Money revolution: making banks public and locally accountable

[eridani]

http://www.theecologist.org/blogs_and_comments/commentators/2987213/money_revolution_making_banks_public_and_locally_accountable.html

Sanders' proposals are a good start. But critics counter that breaking up the biggest banks would be costly, disruptive and destabilizing; and it would not eliminate Wall Street corruption and mismanagement.

Banks today have usurped the power to create the national money supply. As the Bank of England recently acknowledged, banks create money whenever they make loans. Banks determine who gets the money and on what terms. Reducing the biggest banks to less than $50 billion in assets (the Dodd-Frank limit for 'too big to fail') would not make them more trustworthy stewards of that power and privilege.

How can banking be made to serve the needs of the people and the economy, while preserving the more functional aspects of today's highly sophisticated global banking system? Perhaps it is time to reconsider the proposals of the early populists.

The direct approach to 'occupying' the banks is to simply step into their shoes and make them public utilities. Insolvent megabanks can be nationalized - as they were before 2008. (More on that shortly.)

Making banks public utilities can happen on a local level as well. States and cities can establish publicly-owned depository banks on the highly profitable and efficient model of the Bank of North Dakota. Public banks can partner with community banks to direct credit where it is needed locally; and they can reduce the costs of government by recycling bank profits for public use, eliminating outsized Wall Street fees and obviating the need for derivatives to mitigate risk.

At the federal level, not only can postal banks serve as safe depositories and affordable credit alternatives, but the central bank can provide a source of interest-free credit for the nation - as was done, for example, with Canada's central bank from 1939 to 1974. The US Treasury could also reclaim the power to issue, not just pocket change, but a major portion of the money supply - as was done by the American colonists