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TechnoratiReviving the Local Economy With Publicly Owned Banks
State and local leaders are considering creating publicly owned banks that can funnel credit to where it is needed most: directly into the local economy.
The credit crunch is getting worse on Main Street, despite a Wall Street bailout now in the trillions of dollars. The Federal Reserve's charts show that "base money" is rapidly expanding—meaning coins, paper money, and commercial banks' reserves with the central bank. But the money isn't getting where it needs to go to stimulate economic growth: into the bank accounts of American businesses and consumers. The Fed has been pumping out money to the banks, and their reserves have been growing at unprecedented rates, but the money supply in the real economy has been declining.
According to Ambrose Evans-Pritchard, writing last month in the UK Telegraph, U.S. bank credit and M3 (the broadest measure of the money supply) contracted over the summer at rates comparable to the onset of the Great Depression. In the summer quarter, U.S. bank loans fell at an annual pace of almost 14 percent. "There has been nothing like this in the USA since the 1930s," said Professor Tim Congdon of International Monetary Research. "The rapid destruction of money balances is madness."
Chartered banks are allowed to create credit on their books equal to many times their deposit base, but lately they haven't been doing it. In more normal times, one dollar in base money has been fanned by the banks into $8.50 in loans. Today, one dollar in base money produces only one dollar in loans. Although the Fed has been frantically pushing cash into the banks, it can't make them lend to consumers.
This is not because the banks are trying to be difficult. If they had prudent loans on which to turn a profit and the capital base to do it, they no doubt would. But their books have been choked with toxic assets, destroying their capital positions; and the "shadow lenders" who once took subprime loans off their books have gotten wise to the scam and gone away. Bankers who know the endangered state of their own books don't trust each other, so money is tight all around. And the Fed has already dropped interest rates as low as they can go, so it has no more leverage with which to entice borrowers.
Local Government to the Rescue?
The Fed may have played all its cards, but state and local governments still hold a few aces. Some local politicians are looking into the feasibility of opening their own publicly-owned banks, providing them with their own credit machines. A new publicly owned bank would have a clean set of books, untainted by the Wall Street addiction to gambling in complex derivatives; and its profits would go back to the local government and community, rather than being siphoned off in exorbitant salaries, bonuses, and dividends. A publicly-owned bank could funnel credit where it is needed most, directly into the local economy.
One legislator who is considering a publicly-owned bank is Bruno Barreiro, County Commissioner for Miami-Dade County in Florida. In a September 23 article titled "Capital Sources: Recession Steers Banks Away from Business as Usual", The Daily Business Review reported that Miami-Dade is planning to conduct a feasibility study proposing alternatives for becoming its own depository. Said the journal:
"Barreiro notes that throughout the year, a portion of the county's $7.5 billion operating budget is deposited with outside financial institutions in return for an interest rate. However, he feels that given the instability of many banks, the county might be better off going into such a business on its own."
Brian Bandell, writing in The South Florida Business Journal on September 11, reported that Barreiro is concerned that bank accounts are insured by the FDIC for only up to $250,000. The county often has over $50 million in a single account. If the county were to open its own depository institution, it could safeguard against these losses.
However, said Bandell, Barreiro is not proposing to allow the institution to make loans. Rather, the state's money would be invested conservatively in Treasury bonds. The problem with that approach, said Miami banking analyst Kenneth Thomas, is that it would be a challenge to get good interest rates for the county's deposits without making loans. "There's a reason most other municipalities aren't doing it," he said.
In stopping short of making loans, the county could be missing a major business opportunity. The average interest rate on U.S. government bonds is currently 3.35 percent. If the funds in Miami-Dade's operating budget were deposited in the county's own bank, the money could serve as a reserve fund to support at least nine times that sum in loans. Assuming an average interest rate of 5 percent on these loans, the county could increase its revenues by over 1,000 percent (earning 45 percent interest instead of 3.35 percent). [A fuller explanation and references are available here.]
