Treasury secretary Timothy Geithner’s bank bailout proposal announced today is more similar than different to Hank Paulson’s bank bailout plan — based on the sketchy details presented. It protects banks and stockholders at the expense of taxpayers and citizens. Big bank CEO’s have convincingly demonstrated their incompetence at doing anything other than helping themselves to taxpayer bailout money. Banking corporations, on the other hand, showed their mastery of buying up other banks and shored up their bottom lines using taxpayer bailout money.
Under the new Treasury proposal banks and bank CEOs will receive more money from you and me. However the proposal “stop[s] short of ordering banks to issue new loans or requiring them to account in detail for the federal money,” as reported by the New York Times (link below).
No need to account in detail for the federal money. Are they serious? Call it Blank Check Bank Bailout II.
More people are wising up to democratize banks on economic grounds, including economist Dean Baker, co-director of the Center for Economic and Policy Research (link below). Democratizing banks can save money and address home foreclosures.
Absent from either article is the rationale to control banks on democratic grounds. Ever-growing financial institutions have corrupted politics through political campaign contributions/investments, lobbying, the writing of laws, and political implications to workers and communities of controlling credit.
We need to call on our Representatives and Senators to democratize banks.
http://www.nytimes.com/glogin?URI=http://www.nytimes.com/2009/02/11/business/economy/11bailout.html&OQ=_rQ3D1Q26refQ3Dtodayspaper&OP=1beb1d36Q2FQ3B7nQ5DQ3BQ2A-Q60oQ7B--uUQ3BUQ20Q20Q23Q3BQ20UQ3BQ27Q27Q3BQ5DzoPQ5BnooQ3BnQ60-Q5B-_IQ3BQ27Q27Q5DWPb-zuQ25Q24u_b
Bailout Plan: $2.5 Trillion and a Strong U.S. Hand
By EDMUND L. ANDREWS and STEPHEN LABATON
Published: February 11, 2009
http://www.alternet.org/workplace/126354/geithner%27s_folly%3A_the_bank_rescue_plan_is_a_disaster_in_the_making/
Geithner's Folly: The Bank Rescue Plan Is a Disaster in the Making
By Brad Reed, AlterNet. Posted February 11, 2009.
Wednesday, February 11, 2009
Tuesday, February 3, 2009
Stopping foreclosures by turning the tables on corporations
Many people subjected to home foreclosures are using a new strategy — going nowhere. They’re demanding that the original home loan contract be produced — the very note that in the frenzy to make as much money as possible by banks on home loans was often sliced, diced, repackaged and resold by one bank to another...then to another...then to another...
Toledo area Congressperson Marcy Kaptur has vocally called for staying put and demanding banks produce the original paperwork.
http://www.brasschecktv.com/page/550.html
What’s interesting about this approach is that it turns the tables at least to some degree on the corporate crowd hiding behind contract law.
It was the corporate crowd who first professed that corporations had “rights” in 1819 in Dartmouth College vs Woodward by claiming that a corporate charter was a “contract” -- making it difficult for governments to control corpses since contracts were sacred agreements between two equal parties.
Well, what happens when one party to a housing loan contract (the bank) can’t produce the original contract to the homeowner or it’s unclear who actually owns the loan? Shouldn’t the contract be null and void?
Many people believe so.
This shouldn’t be the only approach to go after financial institutions for their scandalous predatory loan practices (not to mention public officials who’ve refused to demand bailout money be used foremost to address the foreclosure crisis), but it is one approach.
Toledo area Congressperson Marcy Kaptur has vocally called for staying put and demanding banks produce the original paperwork.
http://www.brasschecktv.com/page/550.html
What’s interesting about this approach is that it turns the tables at least to some degree on the corporate crowd hiding behind contract law.
It was the corporate crowd who first professed that corporations had “rights” in 1819 in Dartmouth College vs Woodward by claiming that a corporate charter was a “contract” -- making it difficult for governments to control corpses since contracts were sacred agreements between two equal parties.
Well, what happens when one party to a housing loan contract (the bank) can’t produce the original contract to the homeowner or it’s unclear who actually owns the loan? Shouldn’t the contract be null and void?
Many people believe so.
This shouldn’t be the only approach to go after financial institutions for their scandalous predatory loan practices (not to mention public officials who’ve refused to demand bailout money be used foremost to address the foreclosure crisis), but it is one approach.
Wednesday, January 28, 2009
Democratize Banks
The Cleveland Plain Dealer in their lead January 26 editorial concluded the federal bailout of financial institutions wasn’t working. It’s main suggestion was for more transparency. This didn’t quite seem sufficient given the enormity of the problem. What follows is a response...
27. January. 2009
Letters to the Editor
Plain Dealer
Cleveland, Ohio
Editor,
The PD is correct that the Wall St. bailout isn’t working – unless you’re one of the largest US banks that’s used public tax dollars for executive golden parachutes or to purchase other banks, such as PNC’s purchase of Cleveland-based National City. This will lead to further economic concentration and threats to self-governance.
Many of the largest recipients of the blank-check taxpayer-funded bank bailout also lobbied Congress for more bailout money with virtually no strings attached. Recent financial disclosure reports document that American Express , Capital One , Goldman Sachs , KeyCorp, Morgan Stanley , PNC, and Bank of New York Mellon all lobbied the government on the bailout.
The bailout is arguably the most massive transfer of public resources to business corporations in US history since the give-away of public land to the railroad corporations in the 19th century
The prescription to the flawed bailout however, isn’t more transparency, as the PD contends. It’s more control, specifically public control.
