Three Strikes. Time for real changes, government and their sheltered corporations.

From:  ACP Vision and Action

Republished from

Saturday, June 25, 2016

by Melinda Pillsbury-Foster

Southern California is in no wise prepared for a major earthquake. We should be, however. Thomas Jordan, 

director of the Southern California Earthquake Center, said at the National Earthquake Conference in Long 

Beach, California, that the San Andreas fault is “locked, loaded, and ready to roll.” He added, “a massive 

earthquake could strike anytime.” Thomas's comments were quoted in the Inquisitor. Strike One.

Southern Californa is also unprepared for the perfect storm of brush fires which the long drought, die off 

of trees and vegetation, and high temperatures have delivered. Notice the news today. If you live in several 

parts of the southland just open your window and sniff the air. Strike Two.

These are problems caused by nature. We should have been prepared for these – but we weren't. Since we 

pay a lot for governmental agencies at the local, county, and state levels who claim they are in charge of 

ensuring we are safe it is fair to say they 'did not do their job.'

It is also fair to say they should held accountable for their failure to do so. If we survive we should ask this 

question loudly and accept no excuses.Strike Three.

The third danger hanging over our heads makes these first two impinging hazards far more serious. This 

involves a significant lack of oversight by those same agencies and the corporations they were supposed 

to be watching. The corporations, the utilities and oil companies who expect prompt payment from us, 

had all the control necessary to prevent the present situation. 

Quoted in the Times they said, ““Southern California’s smaller cities and large businesses must take 

the threat of a crippling earthquake far more seriously than they have been, a committee of business, 

public policy and utility leaders said Thursday, saying action is needed to “prevent the inevitable disaster 

from becoming a catastrophe.””

We thought the enormously expensive infrastructure of government and the utility companies were 

handling our safety and their own business. We were wrong. 

The most revolting and telling sign is the number of utilities and government agencies lining up, joined 

by Disney, to recommend (Your not going to believe this) another organization be formed to look at the 

problem. This is like starting a committee while the ocean is coming over the deck of the Titanic. Notice 

the attempt to slide out of the line of fire from the public outrage which should engulf them. 

Among these pampered individuals are, according to the Times article cited above, “executives for Southern 

California Edison, the Southern  California Gas Co., the Walt Disney Company, and Wells Fargo, along 

with the Los Angeles Economic Development Corporation, USC, the Port of Los Angeles and the Southern 

California Assn. of Governments.”

Mickey Mouse can be overlooked. The rest cannot. They had well paid and qualified experts on tap but 

nothing happened – unless you look at their end of the year bonuses and raises.

These folks want to, “create a Southern California Disaster Risk Reduction Initiative, intended to highlight 

the unresolved earthquake risks and convince decision makers to fix them. The group issued a report with recommendations on Thursday.”

“Convince decision makers?” How stupid are these people? Send them to Kern County to fight the fires there,

 then they will not need to be convinced. 

This is a CYA moment if I have ever seen one. You have the same players who have never maintained their infrastructure lining up to justify, in advance, what is now poised to happen to people and property for which 

they are, by government, not held responsible when they cause a disaster. As you may know, their 'natural 

monopolies' are treated as an extension of government which also holds itself as not responsible for what 

happens to us, the people who are being squeezed to pay the bills, which includes their salaries and bonuses. 

These hazards include the potential for disaster in the Cajon Pass. This is where the San Andreas fault cuts 
through California, and where the full force of an earthquake is most likely to be felt. 

Consider for a moment this looming threat on the edge of Southern California’s sprawling metropolis. The 
Cajon 

Pass is a narrow mountain pass where the San Andreas fault, which travels down the length of California 
and then, “intersects with combustible natural gas and petroleum pipelines, electrical transmission lines, 
train tracks 

and Interstate 15 north of San Bernardino. Did it, along with the petroleum infrastructure suddenly appear, 

perhaps caused by Harry Potter? No, it did not. 

A huge earthquake on the San Andreas could move one side of the fault as much as 30 feet from the other. 
Such an earthquake would rupture flammable pipelines and lead to a catastrophic explosion so powerful it leaves behind a crater.” Read that again. 

This is a time to remember Porter Ranch clearly and distinctly. 

