Category Archives: Banking

Another bank bailout under cover of a virus

Insolvent Wall Street banks have been quietly bailed out again. Banks made risk-free by the government should be public utilities.

When the Dodd Frank Act was passed in 2010, President Obama triumphantly declared, “No more bailouts!” But what the act actually said was that the next time the banks failed, they would be subject to “bail ins”—the funds of their creditors, including their large depositors, would be tapped to cover their bad loans. Continue reading

Crushing the states, saving the banks: The fed’s generous new rules

Congress seems to be at war with the states. Only $150 billion of its nearly $3 trillion coronavirus relief package—a mere 5%—has been allocated to the 50 states; and they are not allowed to use it where they need it most, to plug the holes in their budgets caused by the mandatory shutdown. On April 22, Senate Majority Leader Mitch McConnell said he was opposed to additional federal aid to the states, and that his preference was to allow states to go bankrupt. Continue reading

Was the Fed just nationalized?

Did Congress just nationalize the Fed? No. But the door has been cracked open for that possibility.

Mainstream politicians have long insisted that Medicare for All, a universal basic income, student debt relief and a slew of other much-needed public programs are off the table because the federal government cannot afford them. But that was before Wall Street and the stock market were driven onto life-support by a virus. Congress has now suddenly discovered the magic money tree. It took only a few days for Congress to unanimously pass the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which will be doling out $2.2 trillion in crisis relief, most of it going to Corporate America with few strings attached. Beyond that, the Federal Reserve is making over $4 trillion available to banks, hedge funds and other financial entities of all stripes; it has dropped the fed funds rate (the rate at which banks borrow from each other) effectively to zero; and it has made $1.5 trillion available to the repo market. Continue reading

Socialism to the rescue after Fed’s bazooka fails

In what is being called the worst financial crisis since 1929, the US stock market has lost a third of its value in the space of a month, wiping out all of its gains of the last three years. When the Federal Reserve tried to ride to the rescue, it only succeeded in making matters worse. The government then pulled out all the stops. To our staunchly capitalist leaders, socialism is suddenly looking good. Continue reading

Mexico’s President AMLO shows how it’s done

While U.S. advocates and local politicians struggle to get their first public banks chartered, Mexico’s new president has begun construction on 2,700 branches of a government-owned bank to be completed in 2021, when it will be the largest bank in the country. At a press conference on Jan. 6, he said the neoliberal model had failed; private banks were not serving the poor and people outside the cities, so the government had to step in. Continue reading

Is the run on the dollar due to panic or greed?

What’s going on in the repo market? Rates on repurchase agreements (“repo”) should be around 2%, in line with the fed funds rate. But they shot up to over 5% on September 16 and got as high as 10% on September 17. Yet banks were refusing to lend to each other, evidently passing up big profits to hold onto their cash—just as they did in the housing market crash and Great Recession of 2008-09. Continue reading

‘Stunning rebuke to predatory Wall Street megabanks’ as California Gov. signs law allowing creation of public banks

‘The people of California just went up against the most powerful corporate lobby in the country—and won.’

California Gov. Gavin Newsom on Wednesday signed into law historic legislation that would allow the state’s cities and counties to establish public banks as an alternative to private financial institutions, a move advocates hailed as a “stunning rebuke to the predatory Wall Street megabanks that crashed the global economy in 2007-08.” Continue reading

The disaster of negative interest rates

President Trump wants negative interest rates, but they would be disastrous for the U.S. economy, and his objectives can be better achieved by other means. Continue reading

Desperate central bankers grab for more power

Conceding that their grip on the economy is slipping, central bankers are proposing a radical economic reset that would shift yet more power from government to themselves. Continue reading

The key to a sustainable economy is 5,000 years old

We are again reaching the point in the business cycle known as “peak debt,” when debts have compounded to the point that their cumulative total cannot be paid. Student debt, credit card debt, auto loans, business debt and sovereign debt are all higher than they have ever been. As economist Michael Hudson writes in his provocative 2018 book, “…and forgive them their debts,” debts that can’t be paid won’t be paid. The question, he says, is how they won’t be paid. Continue reading

The bankers’ ‘power revolution’: How the government got shackled by debt

The U.S. federal debt has more than doubled since the 2008 financial crisis, shooting up from $9.4 trillion in mid-2008 to over $22 trillion in April 2019. The debt is never paid off. The government just keeps paying the interest on it, and interest rates are rising. Continue reading

The next state-owned bank—California or Washington?

