BANKING ON FREEDOM 
Posted: Wednesday, May 16, 2012 - 08:46
The Social Security program... represents our commitment as a society to the belief that workers should not live in dread that a disability, death, or old age could leave them or their families destitute.
-President Jimmy Carter, December 20, 1977.
[This law] assures the elderly that America will always keep the promises made in troubled times a half century ago ... [The Social Security Amendments of 1983 are] a monument to the spirit of compassion and commitment that unites us as a people.
-President Ronald Reagan, April 20, 1983.
So said Presidents Carter and Regan, but that was before 1996, when Congress voted to allow federal agencies to offset portions of Social Security payments to collect debts owed to those agencies. (31 U.S.C. §...
Posted: Monday, April 23, 2012 - 08:43
The Goldman Sachs coup that failed in America has nearly succeeded in Europe - a permanent, irrevocable, unchallengeable bailout for the banks underwritten by the taxpayers.
In September 2008, Henry Paulson, former CEO of Goldman Sachs, managed to extort a $700 billion bank bailout from Congress. But to pull it off, he had to fall on his knees and threaten the collapse of the entire global financial system and the imposition of martial law; and the bailout was a one-time affair. Paulson's plea for a permanent bailout fund - the Troubled Asset Relief Program or TARP - was opposed by Congress and ultimately rejected.
By December 2011, European Central Bank President Mario Draghi, former vice president of Goldman Sachs Europe, was able to...
Posted: Wednesday, April 11, 2012 - 08:48
It is well known that Philadelphia was the birthplace of the U.S. Constitution and American democracy. Less well known is that it was also the birthplace of public banking in America. The Philadelphia Quakers originated a banking model involving government-issued money lent to farmers. The profits returned to the government and the people in a sustainable feedback loop that nourished and supported the local economy.
Both landmark events will be commemorated in upcoming gatherings in Philadelphia. On April 7th, during Occupy Philly’s celebration of its six month anniversary on the mall in front of Independence Hall, the Occupy Philly General Assembly reached consensus in support of the National Gathering Working Group proposal to hold an...
Posted: Monday, April 2, 2012 - 10:30
Canada, called the world’s most resource-rich country, is now being subjected to austerity measures like those imposed on third world countries in earlier decades. It is all done in the name of reducing a federal debt that got out of control in the 1970s, when Canada quit borrowing from its own central bank.
Last week in Ottawa, the Canadian House of Commons passed the federal government’s latest round of budget cuts and austerity measures. Highlights included chopping 19,200 public sector jobs, cutting federal programs by $5.2 billion per year, and raising the retirement age for millions of Canadians from 65 to 67. The justification for the cuts was a massive federal debt that is now over C$ 581 billion, or 84% of GDP. (Photo: Reuters)...
Posted: Thursday, March 22, 2012 - 10:31
Far from reducing risk, derivatives increase risk, often with catastrophic results. -Derivatives expert Satyajit Das, Extreme Money (2011).
The "toxic culture of greed" on Wall Street was highlighted again last week, when Greg Smith went public with his resignation from Goldman Sachs in a scathing op-ed published in The New York Times. In other recent eyebrow-raisers, LIBOR rates - the benchmark interest rates involved in interest-rate swaps - were shown to be manipulated by the banks that would have to pay up; and the objectivity of the ISDA (International Swaps and Derivatives Association) was called into question, when a 50 percent haircut for creditors was not declared a "default" requiring counterparties to pay on credit-default...
Posted: Thursday, March 8, 2012 - 11:23
Once the black sheep of high finance, government owned banks can reassure depositors about the safety of their savings and can help maintain a focus on productive investment in a world in which effective financial regulation remains more of an aspiration than a reality. - Centre for Economic Policy Research, VoxEU.org (January 2010)
Public-sector banking is a concept that is relatively unknown in the United States. Only one state - North Dakota - owns its own bank. North Dakota is also the only state to escape the credit crisis of 2008, and has sported a budget surplus every year since, but skeptics write this off to coincidence or other factors. The common perception is that government bureaucrats are bad businesspeople. To determine...
Posted: Tuesday, February 28, 2012 - 07:27
Seventeen states have now introduced bills for state-owned banks, and others are in the works. Hawaii’s innovative state bank bill addresses the foreclosure mess. County-owned banks are being proposed that would tackle the housing crisis by exercising the right of eminent domain on abandoned and foreclosed properties. Arizona has a bill that would do this for homeowners who are current in their payments but underwater, allowing them to refinance at fair market value.
The long-awaited settlement between 49 state Attorneys General and the big five robo-signing banks is proving to be a major disappointment before it has even been signed, sealed and court approved. Critics maintain that the bankers responsible for the housing crisis and the...
In an article titled “Still No End to ‘Too Big to Fail,’” William Greider wrote in The Nation on February 15th:
Financial market cynics have assumed all along that Dodd-Frank did not end "too big to fail" but instead created a charmed circle of protected banks labeled "systemically important" that will not be allowed to fail, no matter how badly they behave.
That may be, but there is one bit of bad behavior that Uncle Sam himself does not have the funds to underwrite: the $32 trillion market in credit default swaps (CDS). Thirty-two trillion dollars is more than twice the U.S. GDP and more than twice the national debt.
CDS are a form of derivative taken out by investors as insurance against default. According to the Comptroller of the...
Posted: Monday, February 6, 2012 - 11:14
A foreclosure settlement between five major banks guilty of “robo-signing” and the attorneys general of the 50 states is pending for Monday, February 6th; but it is still not clear if all the AGs will sign. California was to get over half of the $25 billion in settlement money, and California AG Kamala Harris has withstood pressure to settle.
That is good. She and the other AGs should not sign until a thorough investigation has been conducted. The evidence to date suggests that “robo-signing” was not a mere technical default or sloppy business practice but was part and parcel of a much larger fraud, the fraud that brought down the whole economy in 2008. It is not just distressed homeowners but the entire economy that has paid the price,...
Posted: Friday, January 27, 2012 - 09:35
The Wall Street Journal reported on January 19 that the Obama administration was pushing heavily to get the 50 state attorneys general to agree to a settlement with five major banks in the "robo-signing" scandal. The scandal involves employees signing names not their own, under titles they did not really have, attesting to the veracity of documents they had not really reviewed. Investigation is revealing that it did not just happen occasionally, but was an industry-wide practice, dating back to the late 1990s; and that it may have clouded the titles of millions of homes. If the settlement is agreed to, it will let Wall Street bankers off the hook for crimes that would land the rest of us in jail - fraud, forgery, securities violations and...