When I was a boy in a small New York town I knew our banker and he knew my entire family, unquestionably he made a good living, but he was always there to help. When I was building my first business in Colorado my banker was Jim Asher. He was a very busy man and when I needed a start-up loan he suggested we could talk in the car during his drive over the pass to another of his banks. One condition was that I write a business plan before meeting him or the trip. We drove over the pass to Fairplay and back, but never discussed the loan. When I was getting out of the car in Breckenridge I was a bit confused, but offered him the paperwork anyway, and he said "it was for you, not me"; I got the loan. He was making a loan to a person, not a balance sheet. Some years later I was in Europe and my partner told me we had an emergency and needed some cash fast. I phoned Homer Ellis, the President of our bank in Vermont, told him our problem and asked how we could solve it. He said the money would be in the account that day and to come in and see him when I returned. They were all in business to serve the community and they knew their customers. (They all were paid back on time.)
During that time interest rates and fees were generally reasonable and banks were profitable. If you were not financially ready to make a loan, your banker helped you develop that readiness. A well known and telling expression was "If you can't trust your banker, who can you trust?"
At that time even big banks were very small by today's standards. They could not operate across State lines. Financial centers like New York City had literally dozens of banks competing for our business. Their operations were regulated and their business was limited to simple savings and checking accounts, auto and home loans, financing business transactions and the like. They ran relatively simple businesses that provided valuable services to the community and made a fair profit. Of course there were a few sharpies who were looking for a fast buck, but they were the exception and generally didn't last long.
Then came the deregulation madness of the '80's. Interstate banking became legal, big banks cannibalized little ones while merging with one another to become huge ones; all in the name of better service at lower costs. Of course the costs did not go down, instead they skyrocketed. Let's not forget the savings and loan scandal in the late 1980s that deregulation enabled. Credit card interest rates soared to such an extent that Congress tried to limit them in the early '90's, but the banks had made bad loans offshore and they claimed they needed the income from credit cards in order to offset them - Congress folded. Are the current bills designed to reign in the banks? Does "Deja Vu all over again" mean anything to you?
It amazes me that after the havoc the banking and financial sector has wrought on America and the World, that they are portraying themselves as the injured parties, and they have the unquestioning support of the majority of our Congressmen. To me it looks like the Power Brokers have regrouped and are back on the offensive bolder than ever. Am I the only one who can see what is going on behind the scenes, or is it that I am totally deluded and misguided?
The answer lies in recognizing that banks should not be profit based:
- They are a core service that is there to facilitate commerce, not to siphon off the cream. They should be chartered and run under strict executive compensation and profitability guidelines.
- They should be firmly regulated regarding the geographical area they can operate in (no bigger than the State they reside in), the maximum compensation allowable for their management, the maximum interest rates they are allowed to charge (as a capped percentage of their average cost of borrowing), and the types of services they are allowed to offer.
- Their market share should be limited to 10% in larger markets and 50% in the smallest.
- Fees should be structured based upon the actual cost of the service offered.
Real solutions for a financial recovery which do not cost a single tax dollar.
This is a summary of our initial post, For the full content please see the same title in the March 2009 archives. Please click this link, the full article will appear at the bottom of this page!
It's simple, much if not all of what ails us economically can be solved without costing one thin dime, that is what we mean by a ZERO COST RECOVERY.
Many of today's ills have come from easily reversible causes, here are a few to start you thinking:
- The Bible condemns usury (sort of); whether or not you are religious, this make great sense.
- "A Free & Independent Press is the Cornerstone of Democracy". I don't know who first said it, but they were spot on. Today's media does not hold the rich and powerful accountable, it is owned by them; they are at the core of the problem.
- Food costs have more than doubled, yet the family farmer is struggling while large corporate farmers are getting huge subsidies. One solution would be enacting anti-trust legislation that forbids the huge conglomerates which are so dominant in critical industries from operating at more than one level in the manufacturing and distribution chain.... Grow it, process it, distribute it or retail it - choose one!
- The price of oil at the well head is dramatically different from the price we see quoted on the TV each night. The difference is created by speculators in the commodities markets (the same holds true for food and other vital commodities). Force the CFTC to re-institute the commodities speculation guideline that were in place prior to 1990.
- Big Pharma spends far more on marketing and lobbyists than on R&D, some say the figure is twice as much. How much do you think this adds to what your prescriptions cost? Lobby our legislators to allow Medicare to negotiate drug costs with their manufacturers and watch prices fall to the levels enjoyed in most other countries.
- Health care costs are skyrocketing yet Physicians pay has decreased dramatically. How much do you think the near monopolies in Health Insurance and HMO's contribute to this?
It's simple, much if not all of what ails us economically can be solved without costing one thin dime, that is what we mean by a ZERO COST RECOVERY.
Many of today's ills have come from easily reversible causes, here are a few to start you thinking:
- The Bible condemns usury (sort of); whether or not you are religious, this make great sense.
- Big Banks don't work for America or Americans (or anyone else for that matter). Consolidation was touted as a way to lower costs, provide better service and more affordable fees to customers. Can anyone show me an example where these promised economies of scale came to life? How about the lower fees and better service?
- Bigger is not better, that is why anti-trust legislation was enacted. Today's financial crisis was brought to a head by the unvarnished greed of the giant banks, financial institutions and corporations with the complicity of the majority of our legislators, it is just that simple.
- The "Free market" is not the cause of this problem, the fact that it has been castrated, prostituted and redefined by the greedy is. "Free market" does not mean a market without rules, or domination by the richest and most powerful. Without meaningful competition, free markets cannot, and do not, exist - period.
Rollback, update and aggressively enforce meaningful anti-trust & financial sector regulations and the root cause will be eliminated. How about requiring a binding contract guaranteeing that all consumer beneficial promises be a part of all mergers and acquisitions? To be effective, it should include an onerous non compliance clause!
- "A Free & Independent Press is the Cornerstone of Democracy". I don't know who first said it, but they were spot on. Today's media does not hold the rich and powerful accountable, it is owned by them; they are at the core of the problem.
- Food costs have more than doubled, yet the family farmer is struggling while large corporate farmers are getting huge subsidies. One solution would be enacting anti-trust legislation that forbids the huge conglomerates which are so dominant in critical industries from operating at more than one level in the manufacturing and distribution chain.... Grow it, process it, distribute it or retail it - choose one!
- The price of oil at the well head is dramatically different from the price we see quoted on the TV each night. The difference is created by speculators in the commodities markets (the same holds true for food and other vital commodities). Force the CFTC to re-institute the commodities speculation guideline that were in place prior to 1990.
- Big Pharma spends far more on marketing and lobbyists than on R&D, some say the figure is twice as much. How much do you think this adds to what your prescriptions cost? Lobby our legislators to allow Medicare to negotiate drug costs with their manufacturers and watch prices fall to the levels enjoyed in most other countries.
- Health care costs are skyrocketing yet Physicians pay has decreased dramatically. How much do you think the near monopolies in Health Insurance and HMO's contribute to this?
-Corporations are NOT People. Our Founding Fathers did not think so when they formed our nation, why are we allowing it now?
Monopolies and oligopolies are the root causes of our problems. Cure these ills, and our financial woes will evaporate WITHOUT COSTING ONE DIME.
Tuesday, April 14, 2009
Hidden in the history our leaders have forgotten, the solution to the financial crisis!
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