Friday, February 27, 2009

It's Time to Democratize Banks

The time has arrived for public takeover of major US banks. The corporate model of banking has led to irresponsible investments, lavish executive gains, further bank consolidations, and, in part, to home foreclosures that have ravished communities.

An increasing number of economists, including Nobel laureates Joseph Stiglitz and Paul Krugman, are calling for at least a temporary public takeover of the largest banks.

More tax dollars to bailout insolvent banks will only benefit shareholders and executives – widening the gap between the very rich and everyone else. Congress should protect taxpayers by opposing any further bailouts.

The FDIC has in the past taken over insolvent banks, wiped out debts, and placed them back on the market. The only difference now is scale.

Congress should also create financial incentives for worker ownership of banks returned to the market. Worker-owned cooperatives exist in every state and all over the world – including banks. Cooperative businesses in general are more transparent, democratic, and responsible.

Credit unions are one form of financial cooperatives. They serve their local communities, not stockholders who may live in another state or country. They are responsible to their owner-members who are also their customers. The do not engage is wild speculative investments.

The time has arrived to democratize banks.

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