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DRAFT PROPOSED

UN SDG Target 17.3.1 & Target Action Plan #22

22. Reform financial systems. Congress Appropriate U.S. Notes as necessary to help fund the Government, implement SDG TAPs, issue zero interest loans, eliminate deficient spending and pay down the National Debt. Carefully vacate as null and void the Federal Reserve Act of 1913 Nationalize the Federal Reserve and convert Federal Reserve Banks into National District Banks. Nationalize and convert large private banks into State, City and Community Public Banks. Recover Federal Reserve Assets

(Updated April 12, 2018)

 

22.1    Introduction and Background:

 

22.1.1 Our Constitution states that “The Congress shall have the power ... To coin Money” and requires that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” The Constitution is the Supreme Law of the Land and takes precedence over all U.S. Federal and State Laws and Court Rulings. Congress cannot delegate this power to produce (“coin”) money and no U.S. Money can be spent, loaned or otherwise withdrawn from the Treasury unless it is appropriated.

 

22.1.2 Early during the Civil War, President Lincoln tried to borrow money in the form of banknotes from bankers to fund the war but the banks wanted 24 to 36% interest.

 

22.1.3 If Lincoln had borrowed the money from the bankers the war would have cost three to four times as much as it finally did, the Union could have lost the war, the South could still be a separate country and slavery could have lasted for years.

 

22.1.4 Instead of borrowing from the Banks, Honest Abe and his Congress, in accordance with the Constitution, authorized, printed and appropriated $449 million of United States Notes to finance the war. U.S. Notes are legal tender for all debts, public and private and have the full backing of the Federal Government. They were used to directly pay the soldiers, doctors for the soldiers, Civil Service employees, etc. and buy guns and supplies for the war. The Union won, slavery was ended and the nation prospered for a while.

 

22.1.5 If President Lincoln and his Congress and all future Presidents and Congresses had authorized, printed and appropriated United States Notes and also issued zero interest loans for projects, inventions, homes, etc. there would be no national debt, no recessions and no need for foreign investments or stock markets.

 

22.1.6 After Lincoln was assassinated:

 

22.1.6.1          The remaining U.S. notes continued to be used as currency but no new ones were appropriated

 

22.1.6.2          Bankers convinced Congress into passing banking laws, under which individuals could deposit their gold in privately owned banks and in exchange receive banknotes which could be used as currency. Banknotes are negotiable promissory notes which were supposed to be payable in gold to the bearer on demand. However, many banks sold more banknotes than the gold that they had and when the owners of the gold demanded it, the Banks did not have it and went bankrupt or simply disappeared. This latter became know as fractional banking and Congressman Ron Paul said “fractional banking creates money out of thin air. Essentially it is done in the same way as counterfeiters.” Many bankers did this and made a lot of money. Many people lost money and there were many recessions.

 

22.1.7 At the end of November 1910, dishonest Senator Nelson W. Aldrich and Assistant Secretary of the U.S. Treasury Department A. Piatt Andrew met secretly with equally dishonest U.S. and foreign financiers/bankers on Jekyll Island, Georgia and drafted legislation for the creation of a banking plan which was called the Aldrich plan. Much of the Aldrich plan were ultimately incorporated into the 1913 Federal Reserve Act which created The Federal Reserve System called the Fed.

 

22.1.7.1          The Fed is not “Federal.” It is a very complicated, expensive system that contributes nothing to the real economy.

 

22.1.7.2          It consists primarily of a 12 Federal Reserve Banks which are privately owned primarily by U.S. and foreign banks, bankers and extended wealthy families. See The Federal Reserve Cartel- The Eight Families, Max Kofoed, Pulse https://www.linkedin.com/pulse/federal-reserve-cartel-eight-families-max-kofoed

 

22.1.7.3          Federal Reserve Notes are Banknotes. The word Reserve in the title means that the Federal Reserve System and Federal Reserve Banks must maintain a reserve of collateral equal to at least the value of all Federal Reserve Notes issued.