Maximizing the Potential of a Publicly-owned Bank
Economist Farid Khavari, a Democratic candidate for governor of Florida in 2010, is proposing a Bank of the State of Florida (BSF) that would take full advantage of the potential of a bank charter. It would not only act as a depository for the state's funds but would actually make loans to Floridians at much lower interest rates than they are getting now. Among other benefits, the BSF could open up frozen credit markets, save homeowners many thousands of dollars in payments, produce major revenues for the state, and allow the state's own debts to be refinanced at much lower rates. All those benefits are possible, says Khavari, because of the "fractional reserve" banking system used by all banks when they make loans. As he explained in a July 29 article in Reuters:
"Using the fractional reserve regulations that govern all banks, we can earn billions per year for Florida's treasury, while saving thousands of dollars per year for Florida homeowners...For $100 in deposits, a bank can create $900 in new money by making loans. So, the BSF can pay 6% for CDs, and make mortgage loans at 2 percent. For $6 per year in interest paid out, the BSF can earn $18 by lending $900 at 2 percent for mortgages.
"The BSF can be started at no cost to taxpayers, and will be a permanent engine driving Florida's economy. We can refinance state and local projects at 3 percent, saving taxpayers billions and balancing state and local budgets without higher taxes."
The state would earn $15,000 per $100,000 of mortgage, at a cost of about $1,700; the homeowner would save $88,000 in interest and pay for the home 15 years sooner. "Our bank will save people about seven years of their pay over the course of 30 years, just on interest costs," Khavari said. "We should work to support ourselves and our families, not the banks...What we have now...makes everyone work for a few greedy fat cats."
Earlier Models
This sort of healthy public competition for the private banking monopoly has earlier precedents, going back to the colony of Pennsylvania in Benjamin Franklin's day. Before Pennsylvania founded its own bank, the province was having difficulty attracting settlers, because there was a shortage of money with which to conduct trade. The settlers could get credit only by borrowing from British bankers at a hefty 8% interest, and even those loans were hard to come by. The provincial government then got the bright idea of printing its own paper money and lending it to the farmers at 5% interest. When credit became cheaper and more freely available, the local economy flourished.
The only state that owns its own bank today is North Dakota. North Dakota is also one of only two states (along with Montana) on track to meet their budgets by 2010. It currently has the lowest unemployment rate in the country and the largest budget surplus it has ever had, tallying in at $1.3 billion. Why this cold and isolated farming state should be doing so well when other states are teetering on bankruptcy has been the subject of several TV commentaries, including a spoof by Conan O'Brien on NBC's Tonight Show, which attributed it to theft from tourists by local farmers. But North Dakota's real secret seems to be that it has escaped the Wall Street credit debacle. The state has generated its own credit through its own publicly-owned bank for nearly a century.
The Bank of North Dakota (BND) was founded in 1919, when a political party called the Non Partisan League succeeded in uniting farmers suffering from an earlier credit crisis. The BND's website states that the bank was originally formed to create additional competition in the credit industry, while providing a local source of capital for state investment and development. The BND avoids opposition from other banks by partnering with them in loan projects. According to the bank's website:
"The primary deposit base of the BND is the State of North Dakota. All state funds and funds of state institutions are deposited with the bank as required by law...Use of the banks' earnings are at the discretion of the state legislature. As an agent of the state it can make subsidized loans to spur development...[It] underwrites municipal bonds for all of the political units in the state, and has been one of the leading banks in the nation in the number of student loans issued. The bank also serves as the state's ‘Mini Fed'...As a result of the banks' services, it enjoys widespread support among the public and the independent banking community."
Bringing the Model Current
The private banking system is in systemic failure, and the public is waking up to the fact. We have been fleeced by Wall Street; banks are not providing loans; and our savings are no longer secure. The publicly owned Bank of North Dakota has provided an alternative model that has worked remarkably well for nearly a century.