Governor Brown just declared Kern County a Disaster, which is certainly true as the wild fire there is continuing 
its merry course and has already burned more than 46 square miles, destroyed over 100 buildings and killed at 
least two people, maybe more. Do you want to bet more is not coming? 

Edison and other utilities have, historically, resisted vigorously any attempt to enforce readiness for disaster and 
with maintaining their facilities. But now they are faced with the meltdown of the petroleum industry and realize 
their very existence is now in question. Therefore, instead of admitting their culpability, they are attempting to 
create a false record showing concern for the dangers they knew all along existed for us for which they could not 
be held accountable. They sat there, like steaming dog turds until the fires had started and the media was 
trumpeting the imminent threat of a major quake. 

It is also likely these unnatural monopolies will be seeking subsidies to upgrade. They must realize the public remembers all too well the wrongs done by the petroleum industry within the last 18 months. 

This comes at a time when ExxonMobil is still facing the possibility of impacting more than a quarter million 
people living within three miles of the Torrance Refinery. Pause to consider the impact of an earthquake, and 
fire on that facility.

The problems Edison now admits must be handled, itemized in the Times article, include:

1. “Reduce the risk of catastrophe at the Cajon Pass would be to put shutoff valves on both 
   sides of the San Andreas fault on petroleum and natural gas pipelines. If the pipelines 

   
   

   are automatically turned off during the earthquake, it could prevent huge amounts 

   
   

   
   

   of fuel from being ignited if the pipelines break.”

   What an interesting idea. Now ask yourself why they did not take these steps 20 years ago. 
2. “In cities, water pipes and natural gas lines will burst during shaking. 
   without running water for six months. Natural gas pipelines can fuel dangerous city fires.”         The reality is disturbing — burst water pipes could leave parts of Southern California 

 3. “Large businesses and local politicians may be underestimating the worst-case scenario.

This 'advice' from the petroleum industry is truly ironic as it is their irresponsibility and the lack of awareness 
of existing building technologies which would have largely reduced these hazards, along with the failure of 
government to carry out the duties they are paid to perform. 

4. “Many Southern Californians don’t know their neighbors, and that’s going to hurt 
     neighborhoods’ ability to recover.”

And whatever happens it is someone else's fault, not theirs because you don't have time to socialize when 
you and your wife are each working three jobs to make ends meet. 

5. “Many cities do not require collapse-prone buildings to be retrofitted.”

And yet fees are extracted from those building structures using the justification this money is paid to 
ensure the structures are safe. But most are not safe, and the affordable sustainable technologies are 
very slow to be approved by these same agencies. 

Cities and towns refuse to allow the use of proven technologies exist which can provide safety from 
earthquakes, fires and flooding. While others around the world are already using these in America 
they remain largely unknown because of the collusion between government and existing construction 
interests. 

The first reconstruction which Californians should demand is of government and the corporations 
who run government. Visit Agents Green to contact us and get information on sustainable materials 
what else should be done.

Celebrate an American Anniversary: December 16, 1773 The Boston Tea Party

From:  OpEd News 

General News 11/19/2006 at 21:35:15

By Melinda Pillsbury-Foster

On August 14, 1765 a small group of colonists came together to form a secret society in furtherance of independence. They first met in Boston under a tree located at the corner of Essex and Orange Streets near Hanover Square. They had gathered to protest the Stamp Act. When they left they had founded a secret society that would promote independence for the colonies, a front line for action. Effigies of two tax collectors had been hanged from what was ever after known as the Tree of Liberty. 

The Sons of Liberty came into existence because awareness was growing that action would soon be necessary. As the 233rd anniversary of the Boston Tea Party approaches all Americans should take a moment to thank those stalwart men who agreed on the need to preserve the autonomy of the colonies and took action. Today we have lost sight of the specific events that motivated the dumping of artificially cheap tea into Boston Harbor. But the reasons went to the insistence of the colonists that they were free, a truth we should never forget. 

The colonists in New England had served in the French and Indian Was fought out far to the west of them but since they were not allowed representation in the British Parliament they rejected the idea that they were obliged to pay for that war. 