 

22.1.7.4          Federal law allows the Federal Reserve Systems to issue Federal Reserve Notes to Banks under strict laws:

 

22.1.7.4.1       12 U.S. Code § 412 - “... collateral required ...” requires that “application to the local Federal Reserve agent ... shall be accompanied with a tender to the local Federal Reserve Agent of collateral in amount equal to the sum of the Federal Reserve notes issued.” This collateral is to be held in Reserve by the Federal Reserve System to provide backing for Federal Reserve Notes to prevent abuses similar to those when banks sold Banknotes for which they did not have enough gold for customers to redeem. This collateral is chiefly gold certificates and United States securities. Federal Reserve notes represent a first lien on all the collateral specifically held against them and the assets of the Federal Reserve Banks. The idea is that if Congress dissolves the Federal Reserve System, the United States would assume the notes (liabilities) and the collateral which should be of equal value. If there is insufficient collateral, assets of the Fed would be assumed as necessary. The spirit and intent of this law is that all Federal Reserve Notes be backed up by collateral

 

22.1.7.4.2       12 U.S. Code § 413 - “Distinctive letter and serial number of notes ... requires that “Federal Reserve notes shall bear upon their faces a distinctive letter and serial number which shall be assigned by the Board of Governors of the Federal Reserve System”

 

22.1.7.5          Since 1914, the Federal Reserve has provided trillions of dollars of Federal Reserve Banknotes at zero or very low interest rates and the Federal Reserve System has apparently allowed the banks to use fractional banking to create many times as many Federal Reserve Banknotes as they received directly from the Fed. Today apparently only 3% of all banknotes were issued by the Fed and 97% were generated out of thin air by the banks using fractional banking.

 

22.1.7.6          The Fed, apparently in violation of the law has.

 

22.1.7.6.1       Not required that the Banks provide the Federal Reserve collateral for the Federal Reserve Notes that they have produced.

 

22.1.7.6.2       Not assigned “distinctive letters and serial numbers” for most of the Federal Reserve Notes issued by the Banks

 

22.1.7.7          By creating money in this way, banks have increased the amount of the Federal Reserve Banknotes by an average of 11.5% a year over the last 40 years. This has pushed up the prices of houses and necessities of life and priced out entire generations.

 

22.1.8 Much, if not most, of these Federal Reserve Banknotes have been used by U.S. Banks to acquire assets not for banking. According to Forbes 2017 Global 2000 in 2017:

 

22.1.8.1          The 2000 largest publicly owned companies in the world have a total of $169 trillion in assets in 2017 (This has increased by $104 trillion since 2003)

 

22.1.8.2          Of the 2000, 565 are in the U.S. and have about $40 trillion in assets.

 

22.1.8.3          Of the 565 largest companies in the U.S., the 25 largest banks and financial institutions have $19.1 trillion in assets which they apparently have acquired for themselves mainly using Federal Reserve Banknotes which they created from nothing using fractional banking. This means that the average assets of the 25 largest banks is 19.7 times the average assets of the largest 540 other companies. and indicates that the banking industries in terms of assets is almost as large as all the other industries in the U.S. combined including defense, housing, food, cable, internet, movie, electrical, water, nuclear etc. and are only 4.4% of the 565 largest publicly owned corporations in the Nation. Banks do not need $19.1 trillion of assets to provide banking.

 

22.1.9 The U.S. Congress established three key objectives in the Federal Reserve Act all of which the Fed has fell miserably at: maximizing employment, stabilizing prices, and moderating long-term interest rates.[11]

 

22.1.9.1.1       “Maximizing employment” - over 30 million people in the U.S. are seriously under or unemployed and the Fed has done very little to get them employed

 

22.1.9.1.2       “Stabilizing prices” - All prices have increased enormously e.g. state universities have increased over 2,000 times since 1954 and college graduate owe over a trillion dollars on student loans.

 

22.1.9.2          “Moderating interest rates” - Bankers and Federal Reserve officials bribed Congress into passing the Depository Institutions De-regulatory Act (also cited as The Monetary Reform Act) (P. L. No. 96-221; 94 Stat. 132) (1980) which allows financial institutions to charge any interest rate they choose and prohibits States from controlling interest rates. For years the maximum annual interest rates that banks could charge was 6% or less in most states. Now interest rates of 10% to 29% are common and payday loans annual interest rates can be much higher.

 

22.1.9.3          Exercise regulatory responsibility over many consumer credit protection laws: During the depression and 2008 recession both of which the Fed was largely responsible for, millions of people lost their homes, farms and businesses to fraudulent bankers and the Fed stood idly by.

 

22.1.10           Target Action Plan TAP #13. Vacate as Null and Void, Set Aside, Repeal, Replace or Amend All or Portions Of Unconstitutional, Unjust and/or Injurious Laws provides additional information about the Federal Reserve.

