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Progressive democrats cannot be trusted with our financial institutions and solutions to a crisis of their making

Here is what the progressives never seem to tell you when writing about financial affairs and the current economic crisis …

  1. The proximate cause of the current financial crisis has basis in government policy. First, when the banking lobby convinced corrupt legislators to nullify the Glass-Steagall act which prohibited depository banks from engaging in investment banking and brokerage (securities, insurance) activities. Second, when the banking lobby convinced corrupt legislators to create the Securities Modernization Act which removed the anti-gambling “gaming: restrictions placed on derivatives by individual states. Third, the use of the quasi-governmental enterprises, Fannie Mae and Freddie Mac, as instruments of public policy and political patronage. Fourth, relaxing prudent mortgage lending guidelines for regulated financial institutions to accommodate the poor, minorities and those who could not really afford to purchase a house. And fifth, using Executive Branch regulatory agencies to ignore sound banking practices, enforce political policies rather than detect and deter obvious financial fraud. The incompetence of the regulatory agencies was so great, that Bernie Madoff was overlooked even though the SEC had received written allegations from a credible financial expert.
  2. The very people involved in creating the current economic crisis are the same ones that are managing the government’s response to the crisis they created. And, in the process, making additional millions of dollars in profit and bonuses.
  3. The Federal Reserve was employed to recapitalize technically insolvent financial institutions by implementing the very same interest rate policies as were used to re-capitalize technically insolvent financial institutions that we caught in the burst of the dot com bubble. 
  4. The spread of the financial contagion was permitted by the government’s unwillingness to regulate the ratings agencies who managed to rate dodgy paper as investment grade securities.
  5. The Dodd-Frank Wall Street Reform and Consumer Protection Act, named for two of the most corrupt democrats in the financial world, Senate Banking Committee Chairman Christophe Dodd (D-CT) and House Financial Services Committee Chairman Barney Frank, that was supposed to curb “too big to fail” financial institutions from posing a systemic risk to our economy is a failure – the TBTF banks growing even larger under the eyes of those administering Dodd-Frank.

In the final analysis, the government cannot be trusted with creating financial policies or policing the marketplace because they are fundamentally corrupt.And, it should come as no surprise that it was the democrats that created Fannie Mae and Freddie Mac, and have just created the largest financial enforcement agency in the history of the United States – the CFPB (Consumer Financial Protection Bureau), all run by progressive democrats.

And yet, we find progressives posing additional remedies to our economic woes – with most of the prescriptive attempting to complete the government’s socialist domination over the entire financial sector …

Here are a number of solution proposed by Ellen Brown, an attorney, author (Web of Debt), and president of the Public Banking Institute.

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown developed an interest in the developing world and its problems while living abroad for eleven years in Kenya, Honduras, Guatemala and Nicaragua. She returned to practicing law when she was asked to join the legal team of a popular Tijuana healer with an innovative cancer therapy, who was targeted by the chemotherapy industry in the 1990s. That experience produced her book Forbidden Medicine, which traces the suppression of natural health treatments to the same corrupting influences that have captured the money system. Brown's eleven books include the bestselling Nature's Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies. <Source>

 (1) Restore the Glass-Steagall Act separating depository banking from investment banking. Support Marcy Kaptur’s H.R. 129.

Return to Prudent Banking Act of 2013 - Amends the Federal Deposit Insurance Act (FDIA) to prohibit an insured depository institution from being an affiliate of any broker or dealer, investment adviser, investment company, or any other person or entity engaged principally in the issue, flotation, underwriting, public sale, or distribution of stocks, bonds, debentures, notes, or other securities.

Prohibits officers, directors and employees of securities firms from simultaneous service on the boards of depository institutions, except in specified circumstances.

Requires any such individual serving as an officer, director, employee, or other institution-affiliated party of any insured depository institution to terminate such service as soon as practicable after enactment of this Act. Requires an insured depository institution to wind-down in an orderly manner and terminate any affiliation prohibited by this Act.

Amends the Banking Act of 1933 (Glass-Steagall Act) to expand its prohibition against the transaction of banking activities by securities firms.

Declares that Congress ratifies the interpretation by the Supreme Court of specified statutory language in the case of Investment Company Institute v. Camp ( ICI vs. Camp) regarding permissible activities of banks and securities firms.

Declares that the reasoning of the Court in that case shall continue to apply to the limitations placed upon security affiliations under the FDIA as enacted by this Act. Prohibits a federal banking agency or federal court from issuing an interpretation regarding such security affiliations that is narrower than that of Court in ICI vs. Camp.

Makes technical and conforming changes to the Gramm-Leach-Bliley Act, the Revised Statutes of the United States, and specified federal law.