The BND has been around for so long, however, that skeptics can write off the state's remarkable success to other factors. A modern-day public bank that quickly turned its flagging local economy around could set a precedent that was irrefutable. If Florida were to establish a successful public banking model, it could blaze a trail out of the economic wilderness for local governments everywhere.
27 Comments so far
Show AllYEAH!!
Public Option BANKING!!
EXERCISE EXEMPLARY DEBTSMANSHIP---WITHDRAW YOUR SUPPORT FOR THE GREED MONKEYS' BANKS!!
The "people" are not the government. The "people" are individuals with as much civil liberties and freedom as possible. The Federal Reserve might be private banks but it is definitely a creation of the government. In a free market it would not exist. The Federal Reserve was created by the government for the benefit of big banks. It was a partnership. It was governmentalization of the market as much as it was privatization of the government. Perhaps more so. For instance, I suggest anyone who doesn't know what a Liberty Dollar is to google "liberty dollar raids." That isn't corporations that are raiding them and taking away their rights, it's the GOVERNMENT.
Anyway, the best way to beat the corporations at their own game is to start your own banks and make your own currency, not more government banks. The state governments can still have their own regulations, their own laws, their own ways of imposing the will of those they favor on the people who don't have the power. And just like the feds are raiding the founders of Liberty Dollars you can be sure state governments will be raiding other members of the public - the true public not the government - who try to trade in a way that should be any citizen's right in a true free country.
Here is a great article from the Treehugger site, that readers of Common Dreams should like because it doesn't have a libertarian slant like a lot of Liberty Dollar news, it is about currencies in places like western Mass. and Ithaca NY that are used as an alternative to US dollars. How long until they're also raided by the government? I don't know but here's the article:
How to Print Your Own Money, Build Community & Not Get Arrested by the Feds
http://www.treehugger.com/files/2009/01/print-your-own-money-build-community.php
Surprised it took so long for folks to realise they don't need the big Wall Street banks that have completely decoupled their financial activities from supporting the real economy.
Now if a few more States start public banks you could see a real fight over State's rights.
Great article and maybe even better comments. You've made my day, folks!
these American commoners! they will never know their place until we have thoroughly destroyed their society and gotten control of them. imagine, commoners talking about economic matters.
Smedley Ambler III of Convington Mews
Were a state or community anywhere within the US to offer banking services, individuals out-of-state might also flock to a public option.
There's no good reason that publicly backed "risk" should create profits for wealthy individuals.
A particularly obvious example is student loans. If one defaults on a student loan, the government covers the loss for the bank and snags back the money in taxes. Yet the bank makes no show of initiative or expertise in making a student loan. It does not check credit, interview applicants or conduct much of any public relations, or really do anything else besides collect a fee.
It is utterly ridiculous that this money should not be cycled back into the educational system, either by directing the money to public schools, by supplying grants to incoming students, or by simply forgiving some parts of the loans to students who have, after all, put forth the labor of study.
Most people don't realize that in our current monetary system, private banks, including the Federal Reserve, create money out of thin air -- whenever anyone, including the government, takes out a loan. On the money the private banks create out of thin air, the private bankers collect interest, accumulating huge wealth for doing nothing to earn it. With this wealth, the private bankers have acquired huge power and control the media, Congress, influence the president, and influence US and world events, all for their own private benefit.
The authority to create money belongs to the people. The US Constitution places this authority in Congress. Money is the medium of exchange by which we exchange goods and services. The creation of money should be the prerogative of a sovereign government. The free market then exists within this environment of money created by the government (via public banks, for example).
By usurping the authority to create money, the private bankers effectively syphon $1+ trillion per year from the people, local, state, and federal governments, by collecting undeserved interest on money created out of thin air. Only the government should be creating money out of thin air and only the people should be benefiting from any interest or feeds on its creation. The public also should not be paying excessive interest rates that double or triple actual costs to the individual, local, state and federal governments!