 

22.1.11           Congressman Louis T. McFadden, Chairman of the House Banking Committee in the 1930s, exposed the corruption and power of the Fed in his remarks in the Congressional Record, House pages 1295 and 1296 on June 10, 1932:

 

22.1.11.1        "Mr. Chairman, we have in this country one of the most corrupt institutions the world has ever known. I refer to the Fed ... which has cheated the Government and the people of the United States out of enough money to pay the national debt several times over. This evil institution has impoverished and ruined the people of the United States; has bankrupted itself, and has practically bankrupted our Government. It has done this through the mal-administration of that law by which the Federal Reserve Board, and through the corrupt practices of the moneyed vultures who control it.

 

22.1.11.2        Some people think the Federal Reserve Banks are United States Government institutions. They are not Government institutions, departments, or agencies. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers. Those 12 private credit monopolies were deceitfully placed upon this country by bankers who came here from Europe and who repaid us for our hospitality by undermining our American institutions.

 

22.1.11.3        The FED basically works like this. They create money in the form of Federal notes, then loan it back to the government charging interest. The government levies income taxes to pay the interest on the debt. On this point, it's interesting to note that the Federal Reserve Act and the sixteenth amendment, which gave Congress the power to collect income taxes, were both passed in 1913.

 

22.1.11.4        On May 23, 1933, Congressman, Louis T. McFadden, brought formal charges against the Board of Governors of the Federal Reserve Bank system, The Comptroller of the Currency and the Secretary of United States Treasury for numerous criminal acts, including but not limited to, CONSPIRACY, FRAUD, UNLAWFUL CONVERSION, AND TREASON.” from an article about the Fed at: https://www.google.com/search?q=Louis+T.+McFadden&ie=utf-8&oe=utf-8&client=firefox-b-1-ab

 

22.1.12           Many others have opposed the FED including:

 

22.1.12.1        President John Kennedy efforts are described in the article JFK Vs The Federal Reserve By John P. Curran, 4-19-7, http://www.rense.com/general76/jfkvs.htm and in Jim Marrs' 1990 book “Crossfire." In his book, Marrs alleges that Kennedy was attempting to replace Federal Reserve Notes with United States Notes backed by silver and called Silver Certificates. Kennedy had more than $4 billion of Silver Certificates brought into circulation with more being printed when he was assassinated. No more Silver Certificates were issued after Kennedy was assassinated.

 

22.1.12.1.1     Congressman Ron Paul of Texas advocates the abolition of the Federal Reserve System in his 2009 book "End the Fed." Paul argues that "in the post-meltdown world, it is irresponsible, ineffective, and ultimately useless to have a serious economic debate without considering and challenging the role of the Federal Reserve. ... the Fed is both corrupt and unconstitutional. ... the Federal Reserve System is inflating currency today at nearly a Weimar or Zimbabwe level, which Paul asserts is a practice that threatens to put the United States into an inflationary depression where the US dollar, which is the reserve currency of the world, would suffer severe devaluation. ... most people are not aware that the Fed—created (he asserts) by the Morgans and Rockefellers at a private club off the coast of Georgia—is actually working against their own personal interests.”

 

22.1.12.1.2     During the 2012 Congressional session, Rep. Dennis Kucinich (D-OH), introduced H.R. 6550, The National Emergency Employment Defense Act, which would have nationalized the Federal Reserve

 

22.1.13           The Problem of the 20th Century: Poverty in the Age of Abundance explains that corporations/companies accumulate trillion in assets by keeping unemployment, prices, profits and executive salaries high, paying low wages and laying off employees. This has helped keep over 30 million people under-unemployed and half the people in the U.S. in various stages of poverty and debt and provides evermore unemployed workers having to work for even lower wages if they find any work.

 

22.1.14           Since the 1910 secretive meeting on Jekyll Island there has been collusion and revolving doors among The Fed, the 12 Federal Reserve Banks, regular banks, members of Congress, the Department of the Treasury and other officials.

 

22.1.15           The following YouTube videos explains more about the Fed:

 

22.1.15.1        Fractional Reserve Banking Explained - Modern Money Mechanics https://www.youtube.com/watch?v=P-5xDzTvW6E

 

22.1.15.2        Century of Enslavement: The History of The Federal Reserve https://www.youtube.com/watch?v=5IJeemTQ7Vk

 

22.1.16           Apparently much of the Federal Reserve Act of 1913 and it amendments were obtained by fraud, have been used to commit fraud and is unconstitutional, null and void.

 

22.1.16.1        The U.S. paid $266 billion interest on the National Debt last year.

 

22.1.16.2        If the Congress and the Presidents had continued the policy of Abraham Lincoln and appropriated United States Notes and issued zero interest loans instead of developing this very complex Federal Reserve system there would be no national debt today and America would be a debt-free, prosperous country. We should start that now and work together and we will be debt free shortly.