It’s time to expand democracy to the financial sector through public take-over of corporate banks. Public control of banks could result in a moratorium on home foreclosures. Once the toxic loans are addressed, some or all banks could be returned to the private sector – as worker-owned cooperatives. There are hundreds of US worker-owned enterprises, thousands more abroad, including banks.
Cooperative banks are by their nature transparent and accountable to workers and to the public. As a result, they are unlikely to engage in the risky, bizarre, and irresponsible investments that became typical of the largest corporate banks.
It’s time to democratize banks.
Greg Coleridge
Coleridge is Economic Justice & Empowerment Program Director of the Northeast Ohio American Friends Service Committee
27. January. 2009
Letters to the Editor
Plain Dealer
Cleveland, Ohio
Editor,
The PD is correct that the Wall St. bailout isn’t working – unless you’re one of the largest US banks that’s used public tax dollars for executive golden parachutes or to purchase other banks, such as PNC’s purchase of Cleveland-based National City. This will lead to further economic concentration and threats to self-governance.
Many of the largest recipients of the blank-check taxpayer-funded bank bailout also lobbied Congress for more bailout money with virtually no strings attached. Recent financial disclosure reports document that American Express , Capital One , Goldman Sachs , KeyCorp, Morgan Stanley , PNC, and Bank of New York Mellon all lobbied the government on the bailout.
The bailout is arguably the most massive transfer of public resources to business corporations in US history since the give-away of public land to the railroad corporations in the 19th century
The prescription to the flawed bailout however, isn’t more transparency, as the PD contends. It’s more control, specifically public control.
It’s time to expand democracy to the financial sector through public take-over of corporate banks. Public control of banks could result in a moratorium on home foreclosures. Once the toxic loans are addressed, some or all banks could be returned to the private sector – as worker-owned cooperatives. There are hundreds of US worker-owned enterprises, thousands more abroad, including banks.
Cooperative banks are by their nature transparent and accountable to workers and to the public. As a result, they are unlikely to engage in the risky, bizarre, and irresponsible investments that became typical of the largest corporate banks.
It’s time to democratize banks.
Greg Coleridge
Coleridge is Economic Justice & Empowerment Program Director of the Northeast Ohio American Friends Service Committee
Monday, January 19, 2009
The Global Financial Crisis
An insightful video connecting the blank check bank bailout with corporate power, self-governance, and other issues...
http://video.google.com/videoplay?docid=-5524526231174165759&ei=3c9zSdaJDZPiqQLwjIS7BQ&q=Michel+Chossudovsky+THE+FINANCIAL+CRISIS
THE GLOBAL FINANCIAL CRISIS
The Great Depression of the 21st Century
with Michel Chossudovsky
Causes and consequences of the financial meltdown;
The speculative onslaught;
Financial fraud and the "bank bailouts";
Bankruptcy of the real economy;
Impacts on employment, wages and social services;
Towards a spiralling public debt;
The economic crisis and its relationship to the Middle East war;
The centralization of corporate power;
The concentration of wealth;
The globalization of poverty.
What are the policy alternatives
http://video.google.com/videoplay?docid=-5524526231174165759&ei=3c9zSdaJDZPiqQLwjIS7BQ&q=Michel+Chossudovsky+THE+FINANCIAL+CRISIS
THE GLOBAL FINANCIAL CRISIS
The Great Depression of the 21st Century
with Michel Chossudovsky
Causes and consequences of the financial meltdown;
The speculative onslaught;
Financial fraud and the "bank bailouts";
Bankruptcy of the real economy;
Impacts on employment, wages and social services;
Towards a spiralling public debt;
The economic crisis and its relationship to the Middle East war;
The centralization of corporate power;
The concentration of wealth;
The globalization of poverty.
What are the policy alternatives
Monday, January 12, 2009
No More Bank Bailouts
Rep. Barney Frank (D-Mass), chairperson of the House Financial Services Committee, is calling for the release of the remaining $350 billion of the $700 billion financial bailout package. Hearings in the House are scheduled for tomorrow (Tuesday) with a vote as early as Wednesday.
Our message should be: NO MORE BLANK-CHECK BANK BAILOUTS
The first $350 billion was an early holiday gift for the largest banking corporations in the US. Most banks receiving the funds banked them rather than using them to help people facing foreclosures. What funds that banks did spend were used for two purposes:
1. To provide large banks resources to buy other banks, further consolidating financial wealth and power. The takeover of National City bank by PNC bank in Pittsburgh was but one example.
2. Executive pay increases. An Associated Press study found that $1.6 billion went to bailed-out bank executives in bonuses and other benefits.
The Northeast Ohio American Friends Service Committee was categorically against both versions of blank check bank bailout – its original version (which was too much for even Congress to swallow) and its revised version with a few added token conditions. Limiting executive pay was supposed to be its major addition.
Now Frank is back wanted the remaining $350 billion.
Treasury Secretary nominee Timothy F. Geithner and President-elect Barack Obama economic team are promising big changes.
They claim they want to use rescue funds to help homeowners avoid foreclosure and unclog the credit markets that finance loans to consumers, small businesses and municipalities.
Frank says he wants to restrict executive bonuses and, according to the Washington Post article, “require firms that receive federal aid to explain how they are spending the money.”
Transparency and accountability would be welcome improvements but is this all we the public should expect? Frank and his colleagues should DEMAND how public money will be spent rather than giving banks the virtual freedom once again to do what they want.