As public banking gains momentum across the country, policymakers in California and Washington state are vying to form the nation’s second state-owned bank, following in the footsteps of the highly successful Bank of North Dakota, founded in 1919. The race is close, with state bank bills now passing their first round of hearings in both states’ senates. Continue reading

Why is the Fed paying so much interest to banks?

When Mary Poppins was made into a movie in 1964, Mr. Banks’ advice to his son was sound. Banks were then paying more than 5% interest on deposits, enough to double young Michael’s investment every 14 years. Continue reading

Media blackout as Israel’s largest banks pay over $1 billion in fines for US tax evasion schemes

Similar revelations about other banks and offshore tax-evasion schemes—such as those contained in the Panama Papers—led to global protests and even the resignations of some world leaders.

WASHINGTON—Israel’s three largest banks—Hapoalim Bank, Leumi Bank and Mizrahi Tefahot Bank—have all been ordered to pay record fines, which collectively are set to total over $1 billion, to the U.S. government after the banks were found to have actively colluded with thousands of wealthy Americans in massive tax-evasion schemes. Continue reading

Monetary policy takes center stage: MMT, QE or public banks?

As alarm bells sound over the advancing destruction of the environment, a variety of Green New Deal proposals have appeared in the US and Europe, along with some interesting academic debates about how to fund them. Monetary policy, normally relegated to obscure academic tomes and bureaucratic meetings behind closed doors, has suddenly taken center stage. Continue reading

The financial secret behind Germany’s green energy revolution

The most profitable and efficient way for national and local governments to finance public infrastructure and development is with their own banks

The “Green New Deal” endorsed by Rep. Alexandria Ocasio-Cortez, D.-N.Y., and more than 40 other House members has been criticized as imposing a too-heavy burden on the rich and upper-middle-class taxpayers who will have to pay for it. However, taxing the rich is not what the Green New Deal resolution proposes. It says funding would come primarily from certain public agencies, including the U.S. Federal Reserve and “a new public bank or system of regional and specialized public banks.” Continue reading

This radical plan to fund the ‘Green New Deal’ just might work

With what Naomi Klein calls “galloping momentum,” the “Green New Deal” promoted by newly-elected Rep. Alexandria Ocasio-Cortez (D-NY) appears to be forging a political pathway for solving all of the ills of society and the planet in one fell swoop. It would give a House Select Committee “a mandate that connects the dots between energy, transportation, housing, as well as healthcare, living wages, a jobs guarantee” and more. But to critics even on the left it is just political theater, since “everyone knows” a program of that scope cannot be funded without a massive redistribution of wealth and slashing of other programs (notably the military), which is not politically feasible. Continue reading

Trump’s war on the Fed

October was a brutal month for the stock market. After the Fed’s eighth interest rate hike on September 26, the Dow Jones Industrial Average dropped more than 2,000 points and the NASDAQ had its worst month in nearly 10 years. Continue reading

Breaking with Wall Street: L.A. takes it to the voters

“Wall Street owns the country.” That was the opening line of a fiery speech by populist leader Mary Ellen Lease in 1890. Franklin Roosevelt said it again in a letter to Colonel House in 1933, and Sen. Dick Durbin was still saying it in 2009. “The banks—hard to believe in a time when we’re facing a banking crisis that many of the banks created—are still the most powerful lobby on Capitol Hill,” Durbin said in an interview. “And they frankly own the place.” Continue reading

Central banks have gone rogue, putting us all at risk

Central bankers are now aggressively playing the stock market. To say they are buying up the planet may be an exaggeration, but they could. They can create money at will, and they have declared their “independence” from government. They have become rogue players in a game of their own. Continue reading

How China’s mobile ecosystems are making banks obsolete

Giant Chinese tech companies have bypassed credit cards and banks to create their own low-cost digital payment systems.

