Tag Archives: Los Angeles

Fraud Ridden Banks Not California’s Only Option

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Fraud “Epic In Scale”…

Ellen Brown

Just in from www.GlobalResearch.com

Ellen Brown

Ellen Brown

“Epic in scale, unprecedented in world history.” That is how William K. Black, professor of law and economics and former bank fraud investigator, describes the frauds in which JPMorgan Chase (JPM) has now been implicated. They involve more than a dozen felonies, including bid-rigging on municipal bond debt; colluding to rig interest rates on hundreds of trillions of dollars in mortgages, derivatives and other contracts; exposing investors to excessive risk; failing to disclose known risks, including those in the Bernie Madoff scandal; and engaging in multiple forms of mortgage fraud.

So why, asks Chicago Alderwoman Leslie Hairston, are we still doing business with them? She plans to introduce a city council ordinance deleting JPM from the city’s list of designated municipal depositories. As quoted in the January 14th Chicago Sun-Times:

The bank has violated the city code by making admissions of dishonesty and deceit in the way they dealt with their investors in the mortgage securities and Bernie Madoff Ponzi scandals. . . . We use this code against city contractors and all the small companies, why wouldn’t we use this against one of the largest banks in the world?

A similar move has been recommended for the City of Los Angeles by L.A. City Councilman Gil Cedillo. But in a January 19th editorial titled “There’s No Profit in L A. Bashing JPMorgan Chase,” the L.A. Times editorial board warned against pulling the city’s money out of JPM and other mega-banks – even though the city attorney is suing them for allegedly causing an epidemic of foreclosures in minority neighborhoods.

“L.A. relies on these banks,” says The Times, “for long-term financing to build bridges and restore lakes, and for short-term financing to pay the bills.” The editorial noted that a similar proposal brought in the fall of 2011 by then-Councilman Richard Alarcon, backed by Occupy L.A., was abandoned because it would have resulted in termination fees and higher interest payments by the city.

It seems we must bow to our oppressors because we have no viable alternative – or do we? What if there is an alternative that would not only save the city money but would be a safer place to deposit its funds than in Wall Street banks?

The Tiny State That Broke Free

There is a place where they don’t bow. Where they don’t park their assets on Wall Street and play the mega-bank game, and haven’t for almost 100 years. Where they escaped the 2008 banking crisis and have no government debt, the lowest foreclosure rate in the country, the lowest default rate on credit card debt, and the lowest unemployment rate. They also have the only publicly-owned bank.

The place is North Dakota, and their state-owned Bank of North Dakota (BND) is a model for Los Angeles and other cities, counties, and states.

Like the BND, a public bank of the City of Los Angeles would not be a commercial bank and would not compete with commercial banks. In fact, it would partner with them – using its tax revenue deposits to create credit for lending programs through the magical everyday banking practice of leveraging capital.

The BND is a major money-maker for North Dakota, returning about $30 million annually in dividends to the treasury – not bad for a state with a population that is less than one-fifth that of the City of Los Angeles. Every year since the 2008 banking crisis, the BND has reported a return on investment of 17-26%.

Like the BND, a Bank of the City of Los Angeles would provide credit for city projects – to build bridges, restore lakes, and pay bills – and this credit would essentially be interest-free, since the city would own the bank and get the interest back. Eliminating interest has been shown to reduce the cost of public projects by 35% or more.

Awesome Possibilities for Los Angeles

Consider what that could mean for Los Angeles. According to the current fiscal budget, the LAX Modernization project is budgeted at $4.11 billion. That’s the sticker price. But what will it cost when you add interest on revenue bonds and other funding sources? The San Francisco-Oakland Bay Bridge earthquake retrofit boondoggle was slated to cost about $6 billion. Interest and bank fees added another $6 billion. Funding through a public bank could have saved taxpayers $6 billion, or 50%.

If Los Angeles owned its own bank, it could also avoid costly “rainy day funds,” which are held by various agencies as surplus taxes. If the city had a low-cost credit line with its own bank, these funds could be released into the general fund, generating massive amounts of new revenue for the city.

The potential for the City and County of Los Angeles can be seen by examining their respective Comprehensive Annual Financial Reports (CAFRs). According to the latest CAFRs (2012), the City of Los Angeles has “cash, pooled and other investments” of $11 billion beyond what is in its pension fund (page 85), and the County of Los Angeles has $22 billion (page 66). To put these sums in perspective, the austerity crisis declared by the State of California in 2012 was the result of a declared state budget deficit of only $16 billion.

The L.A. CAFR funds are currently drawing only minimal interest. With some modest changes in regulations, they could be returned to the general fund for use in the city’s budget, or deposited or invested in the city’s own bank, to be leveraged into credit for local purposes.

Minimizing Risk

Beyond being a money-maker, a city-owned bank can minimize the risks of interest rate manipulation, excessive fees, and dishonest dealings.

Another risk that must now be added to the list is that of confiscation in the event of a “bail in.” Public funds are secured with collateral, but they take a back seat in bankruptcy to the “super priority” of Wall Street’s own derivative claims. A major derivatives fiasco of the sort seen in 2008 could wipe out even a mega-bank’s available collateral, leaving the city with empty coffers.

The city itself could be propelled into bankruptcy by speculative derivatives dealings with Wall Street banks. The dire results can be seen in Detroit, where the emergency manager, operating on behalf of the city’s creditors, put it into bankruptcy to force payment on its debts. First in line were UBS and Bank of America, claiming speculative winnings on their interest-rate swaps, which the emergency manager paid immediately before filing for bankruptcy. Critics say the swaps were improperly entered into and were what propelled the city into bankruptcy. Their propriety is now being investigated by the bankruptcy judge.

