16. Review and Reform of the Federal Reserve Banking System

Review and Reform of the Federal Reserve Banking System. The immediate formation of a non-partisan commission, overseen by Congress, to audit and investigate the short-term and long-term economic risks and benefits in eliminating the Federal Reserve Bank and transferring all its functions to the United States Treasury Department and a truly independent, non-partisan, publicly owned central bank.

It is widely believed that the housing bubble and collapse of financial markets in 2007- 2008, and trillion dollar bail-out was partially caused by the mismanagement, incompetence, and acquiescence of the Federal Reserve Bank.

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Mike Kiernan commented 2012-02-20 17:39:30 -0500 · Flag
You want to see the Fed reformed then take the Country back to the Gold Standard. You do that and the entire Country’s cash backing is now based on a single monetary commodity that everyone else already uses. It also forces the Chinese to value their currency using gold just as we do. That means all of the currency manipulation in foreign exchanges disappears and the trade and customs duties are simplified. Thats reform !!!!
Barbara McLaughlin commented 2012-02-20 17:34:32 -0500 · Flag
If you have not seen documentary THRIVE go to THE THRIVEMOVEMENT.com or Facebook. This film is well documented, has a full section on follow the money and the Federal Reserve as well as solutions, research, resources and many sections you will find interesting.
Just saw your new ad on MSNBC- great job! Made me pause to get your link. Thanks
John Lockette commented 2012-02-19 21:04:54 -0500 · Flag
@ chuck gregory – I disagree that the signers of the Declaration of Independence were merely stating what was unacceptable and they did not propose or state any solutions. In fact, they advanced two major solutions – elevating the colonies to the level of free and independent states and dissolving all ties to the British monarchy. At the same time, however, I agree with your sentiment that getting too specific in advancing too many solutions could create roadblocks in terms of gaining support for the cause.

Therefore, I suggest that we should stick to two or three paramount issues. I would argue that eliminating the influence of money in politics, instituting terms limits, and reforming some of our election practices are the bare minimum. All the other areas can be fixed if we the 99% can regain control of our democracy and our government through the enactment of new rules in those three areas. Essentially, that means going with #’s 2, 4, and 17.
chuck gregory commented 2012-02-19 06:40:21 -0500 · Flag
There are a few themes that underlie all of the proposed reforms at this site. It would be more effectively presented to the public if the Declaration of the 99 focused on those themes rather than solutions.

When the revolutionaries drafted the Declaration of Independence, they did not propose specific solutions; using a radical philosophical framework, they stated what was unacceptable . If they had demanded a federal system of government, the United States would never have happened; they would have been abandoned by the public as they sank into a quagmire of quibbling over details. While the goal is admirable, to propose solutions instead of defining the problem (as the Declaration of Independence did) is to undercut the purpose of the movement. They

If you want people to rally to your side, do as was done in the Declaration of Independence and clearly state the problem rather than offer the solution. Solutions are much better after people deal first with defining the problem.
chuck gregory followed this page 2012-02-19 06:40:04 -0500
John Lockette commented 2012-02-18 21:19:07 -0500 · Flag
It is definitely possible to overreach on this one. A central bank serves a very useful purpose in stabilizing our monetary and banking systems. All modern societies have some form of central banking system for that reason. The blame for the financial collapse does not rest entirely with the Federal Reserve, although it played a part. The Federal Reserve Banks need to be reformed; yes, that is true. But the elimination of our central banking system would make us vulnerable to the kinds of dealings that led to the banking collapse of the early twentieth century. Let’s not repeat that history! The alternative is that it could lead to a commerical banking system mired in bureaucratic, regulatory red tape. Let’s not go down that road either.

