَوْبٌ يُوَارِي عَوْرَتَهُ وَجِلْفُ الْخُبْزِ وَالْمَاءِ»
“The son of Adam has no right except to the following: a house in which he lives, a garment with which he conceals his private parts, dry bread and water.”
While Islam is a real economic alternative, the present situation faced by global capitalism – where governments constantly bail out banks and the super-rich continue to profit from everyone else’s misery – is unsustainable. At the heart of the issue are bankers and their super-rich depositors who are able to buy government legislation to protect their interests, and escape punishment from the law for their wrongdoings. Napoleon Bonaparte, once said, “When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes… Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”
Written for the Central Media Office of Hizb ut Tahrir by
Abdul Majeed Bhatti