We the People may also want to advocate for these 3 items:
1. Any future financial bailouts of private companies (banks or otherwise) should include the conditions of public ownership — i.e. exchange of preferred shares of corporate stocks in exchange for public funds. Voting shares of corporate stock should be used to leverage companies to act with more transparency, to treat workers more fairly, and to create more sustainable company practices. It could also be used to extend political democracy into the economic arena by encouraging democratic workplaces, thousands of which exist throughout the world.
2. Those responsible for the banking crisis be held personally liable -- i.e. prosecution of financial institution leaders and no bonuses or golden parachutes.
3. An immediate moratorium on foreclosures and evictions of low- and moderate-income people until the economy stabilizes.
Contact your Representative and Senators right away.
--------
Making and enforcing new rules is necessary, but that will not be enough. The nation needs a new perspective on the markets, one that acknowledges the self-destructive bent of unfettered capitalism and its ability , unchecked, to wreak havoc beyond Wall Street.
- New York Times editorial, September 16, 2008
Whoever controls the volume of money in any country is absolute master of all industry and commerce.
- James A. Garfield, President of the US, from Ohio
Our message should be: NO MORE BLANK-CHECK BANK BAILOUTS
The first $350 billion was an early holiday gift for the largest banking corporations in the US. Most banks receiving the funds banked them rather than using them to help people facing foreclosures. What funds that banks did spend were used for two purposes:
1. To provide large banks resources to buy other banks, further consolidating financial wealth and power. The takeover of National City bank by PNC bank in Pittsburgh was but one example.
2. Executive pay increases. An Associated Press study found that $1.6 billion went to bailed-out bank executives in bonuses and other benefits.
The Northeast Ohio American Friends Service Committee was categorically against both versions of blank check bank bailout – its original version (which was too much for even Congress to swallow) and its revised version with a few added token conditions. Limiting executive pay was supposed to be its major addition.
Now Frank is back wanted the remaining $350 billion.
Treasury Secretary nominee Timothy F. Geithner and President-elect Barack Obama economic team are promising big changes.
They claim they want to use rescue funds to help homeowners avoid foreclosure and unclog the credit markets that finance loans to consumers, small businesses and municipalities.
Frank says he wants to restrict executive bonuses and, according to the Washington Post article, “require firms that receive federal aid to explain how they are spending the money.”
Transparency and accountability would be welcome improvements but is this all we the public should expect? Frank and his colleagues should DEMAND how public money will be spent rather than giving banks the virtual freedom once again to do what they want.
We the People may also want to advocate for these 3 items:
1. Any future financial bailouts of private companies (banks or otherwise) should include the conditions of public ownership — i.e. exchange of preferred shares of corporate stocks in exchange for public funds. Voting shares of corporate stock should be used to leverage companies to act with more transparency, to treat workers more fairly, and to create more sustainable company practices. It could also be used to extend political democracy into the economic arena by encouraging democratic workplaces, thousands of which exist throughout the world.
2. Those responsible for the banking crisis be held personally liable -- i.e. prosecution of financial institution leaders and no bonuses or golden parachutes.
3. An immediate moratorium on foreclosures and evictions of low- and moderate-income people until the economy stabilizes.
Contact your Representative and Senators right away.
--------
Making and enforcing new rules is necessary, but that will not be enough. The nation needs a new perspective on the markets, one that acknowledges the self-destructive bent of unfettered capitalism and its ability , unchecked, to wreak havoc beyond Wall Street.
- New York Times editorial, September 16, 2008
Whoever controls the volume of money in any country is absolute master of all industry and commerce.
- James A. Garfield, President of the US, from Ohio
Friday, December 19, 2008
This is What Democracy in Ohio Looks Like
From the local to the global, the ability of people to govern themselves is under assault. Some of the major sources of this attack are:
- Business corporations looking to make huge profits by converting what once had been “public” to “private” (“privatization, “ though a more descriptive term would be “corporatization”), including traditional public assets like water and sewer systems, roads, police and fire protection, and now even schools.
- Individuals looking to increase their power, status, and/or privileges by concentrating decision-making from many hands (We the People and government) to few (their own).
- A culture that reinforces notions that public policies are too complicated for ordinary people to understand (thus leaving policy making to experts); that distracts public attention away from self-determination toward the trivial and inane; that worships “the market” as the route to financial and economic salvation which is not to be regulated or controlled; that define certain arenas (economic in particular) as outside the scope of public input; that continues to erase memory of any/all historical examples of citizen control and definition of their lives; that equates anything that is “public” as being inefficient, wasteful, decrepit, and dangerous and anything “private” as efficient, modern and safe; and that keeps people separated to learn from one another and organize to (re)assert meaningful changes.
- Continual legal and constitutional definitions that further “enclose” and redefine “public” arenas as other “Ps”: “private,” “property,” “proprietary,” “privileged”—and thus beyond the reach of public planning, public shaping, and public evaluation.
- A national government that under the guise of “terrorism” has given itself permission to stifle dissent, intimidate dissenters and interrupt effort of self-determination.
But there is another side to this – a democratic/self-determination culture or “infrastructure.” In our communities and across the state exist alternatives to corporations, corporate governance and elite control.
Scores of documents, policies, institutions, structures and groups reflecting inclusiveness are in place – examples where those who are affected by decisions and policies have a legitimate role in the shaping and making of those decisions… or could if we made the effort. They are where We the People have a voice … or could have a real voice if we merely flexed our self-determination muscles.
