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Banking Monopolies: Between 1990 and 2010, thirty-seven banking institutions were consolidated into four: Bank of America, Wells Fargo, Citigroup and JPMorgan Chase.

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Unfortunately, breaking up the big banks back into a greater number of smaller, local banks would inevitably again lead to the most successful of these banks purchasing and consolidating their weaker competitors into fewer, larger entities, and allowing these few private institutions to continue their reign over the financial sector keeps the power of most of our citizens' money in the hands of the shareholders of these companies.
Supporters: Patrick McCarthy, Albert Le, Nathan Bouscal, Kyle Rutland, Luis Soberon, Chris Wooten, David Sauter, Patrick Ander, Lisa Matulevicz
Opponent: Erna Boldt
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Patrick McCarthy

Patrick McCarthy / November 1, 2011 at 1:04 PM DT

I poorly phrased my first post, so I thought I'd try to redo it.

David Sauter

David Sauter / November 6, 2011 at 11:17 AM ST

Nationalizing the banks is not the answer. Credit Unions fill the local use case quite well and I would hate to see them go.

Breaking up the horizontal monopolies is required (I.E. separate different kinds of banks.). Other than that however there's no simple solutions. Money will always gravitate towards those who have it and banks have a lot of it.

Patrick Ander

Patrick Ander / November 7, 2011 at 9:45 AM ST

I see that the money could be moving towards the local credit unions, at least on a personal level. I don't think many large companies are moving their money, but with the recent movement towards credit unions and the reports that a large number of people and some small businesses are doing so, that could be a good sign.

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Solution Nationalize the banks
I propose consolidating the current big banks into a single entity and nationalizing it, creating a nonprofit, credit union type National Bank of the United States, in which every citizen would be a "shareholder," without any priority shares, and receive a dividend at the end of each fiscal year.
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Solution Unify the Money Transmission Regulatory Framework Under the Department of the Treasury
Right now, each state legislature determines whether or not to regulate "money transmission," which is often (but not always) defined as the act of routinely holding onto funds that belong to others with the intent of sending those funds somewhere else, whether domestically or abroad. The ad hoc system of regulation has led to different application fees, license fees, background check requirements, net worth requirements, surety bond requirements, documentation requirements, and auditing requirements, all of which can end up costing around $20 million to comply with in aggregate nationwide. Ironically, all of this expense only ends up insuring consumers who use registered money transmitters. The riskiest money transmitters, who do not bother complying with state or federal laws, are not covered by the surety bonds that registered transmitters are required to obtain, and the FDIC insures only bank accounts.

In summary, the system is totally broken. Standards are desperately needed in order to 1) protect consumers better than the current patchwork can, and 2) allow new entrants with new technologies to lower the price of financial services in general. The Department of the Treasury has already issued some standards through its Financial Crimes Enforcement Network (FinCEN), but the states generally ignore them. Congress needs to explicitly pre-empt state laws so that FinCEN can actually make some sense of this mess and keep people safe.
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