TABLE OF CONTENTS

 

22.1    Introduction and Background:

 

22.2    Purpose

 

22.3    Objectives

 

22.4    Actions.

           22.4.1 Congress appropriate United States Notes (printed and digital) as necessary to help fund the Government, implement the SDG TAPs, pay down the national debt, issue zero interest loans and exchange for federal reserve notes based on how they were earned while requiring this be done inside the U.S. by the actual owners of the federal reserve notes to eliminate overseas tax havens.

           22.4.2 Vacate as Null and Void the Federal Reserve Act of 1913

           22.4.3 Nationalize the Federal Reserve

           22.4.4 The Fed is not holding nearly enough collateral Recover-disgorge appropriate Federal Reserve assets in particular U.S. Treasury securities, mortgage backed securities and properties

           22.4.5 Pay off the National Debts as it comes due and avoid government shutdowns and end deficit spending

           22.4.6 End foreclosures and evictions

           22.4.7 Convert the Federal Reserve Board of Governors Building into a National Bank and District Banks into Public National District Banks and large private banks into State, City and Community Public Banks continuing ongoing business as usual with limits and disbursing funds appropriated by Congress primarily to help implement the SDGs all with detailed, transparent records

           22.4.8 Carefully phase-out stock markets and hedge funds, etc and allow only actual producers and users to participate in futures markets

           22.4.9 Cancel government programs that funnel money to the banks and not to the people

           22.4.10           Review the so called $26 billion settlement between the federal government and 49 state attorney generals with major banks for fraud

           22.4.11           Nationalize the Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac and the Federal National Mortgage Association (FNMA) commonly known as Fannie Mae.

           22.4.12           Vacate as null and void laws that fraudulently and/or unconstitutionally deregulated financial firms

           22.4.13           Outlaw the trading of mortgages and derivatives

           22.4.14           Carefully cancel the approximately $230 Trillion in Derivative Bets.

           22.4.15           Actions to Reform, Regulate and Revitalize Financial Systems

           22.4.16           Consider implementing the Proposals for Effectively Regulating the U.S. Financial System to Avoid Yet Another Meltdown

 

22.5    Background

 

22.6    Bibliography


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22.2    Purpose: Implement Target 17.3.1 “Mobilize additional financial resources” including to implement the SDGs.

 

22.3    Objectives This Plan outlines proposed actions to:

 

22.3.1 Prevent an economic breakdown or collapse

 

22.3.2 Repeal as null and void the Federal Reserve Act of 1913 and laws that deregulated banks and Wall Street

 

22.3.3 Nationalize the Fed and the too big to fail banks,

 

22.3.4 End deficit spending, pay down the national debt

 

22.3.5 Reform, regulate and revitalize financial systems and Wall Street

 

22.3.6 End foreclosures and trading of mortgages and derivatives

 

22.3.7 Provide affordable, community based personal and commercial banking.

 

22.4    Actions. Congress, the Administration and state and local governments as appropriate Footnote :

 

22.4.1 Congress appropriate United States Notes (printed and digital) as necessary to help fund the Government, implement the SDG TAPs, pay down the national debt, issue zero interest loans and exchange for federal reserve notes based on how they were earned while requiring this be done inside the U.S. by the actual owners of the federal reserve notes to eliminate overseas tax havens.

 

22.4.2 Vacate as Null and Void the Federal Reserve Act of 1913 which wrongfully and unlawfully established the Federal Reserve System, as outlined in TAP 13 The Plan to Set Aside, Repeal, Replace or Amend Injurious, Unjust Laws and Court Rulings.

 

22.4.3 Nationalize the Federal Reserve Endnote and operate it as part of the Department of the Treasury under the direct control of Congress. Congress make all decisions about “coining,” appropriations, regulating the value of money, the money supply, interest rates and loan guarantees as required by the Constitution.

 

22.4.4 The Fed is not holding nearly enough collateral Recover-disgorge appropriate Federal Reserve assets in particular U.S. Treasury securities, mortgage backed securities and properties of significant value including:

 

22.4.4.1          The collateral held in reserve by the Fed to provide backing for the notes issued is required by 12 U.S. Code § 412 to be equal in amount to the sum of the Federal Reserve Notes issued.

 

22.4.4.2          The $2,413,031 trillion of U.S. Treasury Securities held by the Federal Reserve as of April 5, 2018 according to Federal Reserve Bank of St. Louis https://fred.stlouisfed.org/series/TREAST

 

This $2.413 trillion is part of the $20.493 trillion national debt as of March12, 2018 (https://fred.stlouisfed.org/series/GFDEBTN) and once it can be recovered the national debt will be about $18 trillion and there will be no need to increase the national debt limit or for a government shutdown).

