Jesse James, Bonnie and Clyde and John Dillinger are just a few examples of how bank robbers have been glamorized in American pop culture; but they are mere poseurs compared to the legends of larceny. It is time we recognize the true rock stars of robbery -- the banks themselves who have been on an amazing streak.
Despite the fact that their reckless speculation drove the economy to the brink of a second great depression, the banks pulled off a masterful inside job in which they scored billions in TARP funds and near-zero interest loans ostensibly for the purpose of stabilizing the financial sector so that credit would once again be available to Main Street, but which were instead lent back to the government at a higher rate or used on things such as executive bonuses or, in the case of JP Morgan, to buy luxury corporate jets and build "the premiere corporate aircraft hangar on the eastern seaboard."
What was the punishment for their bad faith? Fannie Mae and Freddie Mac rewarded Bank of America (BofA) by settling approximately $150 billion in fraud claims for pennies on the dollar.
Surely now with reports that BofA "significantly hindered" federal investigations into the use of forged documentation in foreclosure actions and its posting a $1.7 billion first quarter profit, the age of bank giveaways has ended? Guess again. Pending now before Congress is patent reform legislation which has a special provision applicable only to banks that would enable them to do an end run around the courts and not only avoid over $1 billion in damages for intentionally infringing check processing patents but transfer the bill to -- you guessed it -- Uncle Sam.
At issue is a patent held by a Texas company -- DataTreasury. The company was formed in 1998 to market its founder's check-processing invention and was soon discussing joint venture deals with major banks. Those discussions ended when the banks decided to launch their own joint venture using DataTreasury's patented technology without paying a dime, forcing DataTreasury to sue for infringement.
In 2008, after the banks were unable to invalidate the patent, they turned to Congress seeking an amendment to block the award of damages for check-imaging patents. The effort failed once the Congressional Research Service reported that there was "a high likelihood" that such a mechanism would be deemed an illegal "taking of private property" and require the government to pay over a $1 billion in compensation.
Now as DataTreasury's infringement actions are moving toward trial and the award of substantial damages, banks are asking Congress to legalize its robbery through a retroactive amendment that would allow it to stay pending litigation while it makes another attempt at invalidating the patent. If you are thinking that obviously Congress has dismissed this constitutionally suspect idea as it did three years before -- guess again. The bill passed the Senate 95-5 and was about to be railroaded through the House last week until a coalition of liberal and conservative House members from John Conyers (D-MI) to Dana Rohrabacher (R-CA) demanded a full debate on the bill (including its constitutionality).
What is troubling is trying to determine what has changed in 36 months that we are now willing to punish an inventor who harvested his creativity to develop new technology and opportunity in favor of predatory titans who excel at harvesting accountants and lawyers whose only creations are found in spreadsheets and PowerPoint slides? The banks' cause is no more just than before and, if anything, their actions during this time make them far less worthy of Congressional intervention.
What has changed is their size as they are now more powerful than they were in 2009 when Assistant Senate Majority Leader Dick Durbin complained that banks "own" Capitol Hill. While the phrase "too big to fail" is often bandied about, the operative question is whether they are too big to govern or are somehow exempt from the rule of law itself? Or even worse, who is master of whom?
You do not have to be an engineer or inventor to understand what is at stake as the House debates the America Invents Act. For ultimately this is not about business process patents, but political process beliefs. Are we still a government of the people, by the people and for the people or have the banks foreclosed on that as well?