Insolvent Wall Street banks have been quietly bailed out again. Banks made risk-free by the government should be public utilities.
By Ellen Brown | 18 May 2020
COMMON DREAMS — When the Dodd Frank Act was passed in 2010, President Obama triumphantly declared, “No more bailouts!” But what the Act actually said was that the next time the banks failed, they would be subject to “bail ins” — the funds of their creditors, including their large depositors, would be tapped to cover their bad loans.
When bail-ins were tried in Europe, however, the results were disastrous.
Many economists in the US and Europe argued that the next time the banks failed, they should be nationalized — taken over by the government as public utilities. But that opportunity was lost when, in September 2019 and again in March 2020, Wall Street banks were quietly bailed out from a liquidity crisis in the repo market that could otherwise have bankrupted them. There was no bail-in of private funds, no heated congressional debate, and no public vote. It was all done unilaterally by unelected bureaucrats at the Federal Reserve.
“The justification of private profit,” said President Franklin Roosevelt in a 1938 address, “is private risk.” Banking has now been made virtually risk-free, backed by the full faith and credit of the United States and its people. The American people are therefore entitled to share in the benefits and the profits. Banking needs to be made a public utility. […]