Many of these documents, policies, institutions, structures and groups are built on the notion of the commons, broadly understood historically as any sets of resources (i.e. land, water, air) that a community recognizes as being accessible to any member of that community. Implied is that every member of the community with equal access to the commons has a voice in managing or maintaining them.
Not all of these are “governmental,” some are grassroots created and maintained alternative initiatives bypassing corporate and/or top down government versions of the same function. In the midst of dysfunctional, nonfunctional, undemocratic and/or corrupt state or corporate structures, these alternative grassroots initiatives represent “parallel” institutions that currently coexist with state or corporate power but could over time assume greater legitimacy, if not substitution, if they are more effective in fulfilling the needs of people and communities.
All together, this is what democracy in Ohio looks like!
Some of these are unique to Ohio, most are not. They are meant to inform and/or remind us what we may too often take for granted – that documents, policies, institutions structures and groups exist that are, once were, or for the very first time can become democratic/self-determining. When we fail to use them or be involved in them, they will wither and die. By our not being aware of them, they surely will be manipulated, eliminated or replaced by shells or shams controlled by corporations, top down government or the power elite.
The examples listed below are in no way equally “inclusive” or “democractic”—some, in fact, might quite rightly be argued to be at the moment not very inclusive or democratic at all. There are varying degrees of self-determination here, some more so on paper than in practice, some more so depending on the place, condition, and people involved. But all have democratic “openings” or possibilities. Where social change energies should be placed is a separate strategic question. They also reflect a basic human reality – institutions or structures, no matter how democratically constructed or configured, never alone ensure democratic outcomes. The commitment to and will of people in creating and nurturing authentic self-determination may be most important of all – the force needed to drive a wide and deep wedge into even the narrowest organizational democratic crack.
This directory is not meant to be useful primarily from a “consumer” perspective (i.e. in answering the questions, "Where's the nearest food coop?" or “Is there a public radio station in my town?”) but rather from a democracy/self-determination perspective. That is, it seeks to help readers value the democratic / self-determination openings which still exist or could exist with investment of activist energies. It also strives to reinforce the simultaneous need in working for social change to create or nurture alternatives while working to democratize existing laws, constitutions, policies, practices, and organizations. Finally, the goal of this directory is to stimulate awareness of and actions addressing the multiple threats to what are deemed “public” and available for common use by the constant and cancerous corporate and top-down governmental encroachment in the name of “privatization” or “corporatizaton.”
Democracy/self-determination is not just aims but processes, not just ends but also means. Listed are examples of both – documents, policies, institutions, structures or groups actually reflecting democratic/self-determining values and principles and/or calling for them, even if the callers are not themselves the perfect practitioners.
This directory in many ways reflects and speaks to the need for what is called a “Solidarity Economy” – the growing global movement of people and organizations seeking a new framework for social and economic development based on the principles of social solidarity, cooperation, egalitarianism, sustainability and economic democracy that puts people and the planet before private profits and power. A national organization working in this direction that we plan to support is the US Solidarity Economic Network, http://www.ussen.org
There is no presumption that this list is exhaustive. Huge gaps exist beyond our limited awareness. It’s an ongoing work in progress, meant and, in fact, expected to be amended by readers. Please send additions, feedback, challenges and critiques to GColeridge@afsc.org. Updates will occur regularly.
This is what democracy in Ohio looks like!
Directory at
http://www.afsc.net/PDFFiles/InfrastructureDecember08.pdf
- Business corporations looking to make huge profits by converting what once had been “public” to “private” (“privatization, “ though a more descriptive term would be “corporatization”), including traditional public assets like water and sewer systems, roads, police and fire protection, and now even schools.
- Individuals looking to increase their power, status, and/or privileges by concentrating decision-making from many hands (We the People and government) to few (their own).
- A culture that reinforces notions that public policies are too complicated for ordinary people to understand (thus leaving policy making to experts); that distracts public attention away from self-determination toward the trivial and inane; that worships “the market” as the route to financial and economic salvation which is not to be regulated or controlled; that define certain arenas (economic in particular) as outside the scope of public input; that continues to erase memory of any/all historical examples of citizen control and definition of their lives; that equates anything that is “public” as being inefficient, wasteful, decrepit, and dangerous and anything “private” as efficient, modern and safe; and that keeps people separated to learn from one another and organize to (re)assert meaningful changes.
- Continual legal and constitutional definitions that further “enclose” and redefine “public” arenas as other “Ps”: “private,” “property,” “proprietary,” “privileged”—and thus beyond the reach of public planning, public shaping, and public evaluation.
- A national government that under the guise of “terrorism” has given itself permission to stifle dissent, intimidate dissenters and interrupt effort of self-determination.
But there is another side to this – a democratic/self-determination culture or “infrastructure.” In our communities and across the state exist alternatives to corporations, corporate governance and elite control.
Scores of documents, policies, institutions, structures and groups reflecting inclusiveness are in place – examples where those who are affected by decisions and policies have a legitimate role in the shaping and making of those decisions… or could if we made the effort. They are where We the People have a voice … or could have a real voice if we merely flexed our self-determination muscles.
Many of these documents, policies, institutions, structures and groups are built on the notion of the commons, broadly understood historically as any sets of resources (i.e. land, water, air) that a community
Not all of these are “governmental,” some are grassroots created and maintained alternative initiatives bypassing corporate and/or top down government versions of the same function. In the midst of dysfunctional, nonfunctional, undemocratic and/or corrupt state or corporate structures, these alternative grassroots initiatives represent “parallel” institutions that currently coexist with state or corporate power but could over time assume greater legitimacy, if not substitution, if they are more effective in fulfilling the needs of people and communities.