To understand that something is very wrong with our current debt-based private monetary system, consider the following. Since money, in our current system, is created out of thin air whenever anyone takes out a loan, there is always more debt than money! The public is in debt to approximately $50 trillion and there is only $13-15 trillion in the money supply!
What to do?!?! Understand what is really going on! The private banksters use bank double-speak to mislead the public into what really is going on. For example, the Federal Reserve is neither "Federal" nor has "reserves."
(1) Understand what is really going on. Read "Web of Debt," by Ellen Hodgson Brown (www.webofdebt.com), "The Lost Science of Money," by Stephen Zarlenga (monetary.org), and "Fixing the System: A History of Populism, Ancient and Modern," by Adrian Kuzminski. Here's a review of "Web of Debt": http://onlinejournal.com/artman/publish/article_4427.shtml .
(2) Repeal the Federal Reserve Act of 1913. Take back the authority to create money by passing the American Monetary Act (http://www.monetary.org/amacolorpamphlet.pdf ) or a similar bill that prohibits private banks from creating money out of thin air.
In the meantime, folks are proposing the idea of public state and local banks, modeled after existing public banks, e.g., the Bank of North Dakota (which has existed for ~80 years), to benefit the people!
I highly recommend Kuzminski's book. He incorporates the views of Ellen Meiskin Woods.
Together, they make the point that democracy cannot flourish unless the people have control of publicly-generated capital.
Otherwise, our financial and economic systems will be controlled by a small group of very large banks at the top of the wealth pyramid. They will use their control not only to transfer wealth to the top but to buy the votes of our elected representatives.
As we can see in our run-away Congress that flouts the popular will at every turn because our representatives are legally bribed by their corporate campaign financiers, especially those in the financial services sector, moneyed interests will torpedo democracy in their search for unlimited profits.
Sioux Rose
ANN T: Great post. I have been reading up on this (Fed, the great masquerade) and the catalyst for doing so was generated from wisdom shared in this forum.
Ellen H Brown is one of the handful of authors today who really understand that our pernicious, parasitic banking and financial system has nearly finished killing its host - the American Middle Class. More people must become aware of the root cause of the problem, and apply the correct solutions in a hurry, or our entire civilization will crash and burn.
Dr. Brown's book, Web of Debt, and her articles on the internet are one of the few sources of real monetary and economic information voting citizens can still get. Much great info can be viewed here: http://webofdebt.wordpress.com
If we don't soon wake up in proportions sufficient to make the needed changes in our economy and monetary system we will be trying to reconstruct or rebuild the entire system from the ground up. The repairs, though drastic now, are nothing compared to the complete rebuild that will come from "tinkering with the deck chairs on the Titanic" so to speak.
This "recovery" was an illusion generated by the trillions of bailout dollars the central bankers demanded in ransom from our taxpayers. "They" are rebuilding Wall Street with your tax indebtedness - soon to be servitude. There is no real increase in production of wealth, goods, or services. There is only a temporary slowing of the losses.
Only huge numbers of real productive high-quality jobs are going to turn this catastrophe around, and I don't see that in the tea leaves.
Listen to Ellen Brown, Steven Zarlenga, Dr Michael Hudson and others calling for real changes in our financial structures. The control and regulation of money is the ultimate control over any nation. National sovereignty cannot exist without it. Democratic government cannot exist without it. Monopolistic, undemocratic control over our money is totalitarianism. We must stop this cancer now.
Jere Hough
I agree wholeheartedly.
The most important thing is to get several states to follow the example of North Dakota and, hopefully, Florida, as quickly as possible.
As soon as people learn of the difference that such banks can make in the quality of life in those states, people will start flocking to these states to take advantage of the opportunities there, and other states will emulate them.
The power of example is unlimited, provided we act quickly.
I just found the quote below on a European website. I assume it is genuine.
"The real difficulty is with the vast wealth and power in the hands of
the few and the unscrupulous who represent or control capital.