The US credit card system siphons off excessive amounts of money from merchants, who must raise their prices to cover this charge. In a typical $100 credit card purchase, only $97.25 goes to the seller. The rest goes to banks and processors. But who can compete with Visa and MasterCard? Continue reading

Trump takes on the Fed

The president has criticized Federal Reserve policy for undermining his attempts to build the economy. To make the central bank serve the needs of the economy, it needs to be transformed into a public utility. Continue reading

The City of London and Grand Theft Ethiopia

For decades now, going back to when Bob Geldoff handed over millions in cash to Meles Zenawi during “We Are the World” circa 1983-4 supposedly for food aid for the victims of what was then the Great Ethiopian Famine, the City of London has been at the heart of Grand Theft Ethiopia, grand theft Africa really. Continue reading

A public bank for Los Angeles?

City council puts it to the voters

California legislators exploring the public bank option may be breaking not just from Wall Street but from the Federal Reserve. Continue reading

Blackstone, BlackRock or a public bank?

California needs over $700 billion in infrastructure during the next decade. Where will this money come from? The $1.5 trillion infrastructure initiative unveiled by President Trump in February 2018 includes only $200 billion in federal funding, and less than that after factoring in the billions in tax cuts in infrastructure-related projects. The rest is to come from cities, states, private investors and public-private partnerships (PPPs) one. And since city and state coffers are depleted, that chiefly means private investors and PPPs, which have a shady history at best. Continue reading

Fox in the hen house: Why interest rates are rising

On March 31, the Federal Reserve raised its benchmark interest rate for the sixth time in 3 years and signaled its intention to raise rates twice more in 2018, aiming for a fed funds target of 3.5% by 2020. LIBOR (the London Interbank Offered Rate) has risen even faster than the fed funds rate, up to 2.3% from just 0.3% 2–1/2 years ago. LIBOR is set in London by private agreement of the biggest banks, and the interest on $3.5 trillion globally is linked to it, including $1.2 trillion in consumer mortgages. Continue reading

The war on the post office

The US Postal Service, under attack from a manufactured crisis designed to force its privatization, needs a new source of funding to survive. Postal banking could fill that need. Continue reading

Funding infrastructure: Why China Is running circles around America

“One Belt, One Road,” China’s $1 trillion infrastructure initiative, is a massive undertaking of highways, pipelines, transmission lines, ports, power stations, fiber optics, and railroads connecting China to Central Asia, Europe and Africa. According to Dan Slane, a former advisor in President Trump’s transition team, “It is the largest infrastructure project initiated by one nation in the history of the world and is designed to enable China to become the dominant economic power in the world.” In a January 29 article, titled “Trump’s Plan a Recipe for Failure, Former Infrastructure Advisor Says,” he added, “If we don’t get our act together very soon, we should all be brushing up on our Mandarin.” Continue reading

How Uncle Sam launders marijuana money

Thirty states and the District of Columbia currently have laws broadly legalizing marijuana in some form. The herb has been shown to have significant therapeutic value for a wide range of medical conditions, including cancer, Alzheimer’s disease, multiple sclerosis, epilepsy, glaucoma, lung disease, anxiety, muscle spasms, hepatitis C, inflammatory bowel disease, and arthritis pain. Continue reading

When your bank fails, don’t walk . . . run!

So. the US economy is just fine. The post-recession 2010 Dodd-Frank legislation has cured all. Banks have lots of cash. Congress is your friend and that certain-to-pass Tax Cut and Jobs bill will finally allow you, your family and America to . . . MAGA. Continue reading

The public bank option—safer, local and half the cost

A UK study published on October 27, 2017 reported that the majority of politicians do not know where money comes from. Continue reading

Regulation is killing community banks–public banks can revive them

Crushing regulations are driving small banks to sell out to the megabanks, a consolidation process that appears to be intentional. Publicly-owned banks can help avoid that trend and keep credit flowing in local economies. Continue reading