All together, this is what democracy in Ohio looks like!
Some of these are unique to Ohio, most are not. They are meant to inform and/or remind us what we may too often take for granted – that documents, policies, institutions structures and groups exist that are, once were, or for the very first time can become democratic/self-determining. When we fail to use them or be involved in them, they will wither and die. By our not being aware of them, they surely will be manipulated, eliminated or replaced by shells or shams controlled by corporations, top down government or the power elite.
The examples listed below are in no way equally “inclusive” or “democractic”—some, in fact, might quite rightly be argued to be at the moment not very inclusive or democratic at all. There are varying degrees of self-determination here, some more so on paper than in practice, some more so depending on the place, condition, and people involved. But all have democratic “openings” or possibilities. Where social change energies should be placed is a separate strategic question. They also reflect a basic human reality – institutions or structures, no matter how democratically constructed or configured, never alone ensure democratic outcomes. The commitment to and will of people in creating and nurturing authentic self-determination may be most important of all – the force needed to drive a wide and deep wedge into even the narrowest organizational democratic crack.
This directory is not meant to be useful primarily from a “consumer” perspective (i.e. in answering the questions, "Where's the nearest food coop?" or “Is there a public radio station in my town?”) but rather from a democracy/self-determination perspective. That is, it seeks to help readers value the democratic / self-determination openings which still exist or could exist with investment of activist energies. It also strives to reinforce the simultaneous need in working for social change to create or nurture alternatives while working to democratize existing laws, constitutions, policies, practices, and organizations. Finally, the goal of this directory is to stimulate awareness of and actions addressing the multiple threats to what are deemed “public” and available for common use by the constant and cancerous corporate and top-down governmental encroachment in the name of “privatization” or “corporatizaton.”
Democracy/self-determination is not just aims but processes, not just ends but also means. Listed are examples of both – documents, policies, institutions, structures or groups actually reflecting democratic/self-determining values and principles and/or calling for them, even if the callers are not themselves the perfect practitioners.
This directory in many ways reflects and speaks to the need for what is called a “Solidarity Economy” – the growing global movement of people and organizations seeking a new framework for social and economic development based on the principles of social solidarity, cooperation, egalitarianism, sustainability and economic democracy that puts people and the planet before private profits and power. A national organization working in this direction that we plan to support is the US Solidarity Economic Network, http://www.ussen.org
There is no presumption that this list is exhaustive. Huge gaps exist beyond our limited awareness. It’s an ongoing work in progress, meant and, in fact, expected to be amended by readers. Please send additions, feedback, challenges and critiques to GColeridge@afsc.org. Updates will occur regularly.
This is what democracy in Ohio looks like!
Directory at
http://www.afsc.net/PDFFiles/InfrastructureDecember08.pdf
Friday, December 5, 2008
Banks Bankrupt Democracy
The billions upon billions of dollars thrown at banks and insurance companies over the last few months has been beyond comprehension. Has there ever been a time when government has been so lavishly generous to assist, if not bailout, the most economically and politically powerful sector of business corporations?
Under the guise of “too big to fail,” our tax dollars have gone to bailout “Wall Street” with few conditions. Meanwhile, our “main streets,” ”side streets,” and “backstreets” suffer and crumble from neglect.
Those who came before us who struggled for political and economic freedom would be ashamed of our lack of outrage, not to mention resistance.
Public fear and anger toward commercial banks have been a historic reality -- for good reason. Those who control money control credit. Those who control the money supply shape governments and non-financial corporations.
Denial of loans by banks to finance wars brought Kings to their knees. Supplying money to industrial corporations enabled mass production and massive profits
The early founders of Ohio and this nation understood the inherent power of financial interests. Thomas Jefferson said, “We must crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government, and bid defiance to the laws of our country.”
In an 1802 letter to his Treasury Secretary Albert Gallatin, Jefferson also reflected:
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Early Ohio governance was based on similar fears. The Ohio Legislature awarded charters, granting the privilege for corporations to exist and operate in the state, to corporations one at a time. The terms were
rigid, especially for banking corporations. In the 1808 law to incorporate the Bank of Marietta, the Ohio General Assembly established stringent defining rules, including:
- The charter was granted for only 10 years
- The maximum interest on loans was set at 6%
- All directors had to reside in the same country as
the bank
- Bank debts could not exceed 3 times the sum
value of capital stock
- Bank directors were personally liable for excessive
debt
The public through the state legislature possessed and used their authority repeatedly to establish defining rules under which banks had to operate.
Business corporations violating the terms of their charters were severely punished by having their charters repealed, effectively dissolving their enterprises with assets distributed to the community and/or among those directly harmed. Banks were frequent violators and targets.
In an act to repeal the charter of the German Bank of Wooster in Wayne County and close its doors, the Ohio legislature stated:
It shall be the duty of the court of common pleas... or any judge of the supreme court...to restrain said bank, its officers, agents and servants or assignees, from exercising any corporate rights, privileges, and franchises whatever, or from paying out, selling, transferring, or in any way disposing of, the lands, tenements, goods, chattels, rights, credits, moneys, or effects whatsoever, of said bank... and force the bank commissioners to close the bank and deliver full possession of the banking house, keys, books, papers, lands, tenements, goods, chattels, moneys, property and effects of said bank, of every kind and description whatever...
