The Federal Government used the Public’s funds to BAIL-OUT the Too Big To Fail Banks (TBTF)* from their derivatives-caused gambling crash of 2008. In only 6 years, the TBTF banks have grown by 37% using the same unrepentant, risky investments that caused that crash and subsequent bail-out in the first place. The financial consequences to the public continue to be harsh.
Dodd-Frank legislation, with the collapse of the big banks and their bail-out by public funds, promised that future TBTF bank bail-outs would be permitted “no more”. That protection ended abruptly December 2014 when Citibank provided the language adopted by Congress that once again made a TBTF bank bail-out an option.
BUT WAIT, THERE’S MORE . . . What is a BAIL-IN?
In the event of another derivatives crash, the 2005 Bankruptcy Act gave “super-priority status” in a bankruptcy to derivative investments. Who do you think helped write that legislation?
In a banking collapse, the TBTF banks do not have enough of their own collateral to pay off their bankruptcy, and neither does the Federal Deposit Insurance Corporation (FDIC). Bank accounts (yours, mine, Towns’, Cities’ and Counties’) with funds in TBTF banks have secondary status and can be seized to pay for failed derivative investments in a bankruptcy. In a big failure, there may be no funds remaining to bail-out those who are next in line. Cyprus-style confiscation of public funds is not an isolated incident.
If our public funds were held in our own Public Bank, they would not be at risk for a bail-in when the TBTF banks fail again.
We the People of Santa Fe want our public funds to be kept safer by the establishment of our own Public Bank where the funds would be invested locally and carefully. Our Public Bank could partner with local community banks and other local financial institutions to grow a sustainable, local economy, services and projects for Santa Fe.
*TBTF are global banks like Wells Fargo, Bank of America, Chase Morgan Stanley,& Citibank.
