Thursday, December 22, 2011
- Our own trained and trusted bank employees will manage our capital instead of gambling it in risky and convoluted Wall Street schemes that loose our money and then require us to bail them out to cover the losses of their irresponsible investments.
- If our bank employees try to imitate Wall Street banks fraudulent schemes then we shall be able to catch, fire and prosecute them earlier and as needed since they will not enjoy Washington’s political cover.
- With our capital at home we can self-finance our infrastructure and capital intensive improvements.
- Our bank management will receive reasonable public employee compensation which will save us a bundle in the outrageous salaries and bonuses that Wall Street bankers now give to themselves even after loosing record amounts.
- The savings in operating expenses will allow us to offer better rates to our local banks , who will in turn issue more loans for local projects adding liquidity and jobs to our economy.
- Any profits from operations will stay in California and be used for our common needs.
- After being established, our own bank can act as a clearing house to trade our manufacturers and merchants accounts receivable – this is being offered already in Uruguay and Brazil through the C3 platform – thus increasing the velocity of commerce now being handicapped with businesses having to offer ever longer terms in order to secure a sale.
Three months ago, while visiting an investment banker friend in NYC, he casually authorized the purchase of a $4 Million California Bond with a maturity date of 40 years and an interest rate of 7% compounded annually. My friend bought it for $240K, or 6% of the amount of the obligation. This is how much money is costing us now to get money from Wall Street because we do not have our own bank to borrow from.
Compare those outrageous costs of financing with the pitiful interest we receive from keeping our money in the big commercial banks. And then they loose it and asks us for more money so they can keep their incompetent and wasteful ways. I firmly believe that the crooks of Wall Street do not deserve a second chance, we must get what is left of our money home and keep it here.
By the way, $240K is not even enough to pay for one year salary and benefits of a newly hired police officer ordered to limit my constitutional right to peaceful address my grievances. It also means that in 2051 my children will have a $4 Million bond to pay for the repression of their father’s freedoms in 2011.
Any one studying how our debt service is growing understands clearly that the present system is unsustainable and any attempt to postpone the inevitable will make it harder later to rebuild. A Publicly Owned Bank will provide our State with a way to break out of Wall Street and Washington’s madness. There will be those that will always be tempted to invest in the derivatives casino and they should have the freedom to do that if they wish, but our state deserves the right to choose the more prudent alternative of keeping our money home, working for us.
The author, Sergio Lub, is an adviser to the Public Banking Institute – www.PublicBankingInstitute.org
Sergio has been in business since 1969 – His enterprise supplies over 500 retailers and supports about 30 families, most of them in Northern California – SergioLub.com