There is ample evidence that politicians who control significant sums of money or public agencies are likely to politicize these institutions in ways that promote continuing corruption and the purchase of political power.
One need only look at the spate of savings and loans started by developers under the auspices of their “favorite” politicians – and then cratered when they engaged in self-dealing and ignoring sound banking policy to do favors for their politically-connected friends. Moving money around and loaning insolvent banks enough funds to fool the auditors.
Now, we find the City of Los Angeles attempting to create a “so-called” public bank, whose first depositors may very well be people engaged in illegal activities such as the distribution of marijuana or those illegal aliens who may present false credentials to open accounts.
- How this bank would address affordable housing is problematical. Would politically-connected “bankers” ignore sound banking policies to extend “government-guaranteed” loans to those who cannot afford a car, let alone a residence?
- How this bank would address financing for municipal projects is problematical. These municipal projects are often union-bloated affairs and typically hotbeds of political corruption and special interest self-dealing.
- How this bank would address transparency is problematical. This bank would add another layer of bureaucracy and insulation from transparency requirements where malfeasance, corruption, and evildoing could be hidden behind thick and impenetrable walls.
- How this bank might need to be bailed out by taxpayers and others is problematical. One can easily imagine such a bank advancing funds to a union based on the collateral of a municipality's unfunded pension liabilities and then allowing the entire pyramid scheme to collapse at the taxpayer’s expense.
- How this bank would widen the gap between private and public enterprises is problematical; especially if special benefits will be conferred on the public entity.
- Could this bank be audited? How many people remember the fight to audit the DWP and some of those special union-controlled slush funds? I can see temporary loans being used to cover-up wrongdoing or to trick auditors into falsely declaring insolvent politically-connected agencies as healthy and solvent. What could be hidden in this bank’s charter is problematical.
LA Considers First Ever City-Owned Public Bank In US
Would a city-owned public bank address some of Los Angeles’ pressing issues — such as affordable housing, small business growth and financing for municipal projects — while also freeing the city from the influence of private banks who put shareholder interests over those of the public good?
[OCS: One might legitimately reframe the question: “…while also freeing the city from the influence of “corrupt politicians” who put “their own” interests over those of the public good? And, who defines public good when the City Council may have allegiances to “certain” constituents and not others? Specifically, those who vote or will vote for progressive socialist democrat causes and entitlements?]
That’s what L.A. City Council President Herb Wesson believes. In July, Wesson issued a challenge to the council to create the nation’s first ever city-owned bank.
A city-owned bank “may also provide the best financial solution to reducing the cost of the creation and rehabilitation of affordable and workforce housing in the City of Los Angeles, while at the same time providing low cost financial services for city residents and local governments,” Wesson said in his motion.
[OCS: Want to considerably reduce the cost of the creation and rehabilitation of affordable and workforce housing? Remove mandates requiring union wages and participations.]
Wesson isn’t alone in his thinking. In May, California Lt. Gov. Gavin Newsom on Twitter proposed a state bank that would “build our infrastructure, construct new health care facilities, provide student loans, & build 3.5 million new housing units by 2025.”
[OCS: Can the “public” withstand more dilution of taxpayers funds by running them through city, county,and state public banks – each taking a chunk to support what will eventually become a bloated union-controlled bureaucracy? One can even imagine the Santa Monica Conservancy (with their own police powers) starting their own bank to manage their holdings.]
Along with financing for local entrepreneurs and affordable housing, Wesson also argues that such a bank will allow the marijuana dispensary operators a place to access banking services. Due to the current discrepancy between federal and state laws on marijuana, many banks are wary to provide financial services to cannabis-related businesses.
[OCS: What will the city’s response be when private banks see tens of millions of dollars flowing through the public system and open their doors to the marijuana industry – siphoning off the profitable business and leaving the dregs for the city to deal with?]
“We cannot bury our heads in the sand on the issue of recreational and medical cannabis legalization. Instead we must strive to reasonably regulate the emerging industry while creating opportunities for Angelenos,” Wesson said back in July. Cannabis, which has been legal for medical purposes for more than two decades in California, will become legal for recreational use in 2018. Legalized cannabis could bring the city up to $100 million in new tax revenues per year, and the City Council is currently working on multiple motions and ordinances to create a legalized industry in the city that can be taxed and regulated.
[OCS: What better way of monitoring and taxing cash business than to demand that they bank at a city-controlled financial institution? Is this another way to collect additional “hidden taxes and fees” that will be passed along to consumers?]
Bottom line …
Corrupt politicians and their special interest friends cannot be trusted to manage the billion-dollar school system let alone a financial institution. This appears to be just another way to siphon-off funds from transactions involving massive amounts of money and to justify outrageous salaries for those who manage the bank. Anticipated to be politically-connected progressive socialist democrats.
We are so screwed.
"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius