Oops. $330 MILLION is a rather large mistake. Citi hiked credit card holders’ interest rates immediately after two late payments, then never corrected them as required after the customers paid on time for the next six months. Half of the credit card customers got no reduction to interest rates at all. Half got only a small reduction.
Citigroup said it would refund about $330 million to consumers after discovering it had overcharged 1.75 million credit card accounts on their annual interest rates.
The mistake was discovered after a “periodic internal review,” not via an external regulator, and the mistakes had been going on since 2011. That’s seven years of overcharging 1.75 million customers on their interest rates, which seems a very long time to take to discover a mistake of this magnitude, especially when you consider customers are punished immediately after just two months of being late on a payment date.
Which begs the question, how many other megabanks are making these kinds of “mistakes”? And why are we allowing banks with this kind of track record for punishing customers to hold public funds?
Author Nomi Prins weighs in on the end of Janet Yellen's reign as chair of the Federal Reserve, and the bloody markets yet to come. There’s a fight going on.
Nomi Prins on Truthdig:
"The decade of cheap money crafted by the Fed, and dispersed through collusion among the world’s major central banks, is more powerful than any new head of any one central bank. More volatility will characterize this year, but these major central and private bankers will have one another’s backs. That means the global status quo of cheap money turboboosting the financial markets will continue, Elon Musk rocket style. It’s all these central bankers know. …
This doesn’t mean a financial crisis of greater magnitude isn’t brewing. It is. But central bankers will fight like hell to avoid it, using the only weapon in their arsenal: an unlimited, unregulated and unchecked ability to fabricate capital for the financial system. ...
Cheap Money Hasn’t Worked for Main Street
The markets (read: big banks) got upset that their flow of cheap money might dare come to an end. Yet the stated goal for this money flow, boosting the overall economy, hasn’t been achieved … except in the eyes of politicians, central and private bankers, and people blind to the correlation and causation of cheap-money policy with asset bubbles.
Groundswell of interest in Public Banks has advocates pondering how they could transform their cities
An inspiring new article in Next City takes the pulse of key San Franciscans as they consider starting a Public Bank. The article mentions PBI and delves deeply into the benefits the city could gain. Ellen Brown and Walt McRee are among those quoted.
It includes a particularly good analysis on governance and how the city is already making the same sort of loans the Public Bank would make without running into political issues. A Public Bank would simply expand the city’s ability to make the types of loans it is already making. Supervisor Malia Cohen wants to get the Public Bank incorporated by the end of this year.
Author Oscar Perry Abello writes:
“As [Supervisor Maria] Cohen and others see it, modeling a city-owned bank after the Bank of North Dakota would go beyond protecting public dollars from being used in ways that contradict public values and priorities — it could also help utilize those dollars as a powerful tool to advance those values and priorities."
Supervisor Malia Cohen:
“The key thing I took away from the [community responsive banking] report was this is doable. There’s a lot of moving parts in our financial banking and payroll system, but San Francisco has a lot of talent, and the legal framework already exists.
It’s my goal to have a thoughtful directive from the task force by the summertime, so we can move forward in the fall to introduce legislation to get this incorporated by the end of this year.”
In a recent LA Times article, David Dayen explains how creating a Public Bank for the cannabis industry in California would be a tremendous step forward, but also a tremendous missed opportunity:
“A public bank could do so much more than hold deposits for a handful of entrepreneurs. At a time when California has so many pressing needs, from transportation to water delivery, a public bank could help stretch scarce dollars and rebuild the state. …
A public bank could also be tasked with lending money to support critical public needs. Ethical developers have trouble financing affordable housing, and nonprofit entrepreneurs have trouble securing small business loans; a California public bank could operate as a lifeline.”
LA City Council committee approves resolution supporting state bill to create a Public Bank for marijuana businesses
Things are moving fast in California. A Los Angeles City Council committee approved a resolution February 16 to support the recently introduced state bill that would create a Public Bank that could take deposits from legal marijuana businesses.