In the wake of the French and Indian Wars the British Crown demanded payment for the expenditure of monies that war had cost the Crown, this despite the fact that the war was the continuation of a territorial conflict between the British Crown, France, and Spain. For Britain, the spoils of war was Canada, ceded to them by France. The colonists saw no reason that they should pay for the adventuring taking place far to the west of their own hard won colonies. But Britain had decided that the independence of those colonies, now developing and profitable, needed to be brought under firm control and used the War, which ended with the Treaty of Paris, February 10, 1763, as their excuse. 

The Crown was well aware that the colonists were used to governing themselves; after all, that is why the Puritans had gone there in the first place. But by imposing a tax the Crown hoped to both raise money and at the same time assert the right to impose whatever policies the Crown wished later. 

Imposition of the Stamp Act and the Townsend Acts in 1765 and 1767 were, therefore, a strategy aimed at both augmenting income to the Crown and establishing grounds for further control. This was clear to the colonists. Tensions rose, erupting in the Boston Massacre in 1770. 

Many Americans could see where the actions of Parliament were taking them and began to prepare for war in their towns. The Committees of Correspondence started meeting to read and discuss the causes in detail. The population as a whole was alive to the issues and well informed. 

The Boston Tea Party took place on December 16, 1773, the culmination of that campaign by Parliament to coax colonists into establishing the right to tax. The previous Stamp and Townsend Acts has been rescinded, leaving only that small tax on tea. The Crown put the first part of the agenda, raising money, on the back burner to establish the principle that they could impose control without representation. The colonial leadership in Boston was determined that their plan be thwarted. American freedom was not to be purchased for the cost of cheap tea. 

Three East India Company ships entered Boston Harbor. They were confronted with the sight of a crowd of 7,000 colonists, talking and shouting. That morning a group had met at the Old South Church and voted to demand the ships leave the harbor without paying the required duty. A delegation was sent to the Customs House to demand the ships lift anchor and leave the harbor. The Collector of Customs demanded payment; the ships would not leave otherwise. 

A cry went up from the milling throng when this news was relayed to them. The response came just a few hours later from the Sons of Liberty.

"It was now evening, and I immediately dressed myself in the costume of an Indian, equipped with a small hatchet, which I and my associates denominated the tomahawk, with which, and a club, after having painted my face and hands with coal dust in the shop of a blacksmith, I repaired to Griffin's wharf, where the ships lay that contained the tea. When I first appeared in the street after being thus disguised, I fell in with many who were dressed, equipped and painted as I was, and who fell in with me and marched in order to the place of our destination." 

In 1834 the above report by George Hewes would be published. Hewes, then a very old man and one of the few surviving participants, reported that the group had marched in costume down the nearby hill where they had gathered, two by two dressed in Indian garb. They divided into three groups and made sure that the tea was no longer an issue; rowboats of men later made sure it was unusable. This resulted the next spring in the closing of Boston Harbor by order of Parliament. 

The Sons of Liberty had adopted the forms and terms of the Iroquois tribe for their own secret rituals. When the Revolution began they extinguished their camp fire and picked up arms to fight in that war. Uncertain whether or not the new government would be stable they remained a secret society, ready to take action as necessary, until after the War of 1812. 

In 1813, at historic Fort Mifflin near Philadelphia, various groups that were descended from the original Sons of Liberty had come together to form the Society of Red Men. In 1847 they would again meet at Baltimore, Maryland and found the national organization called the Grand Council of the United States, the Improved Order of Redmen. The Red Men is one of only three organizations ever chartered by Congress. That bill was passed by the 58th Congress 2D Session. March 15, 1904. 

Over the Nineteenth Century their form had changed but they continued to impact the course of American life. The Revolution had been capitalized by the blood, sweat, and tears of ordinary Americans, asserting their right to determine their individual and community direction and culture against the greatest super power in the world as it was then. The America that was coming into existence would confront a series of crises that carried forward the same theme with different players. Will the people govern themselves or will they be subject to the control of others? 

At the same time ordinary Americans were confronting the fact that a newly mobile society had needs for social insurance to spread the risk of events in the lives of individuals. In 1867 the Benevolent and Protective Order of Elks came into existence to ensure that its members and their families would be cared for in the event of the death of the head of the household. The need for security of this kind resulted in an explosion in fraternal orders and programs aimed at ensuring that disaster would not destroy families. The Masons, the Foresters, the Moose, the Eagles, Woodmen of the World, and the reconstituted order that sprang from the Sons Of Liberty saw the need and began providing social insurance programs for their members. From those programs Teddy and Franklin Delano Roosevelt plucked the plans for such programs as Social Security, transferring these to government to be funded through taxation instead of through membership fees. 