The legislature authorized that the bank commissioners,
...shall possess the powers common to sheriffs... and may break open any house, or other building, in which any property, money, books, papers, or effects of said bank may be, having first made demand of entrance into such building; and if the said bank has made any assignment or transfer of its effects, books, property, papers, etc. for the settlement or with a view to its insolence, or for the purpose of avoiding the operations of this law, the same shall be deemed and treated as absolutely void.
Violators of the terms shall be deemed guilty of a crime, and, upon conviction, thereof, shall be imprisoned in the penitentiary and kept at hard labor, not less than one, nor more than 10 years.
Ohioans through their elected state legislature took this controlling bank business seriously. The state legislature in 1816 passed the “bonus law” which extended the charters of existing banks and tax exemption in exchange for a percentage of direct public ownership.
When the federally-chartered Second National Bank called in their debts as a result of the 1819 US economic collapse, Ohio banks were unable to come up with enough gold or silver to meet their $100,000 obligation. Ohioans would suffer as most could not pay off loans at that time. In response, the state legislature passed the “crowbar law” which taxed both state branches of Second National $50,000 each and authorized the state auditor to collect. Ohio auditor, Ralph Osborn, responded by entering one of the branches, showed officials a warrant he had signed, entered the vault, scooped up notes and currency estimated at $100,000 and left.
It was not only the state legislature but the state courts who felt compelled to ensure that citizen sovereignty was protected from rising banking power. The Ohio Supreme Court concluded in four rulings in 1853, all concerning commercial banks, that a corporate charter was not a contract – a direct challenge to an 1819 US Supreme Court decision Dartmouth v Woodward. The Ohio court ruled that bank charters were at root not about individual property rights but public self-governing rights and could be fundamentally controlled.
One of the four cases was Knoup v the Piqua Bank. In its ruling, the Ohio Supreme Court stated:
…[A] banking institution is a public institution, appointed for public purposes – never legitimately created for private purposes… its operations are subject to the control of that public, who may, from time to time, as the public good may require, enlarge, restrain, limit, modify its powers and duties, and, at pleasure, dispense with its benefits.
Our government if founded upon that sublime truth, acknowledged in both our present and old constitutions, as well as in the Declaration of Independence, that all men are created free and equal, and that every exemption, immunity or privilege, is an invasion of the primordial estate, and natural rights of other citizens. Whenever, therefore, a franchise is conferred, upon a corporation, or an individual, nothing but the public good is to be considered: the private advantage which may result to the corporation or individual, is but incidental to the chief object and cannot ripen into a right of property.
…[W]hen the legislature authorizes… a bank to make currency, it grants what belongs to the public. The resumption of which privilege by the public affects no property, impairs no contract, infringes no right, but merely restores to its proper place, so much of popular sovereignty as was claimed by a grant of questionable authority, in clear derogation of common right.
Fears and anger toward economic and political power of banks were not just felt by Ohioans, but by citizens across the land. The Populist movement from the 1870’s to 1890’s focused their educational and organizational resistance to railroads and banks – believing that these corporations were impoverishing farmers and workers and destroying democracy. Their political party treatise, the Omaha Platform, stated:
We demand a national currency, safe, sound, and flexible, issued by the general government only, a full legal tender for all debts, public and private, and that without the use of banking corporations, a just, equitable, and efficient means of distribution direct to the people…
The Federal Reserve Act of 1913 only fueled the fear and anger toward banks and banking power in the minds of millions of citizens. The creation of the private grossly misnamed Federal Reserve Bank centralized currency creation and money supply in the hands of private bankers largely beyond the reach of the public. The Act established basic financial rules defined largely by the largest US banks. It created a financial cartel with all the concentration of economic wealth and political power that goes with it. Money could be created literally out of thin air on bank ledgers as loans issued to individuals, businesses, even governments.
Money is no longer backed by gold, silver or anything of real, intrinsic value or worth. In an economic crisis, whether recession or depression, more money is just added to the economy. This is inflationary.
Over the last several decades, financial institutions have rushed to the government to be bailed out. Risky investments in the 1980’s resulted in the collapse of hundreds of Savings and Loans and cost taxpayers $150 billion (some say twice this amount).
The current financial bailout of $700 billion to rescue the largest US banks in simply the latest installment of the privatizing profits and socializing losses scheme. This doesn’t include the $144 billion to bailout insurance giant AIG.
The financial sector has invested in politicians for years to ensure favorable treatment in the event of conditions like this. The financial sector was the single largest investor to George Bush’s 2004 campaign ($33.8 million) according to Open Secrets. The financial sector in 2008 was the second largest sector investor to Barack Obama’s campaign ($33.1 million) and the largest sector investor to John McCain’s campaign ($26.2 million) just to make sure all their political bases were covered.
This is probably enough to make sure no bank or financial corporation CEO is “imprisoned in the penitentiary and kept at hard labor, not less than one, nor more than 10 years” as was the case in the past to bank officials in Ohio. A little hard labor in a penitentiary, however, certainly seems more appropriate for some of these CEOs than a golden parachute.
When the government bailed out Freddie Mac and Fannie Mae, the two critically wounded government-sponsored mortgage behemoths, to the amount of $200 billion; the Treasury Department effectively took them over….again. Originally these financial entities were public.
That may be the direction to take now – not simply public investment but public control. If banks want public dollars, the public should use their financial leverage to gain public control.