Hundreds of laws of Congress and the state legislatures are in the
interest of these men and against the interests of workingmen. These
need to be exposed and repealed. All laws on corporations, on
taxation, on trusts, wills, descent, and the like, need examination
and extensive change. This is a government of the people, by the
people, and for the people no longer. It is a government of
corporations, by corporations, and for corporations. — How is this?
~ Rutherford B. Hayes
19th President of the United States
(1822 – 1893)"
My reaction: How is it that what the 19th president of the U.S. knew is not commonly known by all Americans more than 150 years later?
BULLFEATHERS!
THE PEOPLE HAVE NO MONEY TO PURCHASE!
Peoples incomes have declined. The reasons are as follows:
Productivity increases were decoupled from wages in the 70's.
Cost of living increases were minimized by cooking the books.
Nafta exported great numbers of high paying jobs.
Imported goods were priced too high for people to afford them.
Collectively, the above items effectively cut peoples buying power to the point of great hardship that we see reflected in home foreclosures, inability to afford health insurance, and increasing joblessness.
THE PROBLEM IS LACK OF DEMAND, NOT THE SUPPLY OF CREDIT.
I want to posit a theory:
The top down economic policies of Bush and Obama are killing capitalism. Since our economic problems are primarily a lack of demand, and, since commitments of up to 24 trillion dollars have been infused at the top in banks, insurance companies, and auto companies, we have worsened the economic system by starving the bottom at the expense of the top.
As people increasingly are pushed into poverty, their attitudes toward capitalism have been changed in favor of policies of socialism. Additionally, the alternative economy is growing from the bottom up with emphasis on sustainability, cooperation as opposed to competition, and localism as opposed to national economics.
In short, our esteemed and educated leadership are killing the golden goose that they are sworn to preserve. While politicians are using Orwellian principles against the populace, Orwell has turned the tables on them.
In conclusion, a depression is eminent. Well how bout' that sports fans!
Sioux Rose
Although I hate going there, I needed a printer cartrige so went to Wallmart last night and it was positively EMPTY. I don't go often, but I have NEVER seen in like that. Its 25 cashiers were missing, only 2 lights were on (2 employees working), and maybe 8 people I noted shopping, and we're talking about 8 P.M. People are definitely cutting back on purchases. I suppose Wallmart went into the food business to make sure they'd still have basic retail sales, as most won't go without their basic foodstuffs. If the obese people in my area have to balance their grocery budgets, I hope it forces them to let go of all the empty calorie snack "foods." Maybe that would produce a net health benefit!
The very last thing WalMart, corporations, or the Government will do is put adequate amounts of money in the hands of those who need it. A battle of the corporate titans is about to begin as they battle each other for the shrinking pie. Once the winners emerge they too will face the reality of shrinking demand as the downward spiral continues. The way up is to firm up the bottom through a steeply progressive tax and a redistribution of wealth. Unfortunately they will probably wait too long to realize this and late efforts will be too late to turn the economy around. They are practicing KAPUT CAPITALISM.
Sioux Rose,
The Wal Mart at Rochester Indiana was scheduled to be replaced with a Super Wal Mart next year. There were signs in the Wal Mart parking lot advertising that the building would soon be available for lease and I asked a teller and she said the new Super Wal Mart would be built about a half a mile east of the location of the existing Wal Mart.
Yesterday I drove past the old Rochester Wal Mart and noticed that it was sporting a new paint scheme on the exterior of the building and the signs advertising that the building would soon be available for lease had disappeared. While this may not mean that the new Wal Mart has been postponed I can find nothing on Google to indicate one way or the other.
On the radio a couple of weeks earlier I heard a news item that some Wal Marts in and around Fort Wayne Indiana were going to be remodeled
From the Kendallville newspaper;
“KENDALLVILLE — Wal-Mart is planning to remodel its Kendallville, Auburn and Coldwater Road store in Fort Wayne next year.
