The Federal Reserve Bank's Policies of Quantitative Easing and providing banks with unlimited, unconditioned, and practically interest free funding from its Open Window Facility and favorable discount rates have failed to create jobs and revenues, and stimulate the economy in proportion to need. These programs merely further benefit the now recovered banking sector at public expense, dangerously increase the money supply and the probability of eventual inflation, fail to materially increase small and medium business and home mortgage lending; impoverish depositors, bondholders, and pensioners and reduced the urgency for federal debt reduction.
Furthermore, the financial sector is pressuring Congress to emasculate the financial reform legislation and oversight and enforcement of regulations (crony relationships with regulators and key government officials); forego prosecution of miscreants and violators; minimize penalties; and avoid the ethical responsibility for banks to lower the interest and/or principle of their subprime mortgage victims, cleverly inducing a compliant federal government to assume this responsibility. Congress and the regulators must develop the integrity, will, skill, and backbone to protect the public and the economy from these greedy, selfish special interests.
Among these measures would be to condition bank access to the Federal Reserve Open Window Facility upon: (a) reducing subprime interest rate and mortgage principles in proportion to those received from the FROWF; (b) increase home mortgage, small and medium business, and consumer lending at fair and reasonable rates based upon minimum due diligence and borrower net worth and income sufficiency; the restoration of former usury (6 percent to 7 percent) interest with caps on fees and penalties), and personal bankruptcy laws; and the requirements of simplicity, full disclosure, and transparency in all personal and business contracts.
Banks now play an outsized role in the economy at the expense of business and services. Traditionally, the primary role of banks was to provide services to business and individuals who create the jobs and revenues and expand the economy. Banks have evolved into predators. They don't create jobs other than their own staffing. Today, they use any means to syphon the money out of the economy; exploit and manipulate governments and their programs; gamble at public risk; use campaign contributions. lobbyists, and foster crony capitalism with congress, regulators and agencies to influence, control, and shape legislation for their own benefit, maximize leverage, and minimize reserves (instead of minimum reserves of 10 percent Tier #1 assets and maximum leverage of 10:1 as a crisis cushion); and develop complex exotic instruments to maximize profits, fleece society, circumvent or minimize oversight and supervision at the risk of the national and global financial systems (like derivatives). Derivatives must be controlled, limited, and regulated. Credit Default Swaps must be eliminated.
THE VOLCKER RULE MUST BE STRICTLY IMPOSED. BANKS CONSIDERED TOO BIG TO FAIL MUST BE REINED IN AND BROKEN UP. JOBS AND BUSINESS MUST RETAIN PRIORITY OVERE THE FINANCIAL SECTOR.