The variety in fraternal orders had allowed Americans to choose one that suited their needs providing for their own security while extending the benefits of their efforts into their communities. The take over by government began the slow but steady process that converted control by the people to control of the people. 

The purpose of the fraternal orders was to see that Americans had in their own hands control of their security and well being. In the hands of the fraternal orders the costs of maintaining these programs remained low; retired businessmen administered them as volunteers. Since this was money they had raised themselves they counted every penny. With Government in charge costs and administration grew astronomically from then until today. Only when the people are in charge are the rights of individuals protected. 

On December 16th America will celebrate the 231st anniversary of the Boston Tea Party. It is an occasion that has been overlooked and neglected for far too long. The date marks the occasion when a small group of people thought through the issues and took action that kept control local, changing the future of the world. 

This December 16th many of us will gather to read the account of Hewes, toast the Sons of Liberty in whatever beverage most pleases us, and hold a moment of silence for those who took the actions that lead to Lexington, Concord and finally to the Declaration of Independence, establishing for the first time in human history the principles that each of us possesses our rights directly from God and through no king or government. 

By steps we became free; by the same small steps we could return to serfdom; that was the possibility that kept the Sons of Liberty active long past the ratification of the Constitution. The events that set our original course speak a truth we need today to turn America back towards the foundation of God-given rights that changed the course of history. The cost of liberty will ever be eternal vigilance and the willingness to take action.

Washington Corruption Is Unparalleled In History

From:  Paul Craig Roberts 

ovember 2, 2017 

Washington Corruption Is Unparalleled In History

Dr. George Szamuely, a distinguished member of the Global Policy Institute of London Metropolitan University, is a British citizen and not a partisan of US politics. He has carefully investigated the so-called Russian dossier and reports that it was entirely the work of the Hillary Democrats.

This fact was known at the beginning both to former CIA director John Brennan and to former FBI director James Comey. Yet both went along with the DNC-invented story of Russian election hacking and Christopher Steele’s fake “dossier” on Trump’s imagined relations with Russians.

The presstitute media told the lies that they were supposed to tell. The consequence of this plot has been to waste the first year of Trump’s presidency and to prevent President Trump from reducing the dangerously high tensions with nuclear power Russia. This is a disservice not only to President Trump but also to the American people and the planet itself.

Dr. Szamuely delivers the sordid details of the plot by a corrupt American establishment to destroy a president selected by the people and not by the ruling interest groups.

You can read the story here: http://theduran.com/obama-hillary-clinton-weaponized-dossier/

The arrest of Paul Manafort by former FBI director Robert Mueller is a further indication of the corrupt character of Washington and the “law” that it utilizes as a weapon. Mueller is supposed to be investigating “Russiagate.” His arrest of Manafort has nothing whatsoever to do with Russiagate. Mueller arrested Manafort on the basis of allegations that in 2006, a decade prior to “Russiagate,” Manafort did not report as income payments he received as an unregistered agent for the Ukrainian government.

According to newspaper reports at the time, Zionist Neoconservative Richard Perle, a former member of the Defense Policy Board and an Assistant Secretary of Defense, served as an unregistered agent for Turkey and was not arrested for his violation of the registration act.

But Manafort is different. By arresting Manafort, who served for a time as Trump’s presidential campaign manager, Mueller can pile on false charges until Manafort buys his way out by providing Mueller with false charges against Trump.

In US federal courts today, charges no longer have to be proven, just asserted. If Trump’s surrender to the military/security complex and abandonment of his intention to normalize relations with Russia do not suffice to make Trump acceptable to the military/security complex, Mueller can squeeze Manafort until Manafort agrees to whatever story Mueller hands him. The last thing Manafort or Trump can count on is justice. There has been no justice in the US “Justice” system for decades.

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A Case of Judicial Murder?