Wal-Mart district manager John Wolf said Friday the retail giant will invest $2 million to $5 million in each store with the Auburn Wal-Mart project scheduled for April, the Coldwater Road store in July and the Kendallville Wal-Mart in August or September. The projects will take two to three months with each creating 60 to 80 temporary jobs.
Wider aisles, painting and replacing floors and light fixtures are among the planned changes and improvements. Departments will also be moved within the store and others expanded, scaled back or removed.
The stores will remain open for business throughout the remodeling, and much of the work is scheduled during overnight hours, according to Wolf.”
http://tinyurl.com/yfq9wrq
Wal Mart has been in Indiana for quite a while and I’ve never seen them do a major remodel, rather when an existing facility is showing its age or is no longer big enough to serve its customers they build a new store.
A new Super Wal Mart recently opened in Wabash Indiana that is about twice as large as the one it replaced, it has a full line supermarket, pharmacy, garden department and it has a much larger home furnishings and furniture department.
The first time I walked into the new building I thought that it was far too large for the community it serves and I have to believe that corporate headquarters can not be happy with the sales numbers this facility is producing. Like your Wal Mart there aren't nearly enough customers.
The new building does have some neat bells and whistles, as you walk through the frozen food section motion sensors turn the lights on in the freezers and turn them off when no motion is observed. On a sunny day skylights provide most of the lighting and the fluorescent lights in the store turn on and off as clouds pass in front of the sun.
Sioux Rose
MAD: They won't give their employees an extra penny an hour but they'll remodel? If that's so, there must be some tax write-off they're aiming at to balance lower revenue (depressed retail sales). That corporation is a ZERO when it comes to any aesthetic ideal, it's ONLY about the $. They're up to some trick IF they are remodeling. I can only comment on my area. Straight out of the scene from "Fried Green Tomatoes" we only have a Winn Dixie. I sometimes drive 25 miles to shop in a Publix, a far more inviting ambiance. Once I drove down to see my parents a few weeks before Thanksgiving, but for some reason they had all the Thanksgiving fixings going on as a sales event. It was GREAT! I got to taste turkey, caesar salad, wine, and even desert! That was my meal after a 6 hour drive. Their adage is, "Publix: Where Shopping is a Pleasure." In their case, it really is. They even have sushi chefs, and great tiramisu.
Where I live, I swear I'm not kidding about this... here's how I first came up against this little local Bible belt insanity. I like to make pasta on Sunday and of course, I like red wine with it. So I headed to the local Winn Dixie and was told I could NOT buy wine. At first I wondered if it was an age thing (people ID'd me not that long ago). Then I was told NO LIQUOR sales on Sunday! In some other regions of the Bible belt no alcohol is sold till 1 PM, presumably when all the would-be drunks have finished hearing the church sermons.
Can you believe one cannot buy wine in my area at all on a Sunday? I had a male friend visit from the Keys and he was so incredulous that we literally drove from town to town until it got to be about 1 PM and he could have a beer or two! Crazy doesn't begin to describe the idiocy and hypocrisy of too much of the U.S. today.
There is no carry out liquor sales anywhere in Indiana on Sunday but you can get liquor in restaurants on Sundays. It's the same with car dealerships, no automobile sales in Indiana on Sunday.
It's more profitable for the liquor stores and car dealerships if they are all closed on Sunday, they don't have to pay any labor and their gross sales are still the same as everybody shops on Saturday.
The major remodel could be a signal that they've just figured out new tricks on crushing the competition and I have a strong feeling it has to do with the Six Sigma Code.
http://en.wikipedia.org/wiki/Six_Sigma
http://www.sixsigmaiq.com/video.cfm?id=116
Keep in mind that Walmart also utilizes Business Intelligence very aggressively and there's no crime against doing it. It looks like Walmart will be a tougher fortress to conquer.
Immanent?
Wouldn't that tend to imply that it had not arrived?
The unemployment in the States is about where it was in 1930, though it is not rising as quickly. Unemployment in California is about where it was in 1931.