 

22.4.4.3          The $1.78 trillion of mortgage backed securities held by the Federal Reserve as of Jan 19, 2018 (https://fred.stlouisfed.org/series/MBST?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=categories)

 

22.4.4.4          Assets that were acquired directly or indirectly with Federal Reserve Notes or loans in particular as much as possible of the $19.1 trillion of real property (factories, infrastructure, land, airports, etc.) or control over this real property acquired directly or indirectly with these funds.

 

22.4.5 Pay off the National Debts as it comes due and avoid government shutdowns and end deficit spending, all government shutdowns, the need to raise the debt ceiling, sequestration and austerity programs, pay down the national debt and avoid an economic collapse, by providing funds from the Summary of Funding Sources.

 

22.4.6 End foreclosures and evictions

 

22.4.7 Convert the Federal Reserve Board of Governors Building into a National Bank and District Banks into Public National District Banks and large private banks into State, City and Community Public Banks continuing ongoing business as usual with limits and disbursing funds appropriated by Congress primarily to help implement the SDGs all with detailed, transparent records. These new public banks should employ the personnel buildings, facilities, equipments and other assets of the Federal Reserve System and the converted large private banks. Please note that globally about 40 percent of all banks are publicly owned and most survived the credit crisis of 2007 while most of the large private banks had to be bailed out by taxpayers.

 

22.4.8 Carefully phase-out stock markets and hedge funds, etc and allow only actual producers and users to participate in futures markets

 

22.4.9 Cancel government programs that funnel money to the banks and not to the people and apply funds remaining in these programs to actual Mortgage Relief.

 

22.4.9.1          The so called term asset-backed securities loan facility (TALF), the Consumer and Business Lending Initiatives, Public-Private Investment Program (PPIP) Endnote

  

22.4.9.2          The TARP/bank bailout and stimulus legislation and similar programs.

 

22.4.9.3          The Homeowner Affordability and Stability Plan and redirect all related funding ($75 billion) intended for it to state governments.

 

22.4.10           Review the so called $26 billion settlement between the federal government and 49 state attorney generals with major banks for fraud. This agreement was supposed to address the criminal fraud, robo signing and changing income and job history on mortgage applications without the applicants knowledge. Most of this so called settlement provides a bailout of the large banks that committed fraud. Some government and independent agencies are separately paying banks for each foreclosure. Foreclosure are once again increasing.

 

22.4.11           Nationalize the Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac and the Federal National Mortgage Association (FNMA) commonly known as Fannie Mae.

 

22.4.11.1        All government and independent agencies cease all payments to banks for foreclosures and recoup all such past payments and return the money to the Treasury.

 

22.4.11.2        Expedite the implementation of The Plan to Rapidly Implement the UN SDG TAPs and End Use of Nuclear Weapons, Wars, Poverty, Hunger, Terrorism, Excessive Global Warming, Inequalities, etc. In the U.S. and Worldwide which provides full employment. Having a job will help troubled mortgage holders make mortgage payments and let her/him better know how much s/he can afford to pay for a home.

 

22.4.12           Vacate as null and void laws that fraudulently and/or unconstitutionally deregulated financial firms and enact replacement legislation as necessary as outlined in The Plan to Set Aside, Repeal, Replace or Amend Injurious, Unjust Laws and Court Rulings. Once these injurious, unjust laws are repealed and declared by Congress to be null and void, regulations such as the Glass-Steagall Act (which prohibits banks from speculating with depositors' money and engaging in investment activities, speculative trading and mergers or collaborating with brokerage firms, selling insurance, etc.) will be effective retroactive to the time it was passed in 1933.           

 

22.4.12.1        Limit maximum interest rates by vacating the Depository Institutions Deregulation and Monetary Control Act (P. L. No. 96-221; 94 Stat. 132) (1980), which removed all controls over interests rates. Enact legislation that will set limits on all mortgages, home equity, government guaranteed and other secured loans, credits cards and unsecured (signature) loans and limit late fees.

 

22.4.12.1.1     Makes these maximum interest rates and lower fees retroactive to the origination of the mortgage, credit card or loan.

 

22.4.12.1.2     Requires financial institutions to calculate amounts due and balances due on all mortgages and loans based on these lower rates and fees with extra interest and excess fees paid to reduce the principal as payments were made.