Not Too Big to Abandon

Mega-banks might be too big to fail. According to U.S. Attorney General Eric Holder, they might even be too big to prosecute. But they are not too big to abandon as depositories for government funds.

There may indeed be no profit in bashing JPMorgan Chase, but there would be profit in pulling deposits out and putting them in Los Angeles’ own public bank. Other major cities currently exploring that possibility include San Franciscoand Philadelphia.

If North Dakota can bypass Wall Street with its own bank and declare its financial independence, so can the City of Los Angeles. And so can the County. And so can the State of California.

Ellen Brown is an attorney, chairman of the Public Banking Institute, and author of 12 books including The Public Bank Solution. She is currently running for California state treasurer on the Green Party ticket.

– See more at: http://www.globalresearch.ca/enough-is-enough-fraud-ridden-banks-are-not-californias-only-option/5366715#sthash.jLqlWRYb.dpuf

Mysterious Disappearance of Charles T. Sprading Solved

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Mysterious Disappearance of Charles T. Sprading Solved

“I am the last living person to have seen him alive in the late 1950s”

 

Charles T. Sprading was one of the greatest intellectuals of the 20th Century. He was a man who championed liberty and fought tyranny all of his life. He vanished around 1959, and many people over the years wondered what happened to him.

My dad was a great friend of Mr. Sprading. Although my father was a technical writer, he was very interested in many other subjects, one of which was rationalism, or free-thought as it is sometimes called. When I was a kid I spent most Saturdays riding around in our old car, visiting dad’s friends. Most of them were quite elderly. Two of the rationalists I remember were Sadie Cook and Charles T. Sprading. I was taught from a young age to listen, not speak. “Children should be seen and not heard,” was the refrain I remember hearing on a weekly basis. These visits to Cook, Sprading, and others opened my eyes to things in philosophy and history at a very early age. Listening to elders talk was serious in my family, so I grew up respecting the views of those who were in very advanced years.

I believe Sadie Cook was the secretary for one of the rationalist societies, and her small house was packed with papers, correspondence, books and magazines. I heard about atheism on Saturdays, then on Sunday it was off to church, for my mother’s side of the family was somewhat religious. I used to ask my dad why I had to go to church if there was no God, and he would answer that I would go to church until I was 18, and then make up my own mind about God. He never said God did not exist, I just picked up that from his discussions with Sadie Cook and others.

Mr. Sprading was a delight to visit, he was a wonderful man, an advanced age, very thin and fragile. He was living in a ramshackle garage in East Los Angeles, I believe it was behind a house on Folsom St., off Brooklyn, in the older section of the city. His living quarters were very sparse, a cot, a sink, some crates and old shelves that contained his remaining books and papers. Looking back, it is more than sad, it is a national disgrace that one of America’s finest intellectuals, a world-respected author and speaker, would end up in such poverty. During our visits, he never complained. He was always cheerful, speaking of many earth shaking historical events. His time was the time of great radicalism. His contemporaries were anarchists, rationalists, syndicalists, libertarians, the great union organizers, and especially Eamon de Valera, the great fighter for Irish Freedom. Sprading was a close associate of de Valera, and worked in the cause for Irish Freedom for many years, as an organizer, speaker, advance man, publicist, and writer.

I would sit in an old shaky wooden chair and listen wide-eyed to Sprading telling about Emma Goldman, revolutionaries, the great strikes, the libertarian campaigns against the religious “blue laws”, and other fantastic events. Most of the libertarian fights in the 1930s seemed to be against the “blue laws”, which among other things forbade retail stores to be open on Sundays. It is hard to believe now, in this time, that such laws existed 80 years ago. Mr. Sprading could go on for a couple of hours, his photographic memory for people and dates were very clear, he would never stumble over a date or a name. After about 2 hours, he would tire, and we would depart so he could rest.

My dad passed on at an early age in 1956. After a time, my mother would take me on a Saturday and we would make the long trip from Hollywood to East Los Angeles on street cars and buses to see Mr. Sprading. My mom didn’t drive, and when father died she sold the car, so we had to take public transportation. Believe it or not, it wasn’t bad back then, because we had the wonderful street car system, soon to be trashed by a conspiracy of GM, Firestone Tires, and Standard Oil. One fateful day we went out to see Mr. Sprading, but he wasn’t there. The landlady who lived in the front house said that he had died. We asked about his books and papers, and she informed us that she had “thrown away all those old papers and books, who would want them?” Even as a young man of 15 at that time, I knew those “old papers” were very valuable. I wanted to scream at this ignorant woman, but years of family training to be polite took hold. My mother was visibly upset, but she kept her cool. On the way home we discussed what a tragedy it was that the stupid woman threw away such rare photos, papers, and books in the trash. My mother knew that material should have gone to a library somewhere. And so it was that one of the giants of the 20th century died quietly in his sleep, living in a dilapidated old garage in the run down section of Los Angeles. His books still exist in libraries, and if someone could track down old copies of The Truth Seeker magazine published by Charles Smith, or other rationalist, libertarian, or freedom magazines, you will find some interesting articles by Charles T. Sprading. Since I was only 15 at the time (1959), and since I never heard of any other “youngsters” who visited him, I am pretty sure that I am the last person presently alive who saw the great Charles T. Sprading.