From:  Paul Craig Roberts 

“When we tolerate what we know to be wrong–when we close our eyes and ears to the corrupt because we are too busy, or too frightened–when we fail to speak up and speak out–we strike a blow against freedom and decency and justice.” – Robert Francis Kennedy

John Remington Graham

 

I have been asked many times why I have intervened in the federal prosecution of Dzhokhar Tsarnaev, the young man who was convicted and sentenced to death in the Boston  Marathon bombing case where two brothers, on April 15, 2013, allegedly detonated pressure cooker bombs on Boylston Street in front of the Forum Restaurant that killed or maimed many people.

As I wrap up my career of fifty years as a member of the bar, including service as a public defender in state and federal courts, co-founder of an accredited law school, and chief public prosecutor in Minnesota state courts, I am apprehensive that my country might be entering into an era of judicial murder.

Judicial murder is the practice of designing a trial to get a guilty verdict, regardless of the facts, and a death sentence carried out.  It has happened in many countries in all ages.  It has been recognized as a threat of public justice by the United States Supreme Court in Powell v. Alabama, 287 U. S. 45 at 72-72 (1932). Judicial murder is followed by corruption and destruction of society.The judicial murder of Socrates was followed by loss of the classical civilization of ancient Greece.  The judicial murder of Jesus of Nazareth, whether son of God or venerable philosopher, was followed by the destruction of Jerusalem and the second temple. The judicial murder of Joan of Arc was followed by loss of most English lands in France. The judicial murder of Charles the First was followed by loss of the free constitution of England.  The judicial murder of Louis XVI was followed by 150 years of defeat, ruin, suffering, and chaos in France.  Judicial murder in the Third Reich was followed by humiliating defeat of Germany.  Judicial murder in the Soviet Union was followed by collapse of the Soviet empire.  If the justice system cannot be trusted, evil consequences follow.

My active intervention in the case began when I assisted the Russian aunt, herself a lawyer, of Dzhokhar file pro se papers in the federal district court in Boston, asking that she be recognized as a friend of the court so she could present evidence conclusively showing, by FBI-gathered evidence, incorporated by reference into the indictment, that Dzhokhar could not have detonated the bomb he was supposed to have detonated.  I proceeded in this way as instructed by the bar liaison officer of the federal district court and the clerk’s office.  Dr. Paul Craig Roberts wrote up this legal adventure in his column of August 17, 2015, in a way which draws from the judicial record, and portrays the scenario clearly enough.  The link is https://www.paulcraigroberts.org/2015/08/17/fbi-evidence-proves-innocence-accused-boston-marathon-bomber-dzhokhar-tsarnaev.  Those unfamiliar with this case need to read that article.

 

The claim of the Russian aunt sounds fantastic only so long as one believes newspapers and does not pay attention to critical, undeniable facts gathered by the FBI, and the language of the indictment as returned on June 27, 2013, especially paragraphs 6, 7, and 24.  A number of things have caused me to doubt Dzhokhar’s guilt.

The FBI crime lab determined from fragments at the scene of the explosions by no later than April 16, 2013, that the culprits were carrying heavy-laden black backpacks on Boyleston Street just before the explosions.  This was not an evaporating investigation theory, but was incorporated into the indictment, was part of the government’s case-in-chief, and was never disavowed by anyone involved in the trial.  On April 18, 2013, the FBI determined that the culprits were portrayed in a street video maintained by the Whiskey Steak House on Boyleston Street. Two still frames were used to identify the brothers Tamerlan, who was shot dead by police, and Dzhokhar, who survived, and was charged, convicted, and sentenced to death.   A third still-frame from the same street video shows Dzhokhar, carrying not a heavy-laden black backpack, but a light-weight white backpack over his right shoulder. The very evidence used by the FBI, and described in the indictment to identify Dzhokhar eliminates him as certainly as white is distinguished from black. The FBI evidence of an exploded backpack is black and the FBI’s identification of Dzhokhar at the scene of the crime shows him with a white backpack. This exculpatory evidence was kept out of the trial.

What of the confessions attributed to Dzhokhar?  The law has always known that, contrary to popular belief, confessions are highly unreliable, often contrived or staged by artifice, or otherwise false, which is why the law has long used safeguards to assure that alleged confessions are received only cautiously under proper circumstances.  The alleged confession by Dzhokhar written in the dark on the side of a boat under which the boy injured from gunshot woulds was hiding is highly suspect. Moreover, if Dzhokhar was willing to confess, why was he hiding?  The confession at sentencing was plainly enough scripted for him, and is not corroborated by what the law calls the “corpus delicti.”  