 

22.4.13           Outlaw the trading of mortgages and derivatives which contribute nothing to the economy or humankind. A mortgage backed security is a derivative that derives it value from the mortgages it is backed by. Require that the current owner(s) of the mortgage backed security(s) which includes the troubled mortgage break down the mortgage backed security into the individual mortgages and determine the “real property(s)”, their value and status. Maintain proof of who is the actual owner of the property and maintain records of all of the owners, originators, packages, regulators, transactions and prices for each individual mortgage when they changed hands and require that:

 

22.4.13.1.1     The current owner(s) of a property with a troubled mortgage;

            

22.4.13.1.2     The current owner(s) of the troubled individual mortgages or of mortgage backed security(s) which includes the troubled mortgage;

 

22.4.13.1.3     The local servicer of the troubled mortgage; and,

 

22.4.13.1.4     Local government official or their agent.

 

22.4.13.1.4.1  On a case by case basis, acting in the best interest of the community to assist the owner in determining the market value of the home, negotiating a payment or rental schedule to stay in the home, what kind of cushion is needed in case conditions change, alternatives to staying in the home and to lessen the impact of the loss of the home by helping them to find and move into an affordable home that for example allows the kids to stay in school, all depending upon the circumstances. Experienced real estate agents would normally be qualified to do or help with this work.

 

22.4.13.1.4.2  Resolve any irregularities or fraud involved in the origination and trading of the mortgage and the related mortgage backed security. Refer irregularities or fraud that can’t be resolved to the appropriate authorities.

 

22.4.13.1.4.3  Determine the amount owed on the mortgage based on the new retroactive interest rates and late fees, the approximate market value of the home and property taxes and all fees if the home were to be sold, whether or not the owner can afford it and available options.

 

22.4.13.1.4.4  Conduct arms length negotiations and evaluate each mortgage and situation individually at the local level with various approaches including loan modifications that could reduce interest rates and eliminate onerous fees, prepayment penalties, stretching it out the mortgage, dividing the home into apartments, selling off parts of larger lots, rent to buy plans, out the mortgage only plans and/or leasehold type contracts. It is to the advantage of both parties to keep the home occupied and not have to go through an eviction or sale of the property. If an agreement cannot be reached, the home could be put on the market and the owner pay a reasonable market rate rent to stay in the home while finding another place to live and the home is sold. If the owner of the property can afford whatever the sales price becomes minus the realtor and other sales fees, then he should have the right of first refusal.

 

22.4.13.2        Review previous foreclosures to ensure that they were just and that applicable laws and regulations were followed including in particular that mortgage creditors had proved to the authorities involved with the foreclosures that they owned the mortgage. If proof was not provided or if there are irregularities in the foreclosure process appropriate action should be taken

            

22.4.13.3        Resolve other derivative that derives their value from real property in about the same way that mortgage backed securities and individual mortgages were resolved. Actions include:

 

22.4.13.3.1     Require that financial institutions owning/holding any derivatives break down each derivative into the individual “instruments (s)”, e.g. mortgages promissary note(s) or contract(s), from which the derivative derived its value and determine the “real property(s)” associated with the instruments(s), maintain proof that they are indeed the owners of the instrument and maintain records of all of the owners, originators, packagers, regulators, transactions and prices for each individual derivative and the related instruments when they changed hands.

 

22.4.13.3.2     Resolve any fraud involved in the origination and trading of each instrument and the related derivative. Refer irregularities or fraud that can’t be resolved to the appropriate authorities.

 

22.4.13.3.3     Determine the amount owed on each instrument based on new interest ratess and late fees, the approximate market value of the real property and taxes and fees if the real property were to be sold.

 

22.4.13.4        Owners of the instruments and real property and the servicer conduct arms length negotiations. Evaluate each instrument and real property with various approaches including lowering interest rates, stretching out the term, dividing the real property, selling off parts, lease to buy plans, lease only plans and/or leasehold type contracts. It is to the advantage of both parties to keep the real property in use. If an agreement cannot be reached, the real property could be put on the market and the owner pay a reasonable market lease rate to continue to use the property while finding a replacement and the real property is sold. The owner of the real property should have the right of first refusal of the best offer minus fees if he can afford the property and can and will make payments.

 

22.4.13.4.1     In any case choose the best option(s) for the owner of the property and the owner of the mortgage Footnote .

