By Frank Nuessle
“BE afraid’ was the lead-in to a New York Times column recently by investigative reporter, Gretchen Morgenson, reporting on the 307 page Senate report detailing JP Morgan Chase’s $6.2 billion trading fiasco last year.
Morgenson goes on to say that Wall Street banks are still very dangerous because they are too big to fail and also too big to regulate.
In light of this damning evidence, don’t you think it’s time for states, cities and counties to take control of their financial assets and remove those assets from Wall Street control?
It is clear to many Americans, including those committed to the Transition Town movement, that there is a major change happening in the American economy and that our nationally elected officials in Washington DC either can’t or won’t take action to correct our severe economic imbalances.
Recent research from the John J. Heldrich Center for Workforce Development at Rutgers University found that five years after the country’s economic downturn, 60% of US residents think the nation’s economy has undergone a permanent change.
Never before have so many Americans been more frustrated with our economic system, more fearful that it is failing, or more open to fresh ideas about a new one. The seeds of a new movement demanding change are forming.
The political evolution of the United States over the last century has concentrated so many of the responsibilities of government in Washington DC that the entire American system is cracking under the strain. Everyone seems to suffer except the Washington politicians and the Wall Street Banks.
Nine Wall Street banks now hold 75 percent of all assets in the U.S. banking system, in an industry that now accounts for more than 60 percent of all U.S. domestic profits. Yet the system fails in its most important function: the effective allocation of capital and credit into the productive economy.
Federal Reserve Bank of Dallas President Richard W. Fisher has himself called for the break-up of the ‘too big to fail’ banks yet no action comes out of Washington. The Attorney General, Eric Holder, was quoted recently to say that the ‘Too big to fail’ banks are also ‘too big to prosecute’ which is perhaps why President Obama has recently appointed a Wall Street Lawyer to head up the SEC – further proof that no change will come out of Washington.
The American economy today is being run as a corporate oligarchy instead of as a critically-thinking free-enterprise democracy. An oligarchy is ‘rule by the few’, and those few are the Wall Street bankers and our national politicians on the revolving door between Wall Street and Washington.
That means that nothing is going to change unless citizens in cities and counties throughout America insist that locally elected officials take action to regain control of local financial assets, such as pension funds and rainy-day funds, along with tax receipts through the establishment of Public Banks.
Public banks, often referred to as “partnership” banks, are capitalized with public funds and assets, which are then leveraged as with any bank, to provide affordable and sustainable credit that is distributed into the productive economy in partnership with private, community banks.
A Public bank is a ‘banker’s bank’ and does not compete with your local community banks. Public Banks are run by banking professionals, paid as civil servants, receiving no mega salaries, bonuses or commissions as incentive for the kind of run-away risk that crashed Wall Street. Profits are reinvested in the loan portfolio or returned to the general fund of the jurisdictions that set them up: a source of non-tax revenue.
The opportunity is to return local communities to the American free-enterprise system of flourishing, hyper-connected, healthy local economic networks at the city, county and state level. Healthy economies require healthy local, human networks. A healthy network requires balance, balance between big and small, between resilience and efficiency, between flexibility and constraint. It is clear that networks are the essential metaphor of the new economy in the same way that mass-producing, assembly lines were the key metaphor for the industrial age.
The fact is that a truly free-enterprise economy is the most complex, chaotic and creatively dynamic system on the planet. No other economic operating system comes close to providing the shared societal benefits of a truly competitive market place.
To reenergize the American free-enterprise economy we need public banks to take back control of municipal assets, complementary exchange systems such as Time banks and local currencies along with Transition Towns throughout America creating those local bonds and connections that are the glue of high-functioning, networked economies.
It is local action and initiative that will recreate prosperity in our local communities and not action out of Washington DC. So let’s get to work locally. Together we can create flourishing, hyper-connected, healthy local economic networks and have lots of fun doing it.