 

But more troubling evidence exists.  Dr. Lorraine Day was the chief of orthopedic surgery at San Francisco General Hospital for some twenty-five years.  She treated many grave injuries, and is an impeccable medical expert.  She prepared a decisive report, dated May 4, 2015, on the Boston bombing case, which she concluded was a hoax. https://www.reddit.com/r/conspiracy/comments/34vs8r/lorraine_day_md_former_chief_of_orthopedic/  She observed, for example, that photos of the scene after the explosions revealed no blood when it should have been visible everywhere, and that, when blood did appear, it was of a bright orange red Hollywood color, not maroon as real blood appears in real life.  The Boston marathon case appears to be at least contaminated by crisis actors if not entirely a false flag event. The video of the man showing no trauma whose leg is purported to be blown away being wheeled down the street sitting upright in a wheelchair is a dead giveaway as to the presence of crisis actors. Any such casualty mishandled in such a way would have quickly bled to death.

The trial of Dzhokhar raises more serious questions. Mr. Tsarnaev was defended by court-appointed lawyers who did not do their job.  His chief counsel had powerful exculpatory evidence available, yet she forcefully asserted that he was guilty in her opening statement, never used the exculpatory evidence at trial, and did not even ask for a verdict of not guilty in her final argument to the jury. Dzhokhar had no defense.  As a lawyer with a half century of experience, it was painful for me to watch what looked like a show trial in which the verdict and sentence were assured in advance.

On verge of retirement, I have no interest in acquiring notoriety to build a practice. I have nothing to gain from coming to the defense of a person abandoned by law, the media, and everyone but his aunt. But my country has everything to lose from judicial murder in behalf of some government agenda. We must examine if that is the case and, if so, prevent it.

As a last hurrah as a lawyer, I recently filed a motion in behalf of three American citizens before the First Circuit in the appeal of Dzhokhar Tsarnaev, asking that they be recognized as friends of the court, so they can show that, on the basis of facts actually of record before the federal district court in Boston, Dzhokhar did not detonate a pressure-cooker bomb on Boylston Street on April 15, 2013, as charged in the indictment. The government and major media of the United States have created such confusion and libelled the accused so foully that it is impossible for the average citizen relying on newspapers to imagine that Dzhokhar is innocent. Major media waged a lock-step propaganda campaign against Mr. Tsarnaev. 

However, perhaps a turning point occurred on Monday of this week. Newsweek on October 23, 2017, reported, two years and two months after Dr. Roberts’ report on my filing in behalf of Dzhokhar’s aunt, Maret Tsarnaeva, that evidence might exist of Dzhokhar’s innocence. http://www.newsweek.com/boston-marathon-bombers-aunt-says-fbi-set-her-nephew-and-she-has-proof-691058 If other of the American media would join Newsweek in informing the public that there is doubt about the conviction, perhaps not only a possible case of wrongful conviction can be corrected, but also a case of possible judicial murder could be prevented.

 – John Remington Graham of the Minnesota Bar (#3664X), jrgraham@novicomfusion.com, 418-888-5049.

 

Regulation Is Killing Community Banks – Public Banks Can Revive Them

From:  Common Dreams 

by

Ellen Brown

Crushing regulations are driving small banks to sell out to the megabanks, a consolidation process that appears to be intentional. Publicly-owned banks can help avoid that trend and keep credit flowing in local economies.

"Killing off the community banks with regulation means killing off the small and medium-size businesses that rely on them for funding, along with the local economies that rely on those businesses," writes Brown. "Community banks service local markets in a way that the megabanks with their standardized lending models are not interested in or capable of." (Photo: Blackline)

At his confirmation hearing in January 2017, Treasury Secretary Stephen Mnuchin said, “regulation is killing community banks.” If the process is not reversed, he warned, we could “end up in a world where we have four big banks in this country.” That would be bad for both jobs and the economy. “I think that we all appreciate the engine of growth is with small and medium-sized businesses,” said Mnuchin. “We’re losing the ability for small and medium-sized banks to make good loans to small and medium-sized businesses in the community, where they understand those credit risks better than anybody else.”