 

22.4.14           Carefully cancel the approximately $230 Trillion in Derivative Bets. Derivatives which do not derive their value from real property are simply used for betting and do not in any way contribute to the economy or mankind. The US government should simply cancel the $230 trillion in derivative bets [derivatives which do not derive their value from real property], declaring them null and void. As no real assets are involved, merely gambling on notional values, the only major effect of closing out or netting all the swaps (mostly over-the-counter contracts between counter-parties) would be to take $230 trillion of leveraged risk out of the financial system. Recommended by Paul Craig Roberts, Institute for Political Economy, in his June 5, 2012 article, Collapse At Hand. Webster Tarpley (tarpley.net) author, historian, economist, journalist, lecturer, and expert on derivatives, US foreign, domestic and economic policy, has been recommending this for years.

 

22.4.14.1        Build a new banking system, around thousands of smaller banks and financial firms with executives that respect their obligations to the broader economy and have common sense i.e. a sense of community

 

22.4.14.2        National Reduce the size of large financial institutions by invoking anti-trust laws, separating investment activities into separate institutions and breaking them down into community, city and no larger than state size firms.

 

22.4.14.3        Nationalize all banks that become insolvent

 

22.4.14.4        Require reasonable down payments on mortgages and loans to provide a grace period that allows a buyer to move into a more affordable home in case he/she loses a job or their economic situation changes

 

22.4.14.5        Require that banks prepare accurate balance sheets which reflect actual values of all liabilities and assets including troubled assets and risky investments. Determine which banks are solvent or insolvent and by how much and the reasons for the insolvencies.

 

22.4.14.6        Government seize insolvent banks and other insolvent financial institutions, replace senior management, and keep them in operation as federal government owned, contractor operated (GOCO) entities so that they continue to function and the work force stays employed.

 

22.4.14.7        Separate out investment activities Sell off those parts of the banks that have nothing to do with banking.

 

22.4.14.8        Ultimately break the larger bank into community, city and no larger than state size banks/firms.

 

22.4.14.9        As soon as practicable turn over branches within a states and allow states to operate them as publicly-owned banks that issue low-interest credit similar to the Bank of North Dakota (BND)

 

22.4.15           Actions to Reform, Regulate and Revitalize Financial Systems

 

22.4.15.1        Return all investment activities to the true purposes of capitalism which are for an individual to invests in legitimate, worthwhile businesses that provides real products or services that benefits humankind and receive a return on his investment if and when the companies revenues exceeds its expenses. Paying dividends or any other forms of returns from the investors own money or the money invested by other investors are probably fraudulent Ponzi schemes

  

22.4.15.2        Stop the corruption of members of the Congress and the Administration by the financial, insurance, real estate and other industries through campaign contributions and lobbying.

 

22.4.15.3        Reject the theory that financial institution and markets self regulate and replace it with serious financial regulatory reform with realistic financial market theories

 

22.4.15.4        Extend regulations and oversight to the "shadow banking system,"

 

22.4.15.5        Reform/establish new regulatory institutions empowered by law to control financial markets and force them to act in the public interest and populate them with well trained officials who believe in serious regulation.

 

22.4.16           Consider implementing the Proposals for Effectively Regulating the U.S. Financial System to Avoid Yet Another Meltdown Footnote , by James Crotty and Gerald Epstein

 

22.4.16.1        Move all risky investments back on bank balance sheets and require adequate capital to support them.

 

22.4.16.2        Require due diligence by creators of complex structured financial products.

 

22.4.16.3        Prohibit the sale of financial securities that are too complex to be sold on exchanges.

 

22.4.16.4        Transform financial firm incentive structures that induce excessive risk-taking.

 

22.4.16.5        Extend regulatory over-sight to the “shadow banking system.”

 

22.4.16.6        Implement a financial pre-cautionary principle. Crotty and Epstein suggested: careful consideration of the "anything not specifically permitted is prohibited" principle.

 

22.4.16.7        Restrict the growth of financial assets through counter-cyclical capital requirements.

 

22.4.16.8        Implement lender-of-last-resort actions with a sting. Institutions might be too big to fail, but no CEO should be. The CEOs of the seven largest investment banks received a total of $3.6 billion from 2004-07, yet the market capitalization of their firms declined by $364 billion from their peak values, an average fall of 49 percent. As long as there is financial capitalism, there will be a need for some lender of last resort bailouts, even if all of these proposed policies are implemented. But a key distinction must be made between the financial institution itself and the agents who made the decisions to take risks and benefitted from these decisions – top management, key traders and other richly rewarded operators. These rainmakers must be made to pay significantly when their firms are bailed out.

 

22.4.16.9        Create a bailout fund financed by Wall Street.

 

22.4.17           Enact legislation that:

 

22.4.17.1        Prohibits trading of mortgage backed securities and all other derivatives including, credit default swaps, structured investment vehicles, collateralized debt obligations, repo (repossession) agreements, and other toxic paper.

 

22.4.17.2        Prohibits commercial and retail banks engaging in investment activities, speculative trading and mergers or collaborating with brokerage firms as was required by the Glass-Steagall Act.

 

22.4.18           Outlaw:

 

22.4.18.1        “Shadowy” banks, private equity accounts, hedge funds, adjustable rate mortgages or loans, stock options, off-balance sheet accounting, more than one set of books, and the fractional reserve system

 

22.4.18.2        All trading, buying or selling of derivatives including mortgage backed securities, actual mortgages, promissary notes, contracts and similar instruments with the possible exception that they can be “sold back” to the originator.

 

22.4.18.3        “Shadowy” banks, private equity accounts and hedge funds.

 

22.4.18.4        Adjustable rate mortgages.

 

22.4.18.5        Stock options.

 

22.4.18.6        Off-balance sheet accountings and more than one set of books.

 

22.4.19           Restores and strengthens:

 

22.4.19.1        Uptick rules that require short sale transactions be entered at a price that is higher than the price of the previous trade. This rule prevents short sellers from adding to the downward momentum when the price of an asset is already experiencing sharp declines.

 

22.4.19.2        Position limits and margin requirements

 

22.4.19.3        Real oversight over the SEC, regulatory authorities and the Federal Reserve System.

 

22.5    Background


Crotty and Epstein concluded: that we will not be able to enact adequate reforms until two fundamental changes take place. First, the mainstream theory of efficient financial markets that is the foundation of support for the NFA must be replaced by the realistic financial market theories associated with John Maynard Keynes and Hyman Minsky. Recent events should convince any rational economist that the theory of efficient capital markets should be rejected once and for all, though it is far from clear that this ideologically grounded vision will in fact disappear. Second, there must be a broad political mandate in support of serious financial regulatory reform. For too long the Lords of Finance have corrupted the political process. Congress and the President have acted in recent decades as if they were paid employees of financial market interests, which many of them were. Perhaps anger over the $700 billion dollars and the likely recession can galvanize the needed political support for change. The key is to channel the anger into pressure for a new "New Deal" in government regulation of financial markets.


Until we have regulatory institutions empowered by law to control financial markets and force them to act in the public interest and we populate them with well trained officials who believe in serious regulation, we will continue down the disastrous path we have been following for the past three decades.


18. The top 1 percent of families now possess roughly the same amount of wealth as the bottom 90 percent, while 20 individuals have as much wealth as the bottom half. Forty percent of families in the US have zero or negative wealth, meaning their debts surpass their assets. The individuals who comprise the wealthiest 0.1 and 0.01 percent of the population function as their own political weather systems, having at their disposal vast sums of money to buy elections, bribe politicians and otherwise control the political process. The Trump administration is, itself, the political reflection of the oligarchic character of American society, the outcome of a half-century of social counterrevolution overseen by both Democrats and Republicans. Palace coup or class struggle: From “The political crisis in Washington and the strategy of the working class” 13 June 2017, http://www.wsws.org/en/articles/2017/06/13/pers-j13.html?view=print

 

22.6    Bibliography

 

22.6.1  Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System, GAO-09-314T January 21, 2009. http://www.gao.gov/new.items/d09314t.pdf

 

22.6.2  Troubled Asset Relief Program (TARP): Additional Actions Needed to Better Ensure Integrity, Accountability, and Transparency, GAO-09-161. http://www.gao.gov/new.items/d09161.pdf

 

22.6.3  Five articles describing concerns with mortgage base securities, derivatives, deregulation, lobbying, campaign contributions, earmarks, and pork barrel spending at: http://www.sanjuanislander.com/columns/brandt/part-1.shtml

 

22.6.4  Economic Crisis: Supplement to Undoing the Bush/Cheney Legacy: A Tool Kit for Congress. http://mcli.org/Legacy_Add-On_Econ_Crisis.pdf

 

22.6.5  Article in On Capitol Hill, Money Is the Root of All Hypocrisy, 21 February 2009, by: Michael Winship, t r u t h o u t | Perspective, http://www.truthout.org/022109Y


Office of the Special Inspector General (SIGTARP) for the Troubled Asset Relief Program Quarterly Report to Congress, July 21, 2009 Advancing Economic Stability Through Transparency, Coordinated Oversight and Robust Enforcement

SPECIAL


Endnotes