POLITICIANS BEATEN BY BANKS

Faced by the banking crisis President Obama quite rightly said that Banks are too big. Other leaders like President Sarkozy or Prime Minister Gordon Brown want to limit excessive bonus payments to Bank Directors or to traders, or alternatively tax abusive profits with "windfall taxes".

Politicians are just nibbling at the problem without identifying the root cause of the current problems. The simple fact is that International Banking Groups are too big !!! They cannot be conveniently controled by the Central Bank of a Sovereign State in which they operate. These international banks are in fact often Inter-Continental, which simply multiplies their independence with respect to the Sovereign States in which they operate !!! They operate in their own world !!!

To solve this problem, rules concerning the size of banks must be adopted world-wide. It would seem that what is required is a new type of bank, to be simple, The National Bank, which has no foreign subsidiaries, is quoted on the national stock exchange and has no foreign shareholders !!! Each country could and would probably have several such "National Banks", all quoted on the national stock exchange.

Only "National" banks should have access to low interest "Tap" loans and credits from their Central Bank. Private Banks and International Banks must be excluded !!! This could permit and ensure that countries, governments and their central banks recover the control of their money markets.

It is quite clear that to attain this objective would require a great number of share transactions. That is the cost of undoing monopolistic positions. Big Multinational, Inter-Continental, Banks are just too big to handle as President Obama quite rightly said !!! They must be reduced in size and importance. They have usurped the role of governments and have created the problem the world is facing now and will continue to face in the future if nothing is done.

This is not the time or the place to enter into the detail of additional changes that will be required. If the foregoing or a similar basic structural "National Bank" system is adopted, or not adopted, other changes will have to be considered anyway. The following subjects will necessarily need to be considered;

- should banks not respect liquidity ratios ? Speculative banks seem to ignore old rules and favour modern ratios that tend not to recognise honestly the impact of the possible consequences of speculative situations !!!

- footnotes to balance sheets should be clear and explicit. Should Bankers not supply money values of current "off balance sheet" situations ?

- should banks be allowed to hide behind "secrecy conventions" ? Should Bankers' secrecy rights not be defined by legislation ?

- should the same rules and standards not be applied by all banks in their published accounts and interim reports ?

- should the official auditors of National Banks not be rotated every two or three years in order to ensure that the spirit of basic reporting standards is observed by all banks in a given country ?

A lot of work needs to be done before one can realistically start talking about controlling bonus payments, controlling hedge funds, tax havens or other such things.

To get big profits, risks are taken; where there are big profits, there is greed !!! That is why legislation is urgently needed !!! And there are many other reasons as everyone knows full well !!!

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