The number of US banks with assets under $100 million dropped from 13,000 in 1995 to under 1,900 in 2014. The regulatory burden imposed by the 2010 Dodd-Frank Act exacerbated this trend, with community banks losing market share at double the rate during the four years after 2010 as in the four years before. But the number had already dropped to only 2,625 in 2010.  What happened between 1995 and 2010?

Six weeks after September 11, 2001, the 1,100 page Patriot Act was dropped on congressional legislators, who were required to vote on it the next day. The Patriot Act added provisions to the 1970 Bank Secrecy Act that not only expanded the federal government’s wiretapping and surveillance powers but outlawed the funding of terrorism, imposing greater scrutiny on banks and stiff criminal penalties for non-compliance. Banks must now collect and verify customer-provided information, check names of customers against lists of known or suspected terrorists, determine risk levels posed by customers, and report suspicious persons, organizations and transactions. One small banker complained that banks have been turned into spies secretly reporting to the federal government. If they fail to comply, they can face stiff enforcement actions, whether or not actual money-laundering crimes are alleged.

In 2010, one small New Jersey bank pleaded guilty to conspiracy to violate the Bank Secrecy Act and was fined $5 million for failure to file suspicious-activity and cash-transaction reports. The bank was acquired a few months later by another bank. Another small New Jersey bank was ordered to shut down a large international wire transfer business because of deficiencies in monitoring for suspicious transactions. It closed its doors after it was hit with $8 million in fines over its inadequate monitoring policies.

Complying with the new rules demands a level of technical expertise not available to ordinary mortals, requiring the hiring of yet more specialized staff and buying more anti-laundering software. Small banks cannot afford the risk of massive fines or the added staff needed to avoid them, and that burden is getting worse. In February 2017, the Financial Crimes Enforcement Network proposed a new rule that would add a new category requiring the flagging of suspicious “cyberevents.” According to an April 2017 article in American Banker:

[T]he “cyberevent” category requires institutions to detect and report all varieties of digital mischief, whether directed at a customer’s account or at the bank itself. . . .

Under a worst-case scenario, a bank’s failure to detect a suspicious [email] attachment or a phishing attack could theoretically result in criminal prosecution, massive fines and

One large bank estimated that the proposed change with the new cyberevent reporting requirement would cost it an additional $9.6 million every year.

Besides the cost of hiring an army of compliance officers to deal with a thousand pages of regulations, banks have been hit with increased capital requirements imposed by the Financial Stability Board under Basel III, eliminating the smaller banks’ profit margins. They have little recourse but to sell to the larger banks, which have large compliance departments and can skirt the capital requirements by parking assets in off-balance-sheet vehicles.

In a September 2014 article titled “The FDIC’s New Capital Rules and Their Expected Impact on Community Banks,” Richard Morris and Monica Reyes Grajales noted that “a full discussion of the rules would resemble an advanced course in calculus,” and that the regulators have ignored protests that the rules would have a devastating impact on community banks. Why? The authors suggested that the rules reflect “the new vision of bank regulation – that there should be bigger and fewer banks in the industry.” That means bank consolidation is an intended result of the punishing rules.

House Financial Services Committee Chairman Jeb Hensarling, sponsor of the Financial CHOICE Act downsizing Dodd-Frank, concurs. In a speech in July 2015, he said:

Since the passage of Dodd-Frank, the big banks are bigger and the small banks are fewer. But because Washington can control a handful of big established firms much easier than many small and zealous competitors, this is likely an intended consequence of the Act. Dodd-Frank concentrates greater assets in fewer institutions. It codifies into law ‘Too Big to Fail’ . . . . [Emphasis added.]

Dodd-Frank institutionalizes “too big to fail” by authorizing the biggest banks to “bail in” or confiscate their creditors’ money in the event of insolvency. The legislation ostensibly reining in the too-big-to-fail banks has just made them bigger. Wall Street lobbyists were well known to have their fingerprints all over Dodd-Frank.

   Restoring Community Banking: The Model of North Dakota  

Killing off the community banks with regulation means killing off the small and medium-size businesses that rely on them for funding, along with the local economies that rely on those businesses. Community banks service local markets in a way that the megabanks with their standardized lending models are not interested in or capable of.