The Federal Reserve Banks and the US Treasury Department serve very different functions. It is not necessary or adviseable to fold the functions of the Federal Reserve into the Treasury Department. The point of having a Federal Reserve is to allow for a degree of independence in the management of our commercial banking system.
Maria Cadwallader commented 2012-02-17 19:53:00 -0500 · Flag
I think I don’t want us messing with the Federal Reserve Banking System right now. There is a bunch of stuff they do right, especially when they close failing banks and pay off on the account insurance for depositors. “Widely believed” is also one of those phrases I think we all should distrust. Like “they say,” it claims without having to provide any factual basis. We have enough to do, on enough complex issues, without thowing this spanner in the works.
Blake LaCroix commented 2012-02-17 14:08:45 -0500 · Flag
The following post is a compromise worked out between a pro Central Bank and anti Central Bank backers. We both have parts we like and parts we don’t like, though not the same parts. It is time to get outside input to improve this proposal. There are a lot of different routes that can be taken so this is not meant to limit or displace any other points of view.

Proposal to Reform/End the Federal Reserve Bank

Overview

For the purpose of setting monetary policy the commercial banks will be organize along the 12 regional districts of the current Federal Reserve Bank and each of them will vote to endorse their own forecast for their district. This should take regional differences into account, and this should allow smaller districts to have an equal say. We don’t want to have a system that is bi-coastal centric. The new central bank (with reduced powers) will do their own forecast and then they will collect all the models and distill them down to one model. The Central Bank will present the agreed upon model to the Public Commission who can either accept it or send it back for rework, they could make recommendations but no dictates. The regional districts will have full autonomy from each other and the Central Bank, thus making the Central Bank one voice amongst many. Each district will be free to form their own forecast without any outside influences.

Public Commission

The Public Commission should consist of an odd number of members as to avoid ties; 7 members should provide enough different points of view as to keep any one person from controlling it. These positions are so important that term limits are necessary. The same would be true for the head of the Central Bank. A term of 4 years for the Public Commission and 8 years for the Central Bank will be enacted. The chairman position will be ceremonial with no additional powers. All Commission meetings will be open to the public (preferably televised on C-Span) so all decisions will be made in the full view of the public. No Commission member will be allowed to move between the banking industry and the Public Commission (or vice-versa) for a period of 4 years. Bankers will have a side to play on and they should stay on that side. The president will nominate Commission members and the senate will confirm, because these positions cannot remain empty for long and they are so important the senate will be required to schedule an up or down vote within 90 days or the nominee will be automatically confirmed. The Public Commission will receive the forecast from the Central Bank then they will either accept or declined it. Recommendations made by the Public Commission on the forecast will not be mandatory. The Public Commission will meet every 90 days with the Central Bank for review and comments. Any corruption discovered will be punished by a mandatory 25 to life jail sentence.

The New Central Bank

The Central Bank will be required to pass a renewal vote every 10 years. You can think of this as a regularly scheduled no confidence vote. All over-site duties will be moved over to the Consumer Protection Agency including the FDIC. The Central Bank will be limited to just its’ banking operation only. The Central Bank will increase the reserve rate 10% or more (also they will be required to have a hard floor of 10% to be instituted). The Central Bank will collect all forecasts from the 12 regional districts and include one forecast of their own. They will cull out the lowest and highest model and then average the remaining models to form one forecast. The agreed upon forecast will be presented to the Public Commission.

The Banks

The six major banks will be broken up to increase competition. Immediate instituting of market capitalization caps, “Too big to fail is too big to exist”. The Volcker rule will be fully enforced. Congress will be required to reinstate the Glass Steagall act to separate commercial banks from investment banks. Investment banks will be permanently limited to a maximum of 10:1 leverage. There will be a requirement for more proof of capitalization before a leveraged deal would be allowed to move forward. A Complete ban of bail-outs will be passed by the Congress. Commercial Banks will only be able to “sale” loans to other commercial Banks only. Commercial Banks will only operate in the state they reside in. Each bank will have one vote in only one of the 12 regional districts they reside in for formation of monetary policy.

Conclusion

Our fore fathers were correct in allowing future generations the ability to change laws, policies and even the Constitution. Though we believe we need change today we are not arrogant enough to believe we can make that call for future generations. They will and should change any of this to suit the needs of their times.

Of course all of this is just a modest proposal. This is not the full extent of reform needed it would be only a start. Please feel free to add, tweak, change, delete or replace entirely any section necessary.
Blake LaCroix followed this page 2012-02-17 14:03:08 -0500
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