Requires the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, or another appropriate federal banking agency to report to Congress a detailed description of the basis for its decision each time it makes a determination or grants an extension concerning an affiliation between insured depository institutions and investment banks or securities firms. <Source>

While I agree with the basic sentiment of the bill, restricting depository institutions from engaging in investment banking, brokerages and other prohibited actions, this poorly-written bill would throw the financial industry and the world financial affairs into chaos while conceding enormous powers over our economy to the Executive Branch, currently presided over by a corrupt socialist ideologue with little or no knowledge of finance, commerce, banking or even job-creation.

(2) Break up the giant derivatives banks.  Support Bernie Sanders’ “too big to jail” legislation.

This is another action that would throw the giant derrivatives banks – mostly all of the major banking institutions – into chaos as they liquidated their assets at fire sale prices to foreign investors without such restrictions. But, being a practical thinking, I would assume that these banks would simply shift all of their operations off-shore and beyond the reach of American regulatory agencies. As for Bernie Sanders, the ONLY self-described democratic socialist in Congress, this is part and parcel of the international socialist agenda and the creation of an international governing agency.

(3) Alternatively, nationalize the TBTFs, as advised in the New York Times by Gar Alperovitz.  If taxpayer bailouts to save the TBTFs are unacceptable, depositor bailouts are even more unacceptable.

Nationalize – as in what socialist and communist governments do – is not the answer. The government has proven it cannot run massive departments and certainly has demonstrated it cannot run large financial institutions such as Fannie Mae, Freddie Mac, Federal Housing Authority, etc. without privatizing the profits and socializing the losses. The idea of a depositor bailout may be said to be unacceptable, but any rational person knows that it will be the consumer, the depositor, the investor and the shareholder who will ultimately pay the price – taxpayers all.

(4) Make derivatives illegal, as they were between 1936 and 1982 under the Commodities Exchange Act. They can be unwound by simply netting them out, declaring them null and void.  As noted by Paul Craig Roberts, “the only major effect of closing out or netting all the swaps (mostly over-the-counter contracts between counter-parties) would be to take $230 trillion of leveraged risk out of the financial system.”

I need to call bullshit. The idea of netting out derrivatives assumes willing participants all under the control of a single financial authority. Because many of the derrivatives were sold abroad, foreign firms are not subject to the American legal system and the entire financial community would be thrown into disarray as $16 TRILLION in derrivatives held by the 8 largest TBTF banks are netted. And what do you think will happen to all of the senior citizens invested in mutual funds, pension funds or in depositories with significant derivative exposure. Don’t tell me that this would not be a chaotic and catastrophic event. Want to see the numbers … the Mother of All Conspiracy Theories May Be True.

(5) Support the Harkin-Whitehouse bill to impose a financial transactions tax on Wall Street trading.  Among other uses, a tax on all trades might supplement the FDIC insurance fund to cover another derivatives disaster.

This is just another one of those poorly written massive tax increases where the funds will be used to bail out unfunded and underfunded pension funds disadvantaged by their speculation in derrivatives. There are loopholes aplenty and the entire bill is a socialist democrat delusion … including its support by Bernie Sanders. This is a double tax as it will ultimately be imposed by both the buyer and the seller during the purchase cycle. Notice that it exempts IPOs (Initial Public Offerings to raise funds or to allow big players to cash out) and provides tax offsets for the largest players in the social welfare arena.

Wall Street Trading and Speculators Tax Act - Amends the Internal Revenue Code to impose a .03% excise tax on the purchase of a security if: (1) such purchase occurs or is cleared on a trading facility located in the United States, or (2) the purchaser or seller is a U.S. person.

Defines "security" to include: (1) stocks, partnership interests, notes, bonds, debentures, or other evidences of indebtedness; (2) interests in a derivative financial instrument (i.e., any option, forward contract, futures contract, or any similar financial instrument) and (3) any notional principal contract.

Exempts from such tax: (1) initial issues of securities; (2) any note, bond, debenture, or other evidence of indebtedness which is traded on a trading facility located in the United States and has a fixed maturity of not more than 100 days; and (3) securities traded pursuant to certain lending arrangements. Makes such tax applicable to transactions by controlled foreign corporations and payable by its U.S. shareholders.

Allows an offset against such tax for contributions to certain tax-favored accounts, including tax-exempt retirement plans, Archer medical savings accounts, health savings accounts, and qualified tuition plans and Coverdell education savings accounts. <Source>

One look at the bill’s supporters should be enough to convince you that it is being offered in furtherance of larger government and its socialist agenda and the usual progressive sycophants … Just the line highlighted in yellow illustrates my assertion.