How can the community banks be preserved and nurtured? For some ideas, we can look to a state where they are still thriving – North Dakota. In an article titled “How One State Escaped Wall Street’s Rule and Created a Banking System That’s 83% Locally Owned,” Stacy Mitchell writes that North Dakota’s banking sector bears little resemblance to that of the rest of the country:

With 89 small and mid-sized community banks and 38 credit unions, North Dakota has six times as many locally owned financial institutions per person as the rest of the nation. And these local banks and credit unions control a resounding 83 percent of deposits in the state — more than twice the 30 percent market share that small and mid-sized financial institutions have nationally.

Their secret is the century-old Bank of North Dakota (BND), the nation’s only state-owned depository bank, which partners with and supports the state’s local banks. In an April 2015 article titled “Is Dodd-Frank Killing Community Banks? The More Important Question is How to Save Them”, Matt Stannard writes:

Public banks offer unique benefits to community banks, including collateralization of deposits, protection from poaching of customers by big banks, the creation of more successful deals, and . . . regulatory compliance. The Bank of North Dakota, the nation’s only public bank, directly supports community banks and enables them to meet regulatory requirements such as asset to loan ratios and deposit to loan ratios. . . . [I]t keeps community banks solvent in other ways, lessening the impact of regulatory compliance on banks’ bottom lines.

We know from FDIC data in 2009 that North Dakota had almost 16 banks per 100,000 people, the most in the country. A more important figure, however, is community banks’ loan averages per capita, which was $12,000 in North Dakota, compared to only $3,000 nationally. . . . During the last decade, banks in North Dakota with less than $1 billion in assets have averaged a stunning 434 percent more small business lending than the national average.

The BND has been very profitable for the state and its citizens – more profitable, according to the Wall Street Journal, than JPMorgan Chase and Goldman Sachs. The BND does not compete with local banks but partners with them, helping with capitalization and liquidity and allowing them to take on larger loans that would otherwise go to larger out-of-state banks.

In order to help rural lenders with regulatory compliance, in 2011 the BND was directed by the state legislature to get into the rural home mortgage origination business. Rural banks that saw only three to five mortgages a year could not shoulder the regulatory burden, leading to business lost to out-of-state banks. After a successful pilot program, SB 2064, establishing the Mortgage Origination Program, was signed by North Dakota’s governor on April 3, 2013. It states that the BND may establish a residential mortgage loan program under which the Bank may originate residential mortgages if private sector mortgage loan services are not reasonably available. Under this program a local financial institution or credit union may assist the Bank in taking a loan application, gathering required documents, ordering required legal documents, and maintaining contact with the borrower. At a hearing on the bill, Rick Clayburgh, President of the North Dakota Bankers Association, testified in its support:

Over the past years because of the regulatory burdens our banks face by the passage of Dodd Frank, and now the creation of the Consumer Financial Protection Bureau, it has become very prohibitive for a number of our banks to provide residential mortgage services anymore. We two years ago worked both with the Independent Community Bankers Association, and our Association and the Bank of North Dakota to come up with the idea in this program to help the bank provide services into the parts of the state that really residential mortgaging has seized up. We have a number of our banks that have terminated doing mortgage loans in their communities. They have stopped the process because they cannot afford to be written up by their regulator.

Under the Mortgage Origination Program, local banks get paid what is essentially a finder’s fee for sending rural mortgage loans to the BND. If the BND touches the money first, the onus is on it to deal with the regulators, something it can afford to do by capitalizing on economies of scale. The local bank thus avoids having to deal with regulatory compliance while keeping its customer.

The BND is the only model of a publicly-owned depository bank in the US; but in Germany, the publicly-owned Sparkassen banks operate a network of over 15,600 branches and are the financial backbone supporting Germany’s strong local business sector. In the matter of regulatory compliance, they too capitalize on economies of scale, by providing a compliance department that pools resources to deal with the onerous regulations imposed on banks by the EU.

The BND and the Sparkassen are proven models for maintaining the viability of local credit and banking services. It is time other states followed North Dakota’s lead, not only to protect their local communities and local banks, but to bolster their revenues, escape the noose of Washington and Wall Street, and provide a bail-in-proof depository for their public funds.

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Ellen Brown is an attorney and founder of the Public Banking Institute. She is the author of twelve books, including the best-selling Web of Debt, and her latest book, The Public Bank Solution, which explores successful public banking models historically and globally.