Who will be the big losers in the next crash? Depositors.
Dodd-Frank prohibits taxpayer funded bailouts like that of 2008. So, in the coming crash the Wall Street banks will go under? Of course not. Instead, they will be "bailed in" by seizing depositors funds. The dry run was Cyprus.
But, you say, that's my money! No, it isn't. Legally, when you deposit money in a bank, it belongs to the bank, and what the depositor has is an IOU; which gets paid if there is any money left in a bank meltdown.
And there won't be. The reserves of the FDIC will get blown away in days, if not minutes. And the 2005 bankruptcy "reform," gives the counter parties to derivative bets "super priority" status to get paid off before "unsecured creditors."
That's you, and any local government which parks its money on Wall Street; money needed to meet payroll, for example.
This pending catastrophe is not something members of Congress, the president, or the real power in the U.S., the Federal Reserve, want to discuss.
But those responsible for public funds must pay attention to what the "invisible hand" at the Federal Reserve is doing, understand that it controls the American system of banking and finance and the U.S. economy, and that it works for the banksters on Wall Street and no one else.
The public bank option
Ellen H Brown founded and leads the American public banking movement.
In the aftermath of the Wall Street collapse and the catastrophe it let lose, she noticed that while forty-nine of the fifty states and thousands of municipal governments were drowning in red ink and deficits, one state was not: North Dakota.
She investigated and discovered that unlike the other states, the people of North Dakota owned their own central bank, a mini Federal Reserve, the Bank of North Dakota (BND), and as one North Dakota banker put it, "When the crash hit, the BND never blinked, and the credit kept flowing."
Affordable credit is the life blood of modern economies, providing families and individuals who are not wealthy the essential tool to create some wealth and prosperity, and enabling businesses to grow and create jobs.
The BND is not a commercial bank. It partners with, and does not compete with local banks, credit unions and financial institution. allowing them to make larger loans than otherwise possible, or "buying down" interest rates, making loans more affordable so that local banks can approve more loans.
This is a no branches, no tellers, no ATM, no advertising, no mega salary or mega bonus bank. Low overhead and very profitable. Last year the bank returned $94 million in profits to the state -- non tax revenue -- for a budget surplus.
The BND has a current loan portfolio of $3.2 billion at work creating jobs in a state of 670,000 people, about the population of the county where this newspaper is published. Unemployment in North Dakota is 2.6%.
The story line out of Wall Street and Washington is that the BND has nothing to do with the prosperity of that state. It's all about the shale gas boom.
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