A second option is creating rules that reduce bank size. If banks are too big to fail (and have too much political influence), then they’re too big to exist. Break them up. Instead, recent federal rules coupled with funds from the $700 bailout package have resulted in further bank consolidation, including the acquisition of Cleveland-based National City bank by PNC bank of Pittsburgh.
Third, consideration should be given to revoking the charter of banks that have acted recklessly through risky investments, in particular those of buying and repackaging high risk mortgages for resale as quickly as possible. A charter revocation does not automatically mean a corporation has to be abolished and jobs lost – just remade under different terms. This could include holding managers and directors personally liable for reckless actions.
A fourth option is employee control. The top-down, private corporation is not the only business model known to the human species. If we feel greater democracy is required in our political spheres, what’s wrong with it in our economic spheres?
Economic Cooperatives are enterprises where workers and/or users are also owners. Decisions are democratically made by members (defined in different ways depending on the firm). There are still managers but they are beholden not to stockholders (who have power based on a “one dollar or share, one vote” system) but to members (based on a one person, one vote system). It’s an economic system mirroring our political system.
Banking corporations that may for good reason deserve to have their charters revoked would be prime candidates to have new terms defined encouraging a cooperative business model. If you think such a notion is complete pie-in-the-sky, just consider credit unions – financial institutions that are member owned and directed.
Finally, somewhere along the way the so-called and misnamed Federal Reserve Bank must be either significantly changed or abolished. Private banking corporations should not have the power to issue national currency.
Greater public awareness, action and resistance leading to greater sovereignty of our personal and national finances and financial institutions in not only sound economics but also essential to prevent the further bankruptcy of whatever amount of democracy we have left.
Under the guise of “too big to fail,” our tax dollars have gone to bailout “Wall Street” with few conditions. Meanwhile, our “main streets,” ”side streets,” and “backstreets” suffer and crumble from neglect.
Those who came before us who struggled for political and economic freedom would be ashamed of our lack of outrage, not to mention resistance.
Public fear and anger toward commercial banks have been a historic reality -- for good reason. Those who control money control credit. Those who control the money supply shape governments and non-financial corporations.
Denial of loans by banks to finance wars brought Kings to their knees. Supplying money to industrial corporations enabled mass production and massive profits
The early founders of Ohio and this nation understood the inherent power of financial interests. Thomas Jefferson said, “We must crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government, and bid defiance to the laws of our country.”
In an 1802 letter to his Treasury Secretary Albert Gallatin, Jefferson also reflected:
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Early Ohio governance was based on similar fears. The Ohio Legislature awarded charters, granting the privilege for corporations to exist and operate in the state, to corporations one at a time. The terms were
rigid, especially for banking corporations. In the 1808 law to incorporate the Bank of Marietta, the Ohio General Assembly established stringent defining rules, including:
- The charter was granted for only 10 years
- The maximum interest on loans was set at 6%
- All directors had to reside in the same country as
the bank
- Bank debts could not exceed 3 times the sum
value of capital stock
- Bank directors were personally liable for excessive
debt
The public through the state legislature possessed and used their authority repeatedly to establish defining rules under which banks had to operate.
Business corporations violating the terms of their charters were severely punished by having their charters repealed, effectively dissolving their enterprises with assets distributed to the community and/or among those directly harmed. Banks were frequent violators and targets.
In an act to repeal the charter of the German Bank of Wooster in Wayne County and close its doors, the Ohio legislature stated:
It shall be the duty of the court of common pleas... or any judge of the supreme court...to restrain said bank, its officers, agents and servants or assignees, from exercising any corporate rights, privileges, and franchises whatever, or from paying out, selling, transferring, or in any way disposing of, the lands, tenements, goods, chattels, rights, credits, moneys, or effects whatsoever, of said bank... and force the bank commissioners to close the bank and deliver full possession of the banking house, keys, books, papers, lands, tenements, goods, chattels, moneys, property and effects of said bank, of every kind and description whatever...
The legislature authorized that the bank commissioners,
...shall possess the powers common to sheriffs... and may break open any house, or other building, in which any property, money, books, papers, or effects of said bank may be, having first made demand of entrance into such building; and if the said bank has made any assignment or transfer of its effects, books, property, papers, etc. for the settlement or with a view to its insolence, or for the purpose of avoiding the operations of this law, the same shall be deemed and treated as absolutely void.
Violators of the terms shall be deemed guilty of a crime, and, upon conviction, thereof, shall be imprisoned in the penitentiary and kept at hard labor, not less than one, nor more than 10 years.
Ohioans through their elected state legislature took this controlling bank business seriously. The state legislature in 1816 passed the “bonus law” which extended the charters of existing banks and tax exemption in exchange for a percentage of direct public ownership.
When the federally-chartered Second National Bank called in their debts as a result of the 1819 US economic collapse, Ohio banks were unable to come up with enough gold or silver to meet their $100,000 obligation. Ohioans would suffer as most could not pay off loans at that time. In response, the state legislature passed the “crowbar law” which taxed both state branches of Second National $50,000 each and authorized the state auditor to collect. Ohio auditor, Ralph Osborn, responded by entering one of the branches, showed officials a warrant he had signed, entered the vault, scooped up notes and currency estimated at $100,000 and left.
It was not only the state legislature but the state courts who felt compelled to ensure that citizen sovereignty was protected from rising banking power. The Ohio Supreme Court concluded in four rulings in 1853, all concerning commercial banks, that a corporate charter was not a contract – a direct challenge to an 1819 US Supreme Court decision Dartmouth v Woodward. The Ohio court ruled that bank charters were at root not about individual property rights but public self-governing rights and could be fundamentally controlled.