A rather interesting observation - one hears it repeated as though it were gospel that FDR's New Deal did not resolve the depression. That's hugely misleading, as the statistics and graphs below show clearly:
ingrimayne.com/econ/EconomicCatastrophe/GreatDepression.html
The New Deal, half-hearted as it was, turned the tide of recession rather sharply. Were Bush & 0bama & Cronies to have attempted to bail the economy out instead of just raiding the cookie jar, we could have had green public works structures and a more viable economy.
Obscurantism runs deep in economics. The guilt runs deep.
The crisis in banking isn’t the cause of our economic troubles; it’s a symptom of our economic woes.
Since 1980 the government of the United States has waged war on America’s Middle Class and blue collar workers. Labor unions have been destroyed, the manufacturing sector has been shipped overseas to low wage third world economies, NAFTA has opened America’s borders to a flood of cheap foreign manufactured goods, America’s borders have been opened to allow an influx of foreign labor, outsourcing has shipped millions of good paying jobs overseas and the burden of paying for government has been shifted away from the wealthy and onto the backs of working Americans with tax cuts for the wealthy and lowered taxes on unearned income.
There have been vast improvements in worker productivity over the last 40 years but none of these increases in productivity have gone to workers, instead these increases to the wealth of the nation have gone to profits and huge gains in CEO compensation.
Those who have benefited under the current economic shift of wealth away from America’s workers to the economic elite don’t need loans and those who do need loans don’t have enough income to freakin pay off the loan. The banksters have figured this out and extorted a twelve trillion dollar bailout from working Americans by threatening economic chaos if they were allowed to fail. Instead of them failing they have reverted to Zombie mode and frozen the flow of money which is killing the rest of the economy.
In an incredible insult to the intelligence of the average American the happy talk out of Washington D.C. that the recession is over, even though unemployment is still rising and the real economy is still contracting, is laughable, were it not for the millions of American families that will not be able to afford to heat their homes this winter.
It's going to get far worse as none of the problems I noted are being addressed by our government.
THE ELITE DECIDED THAT THE WORLD CANNOT HAVE A LONE SUPER POWER.
IN CORPORATE-RAIDER FASHION, THEY LOOTED IT OF ASSETS, SOLD OUT EARLY AND WILL LEAVE US HOLDING THE BAG. WELCOME TO FEUDAL EARTH...unless the climate gets us first.
Well said.
There actually are banks and credit unions that make money the old fashioned way.
Rather than create new banks, states could mandate that state funds be deposited/held in financial institutions that meet strict criteria.
If a bank has a history of sub-prime mortgages, derivitives
or links with corrupted money center banks and insitituions, they would not have access to state funds.
Most credit unions would meet this test. Some banks might meet this test.
It takes years to develop banking systems that could solve today's problems. We do not have the time to develop better systems. Institutions, and, more importantly, honest bankers with years of experience, are already in place.
Massachusetts tried to provide universal health care through the creation of a new system - Commonwealth Care.
Several years since inception - they are still trying to develop a meaningful program. Even with massive assistance from the state, they cannot compete with entrenched private insurers.
It would take years for a "state bank" to be developed and sustainable. We need help today.
The idea of publicly owned banks is interesting on the local level but I still think that at some point, we need to foster healthy competition with more credit unions and small banks. The thing I worry about well known publicly held banks is that any pol can step in and allow bad business leader(s) to privatize it into another "too big to fail" bank. Maybe a blend of centralization and decentralization would do.
Great idea but let's face facts Wall st. and it's army of screech monkeys in DC and every State Capitol will NEVER ever allow this to happen anymore then the Health mafia is going to allow a real reform of the present corrupt Health system. To many people are making to much to allow this to happen and these people are prepared to do whatever to whomever to maintain their ruinous hold on our collective throats.
It may be possible to reform Washington if more people would pay attention to their local and state races and try electing more pols that stand up for the people and not the corporate interests. That might tame or better yet get rid of those flying butt monkeys in Washington.