This time, everybody wins -- except Wall Street
By Mike Krauss
Bucks County Courier Times
With every day there comes another revelation of the extent to which the American democracy has been subverted, and the degree to which the rights, welfare and prosperity of the people have been subordinated to the wealth of the Wall Street cartel and the 1 percent.
Last week Americans learned that without the knowledge or consent of Congress or the American people, Wall Street’s acolytes at the Federal Reserve gave the cartel not billions, but trillions of no-strings-attached and virtually no cost credit, while the real economy, businesses and families were starved of that credit.
Bloomberg News put the give-away at $7.7 trillion, but other estimates are far higher. The information has been ferreted out of more than 25,000 pages of documents the Fed kept secret until forced by a law suit and one lone U.S. senator to open up.
The $7.7 trillion estimate alone is an amount equal to one half the value of EVERYTHING produced in the U.S. economy for the year — and you knew nothing about it. But you know what happened next.
Wall Street’s profits skyrocketed — at least another $16 billion on the deal — as the economy collapsed. Millions of American families and thousands of communities are broken and battered. I wish that were hyperbole, but you know it is not.
The American people need urgently to dismantle the Federal Reserve and break the power of the Wall Street cartel. Creation of public banking institutions throughout the nation is the first step.
The nation needs an adequate source of affordable credit to grow the economy and support individuals and families as they struggle to achieve some measure of prosperity and economic security. The nation and the economy need an honest and well regulated banking industry, and not the failed, arrogant, fraud-ridden, private Wall Street cartel that now steals at will from the American people.
That is the promise of a national network of independent pubic banks, and counties like Bucks and cities like Philadelphia can lead the way.
A county or city uses the public funds — tax revenue, investments, rainy day and other funds and public assets — to capitalize a bank. As with any bank, these funds and assets are leveraged to create a pool of affordable credit.
Working in partnership with community banks and credit unions which originate and service loans, that credit flows into the community for new businesses, small business expansion, economic development, home buyers and homeowners, students and job creation.
A public bank can also partner with existing municipal authorities to expand their activity and jobs creation with large scale infrastructure and redevelopment projects.
Profits of the public bank are both retained to increase the bank’s lending activity, and returned to the county’s general fund — revenue without taxes, even as increased economic activity generates more county and municipal revenue.
The common wealth is put to work for the common good.
At year end 2010, Bucks County reported $624 million in assets, annual revenue of $205 million and $132 million cash on hand — resources sufficient to generate several billion in credit for the county’s economy. The City of Philadelphia has larger assets.
The possibilities are extraordinary.
Home foreclosures are tearing apart families and communities. An industry trade group, Realty Track reports that in October, the last month for which data is available, 1 in 826 housing units in Bucks County received a foreclosure notice, adding to the thousands already foreclosed. The tidal wave rolls on.
Using the power of eminent domain, the county can seize vacant and foreclosed homes and commercial properties, which further depress property values and are becoming bases of operation for vandals, gangs and drug dealers. These properties become one more asset of the public bank.
Working with existing housing authorities, home builders and others, the acquired foreclosed properties can be maintained or improved as necessary, and programs developed to put dispossessed homeowners back in their homes with affordable mortgages where possible, or as renters on the path to home ownership.
With affordable credit, start-up and expanding small and micro-businesses can occupy now vacant commercial property. Home builders can get the credit they need to hire and buy necessary goods and services from local banks, supported by the public bank.
Only state charted banks and credit unions would be eligible for participation with the public bank. The Wall Street banks need not apply.
America urgently needs an alternative to the Wall Street — Federal Reserve monopoly on our money and credit. Public banks are that alternative, and can be an engine of locally directed economic development and jobs creation across America — no federal authority or bureaucrats involved.
Creation of a state public bank modeled on the hugely successful Bank of North Dakota is many months away. But county commissioners, city councils and county and city treasurers can act now.
In the formation of any public bank, issues of governance, mission, management, transparency, accountability and risk management must be addressed. But effective models of “best practices” exist and these are hardly insurmountable tasks.
Bucks County can harness the know-how and experience of our local governments, community bankers, business and civic leaders and lead other counties and municipalities on the way to recovering opportunity, prosperity and economic security for all the people.
With public banks, everybody wins — except Wall Street.
And that is what must finally happen.
Mike Krauss, formerly of Levittown, is a director of the Public Banking Institute and chair of The Pennsylvania Project www.papublicbankproject.org. E-mail: firstname.lastname@example.org