One of the four cases was Knoup v the Piqua Bank. In its ruling, the Ohio Supreme Court stated:
…[A] banking institution is a public institution, appointed for public purposes – never legitimately created for private purposes… its operations are subject to the control of that public, who may, from time to time, as the public good may require, enlarge, restrain, limit, modify its powers and duties, and, at pleasure, dispense with its benefits.
Our government if founded upon that sublime truth, acknowledged in both our present and old constitutions, as well as in the Declaration of Independence, that all men are created free and equal, and that every exemption, immunity or privilege, is an invasion of the primordial estate, and natural rights of other citizens. Whenever, therefore, a franchise is conferred, upon a corporation, or an individual, nothing but the public good is to be considered: the private advantage which may result to the corporation or individual, is but incidental to the chief object and cannot ripen into a right of property.
…[W]hen the legislature authorizes… a bank to make currency, it grants what belongs to the public. The resumption of which privilege by the public affects no property, impairs no contract, infringes no right, but merely restores to its proper place, so much of popular sovereignty as was claimed by a grant of questionable authority, in clear derogation of common right.
Fears and anger toward economic and political power of banks were not just felt by Ohioans, but by citizens across the land. The Populist movement from the 1870’s to 1890’s focused their educational and organizational resistance to railroads and banks – believing that these corporations were impoverishing farmers and workers and destroying democracy. Their political party treatise, the Omaha Platform, stated:
We demand a national currency, safe, sound, and flexible, issued by the general government only, a full legal tender for all debts, public and private, and that without the use of banking corporations, a just, equitable, and efficient means of distribution direct to the people…
The Federal Reserve Act of 1913 only fueled the fear and anger toward banks and banking power in the minds of millions of citizens. The creation of the private grossly misnamed Federal Reserve Bank centralized currency creation and money supply in the hands of private bankers largely beyond the reach of the public. The Act established basic financial rules defined largely by the largest US banks. It created a financial cartel with all the concentration of economic wealth and political power that goes with it. Money could be created literally out of thin air on bank ledgers as loans issued to individuals, businesses, even governments.
Money is no longer backed by gold, silver or anything of real, intrinsic value or worth. In an economic crisis, whether recession or depression, more money is just added to the economy. This is inflationary.
Over the last several decades, financial institutions have rushed to the government to be bailed out. Risky investments in the 1980’s resulted in the collapse of hundreds of Savings and Loans and cost taxpayers $150 billion (some say twice this amount).
The current financial bailout of $700 billion to rescue the largest US banks in simply the latest installment of the privatizing profits and socializing losses scheme. This doesn’t include the $144 billion to bailout insurance giant AIG.
The financial sector has invested in politicians for years to ensure favorable treatment in the event of conditions like this. The financial sector was the single largest investor to George Bush’s 2004 campaign ($33.8 million) according to Open Secrets. The financial sector in 2008 was the second largest sector investor to Barack Obama’s campaign ($33.1 million) and the largest sector investor to John McCain’s campaign ($26.2 million) just to make sure all their political bases were covered.
This is probably enough to make sure no bank or financial corporation CEO is “imprisoned in the penitentiary and kept at hard labor, not less than one, nor more than 10 years” as was the case in the past to bank officials in Ohio. A little hard labor in a penitentiary, however, certainly seems more appropriate for some of these CEOs than a golden parachute.
When the government bailed out Freddie Mac and Fannie Mae, the two critically wounded government-sponsored mortgage behemoths, to the amount of $200 billion; the Treasury Department effectively took them over….again. Originally these financial entities were public.
That may be the direction to take now – not simply public investment but public control. If banks want public dollars, the public should use their financial leverage to gain public control.
A second option is creating rules that reduce bank size. If banks are too big to fail (and have too much political influence), then they’re too big to exist. Break them up. Instead, recent federal rules coupled with funds from the $700 bailout package have resulted in further bank consolidation, including the acquisition of Cleveland-based National City bank by PNC bank of Pittsburgh.
Third, consideration should be given to revoking the charter of banks that have acted recklessly through risky investments, in particular those of buying and repackaging high risk mortgages for resale as quickly as possible. A charter revocation does not automatically mean a corporation has to be abolished and jobs lost – just remade under different terms. This could include holding managers and directors personally liable for reckless actions.
A fourth option is employee control. The top-down, private corporation is not the only business model known to the human species. If we feel greater democracy is required in our political spheres, what’s wrong with it in our economic spheres?
Economic Cooperatives are enterprises where workers and/or users are also owners. Decisions are democratically made by members (defined in different ways depending on the firm). There are still managers but they are beholden not to stockholders (who have power based on a “one dollar or share, one vote” system) but to members (based on a one person, one vote system). It’s an economic system mirroring our political system.
Banking corporations that may for good reason deserve to have their charters revoked would be prime candidates to have new terms defined encouraging a cooperative business model. If you think such a notion is complete pie-in-the-sky, just consider credit unions – financial institutions that are member owned and directed.
Finally, somewhere along the way the so-called and misnamed Federal Reserve Bank must be either significantly changed or abolished. Private banking corporations should not have the power to issue national currency.
Greater public awareness, action and resistance leading to greater sovereignty of our personal and national finances and financial institutions in not only sound economics but also essential to prevent the further bankruptcy of whatever amount of democracy we have left.
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