Among the national organizations supporting this effort are: AFL-CIO, Alliance for a Just Society, American Family Voices, American Federation of Government Employees, American Federation of State, County and Municipal Employees (AFSCME), Americans for Financial Reform, Americans for Tax Fairness, Campaign for a Fair Settlement, Campaign for America's Future, Capital Institute, Catholics United, Center for Effective Government (formerly OMB Watch), Center of Concern, Communications Workers of America, Community Action Partnership, Consumer Action, Consumers Union, CREDO, Demos, Health Care for America Now, International Brotherhood of the Teamsters, International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, UAW, Jobs with Justice, Leadership Center for the Common Good, Main Street Alliance, Maryknoll Office for Global Concerns, MoveOn, National Education Association, National Women’s Law Center, PICO National Network, Public Citizen, Responsible Wealth, SEIU, Tax Justice Network USA, The Center for Media and Democracy, The Government Accountability Project, The Institute for College Access & Success and its Project on Student Debt, The Leadership Conference on Civil and Human Rights, U.S. PIRG, United for a Fair Economy, United Steelworkers, USAction, Working America. <Source: Senator Tom Harken>

(5) Establish postal savings banks as government-guaranteed depositories for individual savings. Many countries have public savings banks, which became particularly popular after savings in private banks were wiped out in the banking crisis of the late 1990s.

Another effort to bail out unionized postal workers and to save the post office. This is an indirect method of allowing a public employees union to use your funds for their purposes. If you can’t trust the Post Office to deliver important packages, what chance do you think they should deserve your banking business? Note: the Post Office was one knowingly of the largest conduits between illegal aliens and foreign sovereign states with their money order program. Of course, you should recognize the article author’s name highlighted in yellow.

Saving the Post Office: Letter Carriers Consider Bringing Back Banking Services By Ellen Brown 

On July 27, 2012, the National Association of Letter Carriers adopted a resolution at their national convention in Minneapolis to investigate the establishment of a postal banking system. The resolution noted that expanding postal services and developing new sources of revenue are important components of any effort to save the public post office and preserve living-wage jobs; that many countries have a long and successful history of postal banking, including Germany, France, Italy, Japan and the United States itself; and that postal banks could serve the nine million people who don't have a bank account and the 21 million who use usurious check cashers, giving low-income people access to a safe banking system. "A USPS [United States Postal Service] bank would offer a 'public option' for banking," concluded the resolution, "providing basic checking and savings - and no complex financial wheeling and dealing." <Source

(6) Establish publicly-owned banks to be depositories of public monies, following the lead of North Dakota, the only state to completely escape the 2008 banking crisis. North Dakota does not keep its revenues in Wall Street banks but deposits them in the state-owned Bank of North Dakota by law.  The bank has a mandate to serve the public, and it does not gamble in derivatives. A motivated state legislature could set up a publicly-owned bank very quickly. Having its own bank would allow the state to protect both its own revenues and those of its citizens while generating the credit needed to support local business and restore prosperity to Main Street.

The idea of a publicly-owned bank controlled by a political entity is abhorrent. An institution that cannot be trusted. Imagine the opportunity for corruption with highly-paid political patronage appointees and confiscation using onerous fees. Possibly serving as a direct conduit between the tax collector and citizens. You will notice that the fund in the bank are not FDIC insured, the taxpayers guarantee the funds (with no limit), and is involved with social causes such as student loans. Notice that politicians actually run the bank, one of its kind in the United States.

The Bank of North Dakota is a state-owned and -run financial institution based in Bismarck, North Dakota. Under state law the bank is the State of North Dakota doing business as the Bank of North Dakota. The state and state agencies are required to place their funds in the bank, local governments are not required to do so. Other entities may also open accounts at the Bank; however, BND offers fewer retail services than other institutions, and has only one office, limiting its competitiveness in consumer banking.

Instead, BND has taken a role more akin to a central bank, and has many functions, such as check clearing, that might be expected from a branch office of the Federal Reserve. The bank does have an account with the Federal Reserve Bank, but deposits are not insured by the Federal Deposit Insurance Corporation, instead being guaranteed by the general fund of the state of North Dakota itself and the taxpayers of the state. BND also guarantees student loans (through its Student Loans of North Dakota division)

[T]he bank is managed by the North Dakota Industrial Commission, which is composed of the Governor, Attorney General, and the Agriculture Commissioner (formerly the Agriculture and Labor Commissioner) of North Dakota. <Source>

Bottom line …

You can’t trust the progressive democrat/socialist/communists to clean up the mess that they made … only make it worse to prepare the way for an international socialist agenda that requires control over both the means of production, available capital and labor – aka the Worker’s Paradise where everyone has no title other than comrade; and some animals are more equal than others.

-- steve

“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"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

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS