A very serious issue in banking has arisen that bears watching for what our model has been warning is that the bankers are losing control of government and are becoming their target. While the likelihood of this new legislation targeting the bankers getting out of the Senate and over the the House may not be so great, nonetheless, this bill illustrates just how desperate search for money has become. Politicians are our worst enemy of the people for never do they look at their impact upon society and the future. It is always just about them and the immediate need – never long-term.
This is the first time in modern history where Capitol Hill has produced members of Congress who are powerful looking at taking on the Federal Reserve and its member banks. The banking industry is scrambling to kill a provision in the Senate highway-funding bill that would reap billions of dollars in revenue by cutting a century-old system of loopholes for banks.
The Banking Industry lobbyists say that they were blindsided by the sneaking inclusion of the provision that would cost banks dearly. This would help policymakers cover the highway bill’s cost by cutting the regular dividends the Federal Reserve pays to its member banks. Actually, when banks join the Federal Reserve system, they are required by law to buy stock in the central bank equal to 6% of their assets. However, this stock does not appreciate in value for it is non-tradeable on the market. The Fed pays out a 6% dividend payment so the banks earn 6% income of 6% of its assets. That is pretty good money right now.
This latest Senate proposal claims it will save $17 billion by slashing what now appears to be an “overly generous†payout. This may not even be legal given the Federal Reserve Act of 1913 and the mandatory nature that banks must but stock in the Fed that they cannot sell. Since this is limited to banks with more than $1 billion in assets, the proponents argue that this will only impact “large banks.â€
