Charles W. Calomiris and stephen H. Haber write,
The fact that the property rights system underpinning banking systems is an outcome of political deal-making means that there are no fully private banking systems; rather, all modern banking is best thought of as a partnership between the government and a group of bankers, and that partnership is shaped by the institutions that govern the distribution of power in the political system.
Read the whole thing. Another excerpt:
In 1977, Congress passed the Community Reinvestment Act to ensure that banks were responsive to the needs of the communities they served. The CRA required banks that wanted to merge with or acquire other banks to demonstrate that responsiveness to federal regulators; the requirements were later strengthened by the Clinton administration, increasing the burden on banks to prove that they were good corporate citizens. This provided a source of leverage for urban activist organizations such as the Neighborhood Assistance Corporation of America, the Greenlining Institute, and the Association of Community Organizations for Reform Now, known as ACORN, which defined themselves as advocates for low-income, urban, and minority communities. Such groups could block or delay a merger by claiming that the banks were not in compliance with their responsibilities; they could also smooth the merger-approval process by publicly supporting the banks. Thus, banks seeking to become nationwide enterprises formed unlikely alliances with such organizations. In exchange for the activists’ support, banks committed to transfer funds to these organizations and to make loans to borrowers identified by them. From 1992 to 2007, the loans that resulted from these arrangements totaled $850 billion.
In contrast,
In Canada, the government did not use the banking system to channel subsidized credit to favored political constituencies, so it had no need to tolerate instability.
Only that those favored political constituencies are the Wall Street investment banks, the ones we continue to shovel money. The largest issue in public choice is control ensuring regulations are never written and the problems never solved.
On October 22, 2013, Jesus Christ terminated liberalism’s Creature from Jekyll Island, through the failure of currency carry trade investment, seen in the EURJPY and the AUDJPY trading lower, as well as the failure of credit, seen in the short term bond fund ETF, FLOT, trading lower. Jesus Christ operating through dispensation, that is the completion of every ear, epoch, era, and time frame, has ended the Fed. He did what Ron Paul could not do. The Fed be dead, and its policies no longer provide stimulus, only death. The fiat asset inflation that came via the grand experiment by the US Federal Reserve policies of monetary intervention is over, finished and done. Fiat asset deflation has arrived and is bearing down on the World Financial Institutions, IXG, and on currency trading and credit sensitive nations, such as Brazil, EWZ, EWZS, and India, INP, SCIN, and China, YAO, ECNS, with Brazil Financials, BRAF, India Earnings, EPI, and China Financials, CHIX, leading lower.
On October 22, 2013, Jesus Christ gave birth to authoritarianism’s Beast Regime of regional governance and totalitarian collectivism, through the Mario Draghi announcement of plans for European banking supervision.
News events clearly reflect the fulfillment of bible prophecy. As presented in Revelation 13:1-4, Jesus Christ has designed the Beast Regime to be the ultimate predator, having feet of a bear, the mouth of a lion, and camouflage of a leopard. It’s feet have emerged in the European banking supervision system; its feet enable the monster to stand upright against all enemies, as well as to run down and trample all naysayers; and its claws enable it to root out and tear apart all opposition.
In the new regime, all banks everywhere, will be regionally integrated and be known as the government bank, or govbank for short.
No country has got it exactly right, but I think in this instance Canada is doing well. Though taxes are much higher (income and sales) there, in many spheres of economic activity, such as homeownership, Government is less involved. Canada is more cautious about the “homeownership is good for everybody” claim.