Banker Friendly

Some of those crippled Individuals who are forced to listen to my pedantic meanderings are aware that I am deeply disappointed about the Mindset of both Treasury and Fed. There is a lamentable devotion to the protection of their own Peers, rather than any Concern about the fate of Anyone else. The Goal of the Bailout has become the protection of the Banking community from the financial crisis, rather than a protection of the Economy from the Banking crisis. Actions taken have devolved into defending Bankers from potential Risks, much more than protection of the Economy from Credit loss. The elimination of Risk for Banks may seem like fundamental underpinning for the Economy, but it is not; and actually, only allows for Banking profitability under Recessionary conditions.

Bernanke at the Fed suggested recently that the Fed should start paying Interest on Reserves Banks currently are mandated to maintain in order to lend. Does this sound like a good Deal on the surface? It will produce a Monetarist goal of additional deficit spending on the part of a Government entity, but there may be various avenues far better suited to arrange such deficit spending–like Welfare to Someone other than rich Bankers. A couple of Economists could possibly agree with Me that such a Practice could lead Bankers to park more funds with the Fed as Reserves, and actually lend less to an Economy needing the Cash. I will grant Equal Time to Alternate Opinion (my own) and suggest that there be a 0.1% per month federal tax upon Total Deposits held by every Bank, working out to a 1.2% tax on Total Deposit holdings per year. This would incite Bankers to actually keep their Lending potential fully subscripted by carefully examined loan extension, as they would need careful supervision of their total funds dispersal to generate adequate Profits to satisfy Investors, and thereby, to keep their Jobs.

Other interesting Contemplations could be insistence that every Author of a Credit Derivative or CDO must place their Name and Position on the Instruments, just in case We want to sling Mud someday; declaring them unmarketable without such Labeling. Bankers could join the rest of Us in fear of independent Audits, and be forced to undergo a regular Independent Audit system by an outside Accounting firm. Such a Publication of personal failures could lead Investors in financial institutions to suggest an alternate search for Work for Some. An element could be mandated Statements listing Percentage success of completed loans under each Bank Officer supervision, in the yearly distributed Stockholder Prospectus. Accountability is a Concept which few Bankers have yet adjusted, but is One whose Day may have come. lgl