Tired already of the federal government stuffing your tax dollars down the maw of insolvent banks "to big to fail", or slipped into the pockets of criminally rich Wall Street executives? Want some of that Uncle Sugar available to you as near as your neighborhood post office? Want to actually re-inflate our economy by boosting consumer spending (responsible for 72% of our GDP) or save your mortgage from foreclosure? Ready for some real stimulus*? It is an idea whose time has come at last, and one that
U.S. Person has suggested before. United Kingdom's business secretary (equivalent to our Secretary of Commerce) Peter Mandelson, is pushing a plan to make post office outlets into mini branch banks of a new national bank. Cherished UK post offices [photo] would be able to offer a range of services such as savings accounts, checking, personal loans, credit card accounts, small business services and financial advice. The UK post office already offers bill paying services and runs the card account that distributes benefits to pensioners. But the idea comes with a catch. It is part of a plan to privatize the Royal Mail. At least a hundred Labor MPs object to privatizing an institution most British see as working just fine, thank you very much. Nevertheless, the peoples' bank idea is striking a cord with organized labor and small business in the UK. Of course if the idea could work in England, it could work here. But if peoples' banks were suggested for the United States, the howls of "socialist" from the unreconstructed capitalist cronies in Congress would be heard from sea to shinning sea.
But the hard fact is that more mega banks will fail,
as reluctantly recognized by 44. They will fail despite massive infusion of taxpayer money, and will fail because they are mired in bad debt and excessive leveraging. The U.S. must allow these so-called "
zombie banks" to fail, not just for moral reasons--bond and share holders should bear the risk of their managers' imprudent strategies --but so the market can be cleared of their toxic assets. Consider just two examples. Bank of America's share price is plunging towards zero making it impossible to raise private capital. It has already received $45 billion in federal funds. But its exposure to risky credit default swaps is $2.5 trillion! The bank is exposed to defaults by trading partners to the tune of 177.6% of its total assets. The situation at Citicorp is even worse. Its share price is already near zero. Citicorp is exposed to 260% of the bank's total assets. Citicorp holds credit default swaps of
$3.3 trillion. Together the two banks have credit swaps more than sixty times larger than the $90 billion they have received so far from the US Treasury. Uncle Sam simply does not have enough money to bail them out without jeopardizing the US economy. New, honest banks geared to meet the needs of ordinary Americans must be created to replace the zombies before they devour the Treasury too.
Tired already of the federal government stuffing your tax dollars down the maw of insolvent banks "to big to fail", or slipped into the pockets of criminally rich Wall Street executives? Want some of that Uncle Sugar available to you as near as your neighborhood post office? Want to actually re-inflate our economy by boosting consumer spending (responsible for 72% of our GDP) or save your mortgage from foreclosure? Ready for some real stimulus*? It is an idea whose time has come at last, and one that U.S. Person has suggested before. United Kingdom's business secretary (equivalent to our Secretary of Commerce) Peter Mandelson, is pushing a plan to make post office outlets into mini branch banks of a new national bank. Cherished UK post offices [photo] would be able to offer a range of services such as savings accounts, checking, personal loans, credit card accounts, small business services and financial advice. The UK post office already offers bill paying services and runs the card account that distributes benefits to pensioners. But the idea comes with a catch. It is part of a plan to privatize the Royal Mail. At least a hundred Labor MPs object to privatizing an institution most British see as working just fine, thank you very much. Nevertheless, the peoples' bank idea is striking a cord with organized labor and small business in the UK. Of course if the idea could work in England, it could work here. But if peoples' banks were suggested for the United States, the howls of "socialist" from the unreconstructed capitalist cronies in Congress would be heard from sea to shinning sea.