California Senate Bill 930, introduced at the end of January, would establish a state-chartered bank that would “allow a person licensed to engage in commercial cannabis activity to engage in banking activities in California”.
The LA resolution to support SB 930 was proposed by Council President Herb Wesson and approved by the council’s Rules, Elections and Intergovernmental Relations Committee.
Wesson proposed creating a Public Bank for the City of Los Angeles in July 2017.Read more
Phoenix Goodman and Trinity Tran from our allies Public Bank LA and Divest LA delivered a powerful extended interview with Cenk Uygur on TYT in early February. Watch them give an excellent tactical and strategic step-by-step for any community wanting to make revolutionary systemic change.
Trinity Tran states how the coalition’s effort to persuade LA city officials to divest the city's funds from Wells Fargo succeeded:
“[It] would send a very powerful message to Wells Fargo and to all big banks: If you finance harm to our community, we will defund you. … We created a very specific agenda … leveraging policy and protest.”
Phoenix Goodman explains how Divest LA took the natural next step to Public Banking:
“The dilemma that hit us: yes you can divest from a big bank, but the only other banks that can handle that volume are other Wall Street banks. The penny dropped. … Can we create a city Public Bank?”
Trinity Tran continued:
“Our advice to activists is: be bold. You can actually educate and inspire a lot of our elected officials.”
“A small group of dedicated people can make a big difference.”
Pam Martens and Russ Martens of Wall Street on Parade alert their readers, "It’s not every day that three well-credentialed men are willing to put their names and reputations behind the allegation that the U.S. Federal Reserve is rigging the stock market. But that’s exactly what happened yesterday."
Indeed, Paul Craig Roberts, Michael Hudson and Dave Kranzler write,
"It appears that in May 2010, August 2015, January/February 2016, and currently in February 2018 the Fed is rigging the stock market by purchasing S&P equity index futures in order to arrest stock market declines driven by fundamentals...."
Paul Craig Roberts is a former Associate Editor of the Wall Street Journal and Assistant Secretary of the U.S. Treasury. Michael Hudson is an Economist, and Dave Kranzler a Wall Street veteran. They continue:
"If central banks can produce zero interest rates simultaneously with a massive increase in indebtedness, why can’t they keep equity prices far above the values supported by fundamentals? As central banks have learned that they can rig financial asset prices to the delight of everyone in the market, in what sense does capitalism, free markets, and price discovery exist? Have we entered a new kind of economic system?"
San Francisco has assembled its 16-member Municipal Bank Feasibility Task Force that will study launching a Public Bank. SF Treasurer José Cisneros announced last week the task force’s purpose is “to identify and pursue opportunities to extend access to credit for small businesses, provide banking services to the cannabis industry, expand capital for affordable housing, and research the viability and advisability of a municipal bank.”
“San Francisco has always been a leader in socially responsible banking and investment. I am eager to work with the Task Force to identify new approaches to support our City’s bold vision for inclusive innovation.”
Task force member and former Supervisor John Avalos, a longtime advocate for Public Banks, told the San Francisco Examiner:
“With the profit motive out of its mission, the municipal bank can hold private financial institutions to a higher standard of greater equity and public good.”
The first meeting of the Municipal Bank Feasibility Task Force will be on Wednesday, February 21 in City Hall room 305 from 3-5pm. The full meeting calendar is posted here.Read more
The Story of Stuff project put out this short video a few years ago that is just as urgent today. The Story of Solutions explores how we need to reorient ourselves to an entirely new goal if we want to create a just economy. We need to change the point of the “game.”
Public Banking is exactly this kind of “game changing solution.” A Public Bank gives people more power, lessens the wealth gap, and brings democracy to our money. It is time to build the solutions … solutions that will change the entire game.
PBI Chair Ellen Brown’s latest article explains how the US itself is the largest money launderer of cannabis cash. The IRS accepts money from the cannabis industry in the majority of states where the herb is now legal to some degree, as payment of taxes — turning it into “clean” money — all the while continuing to brand growers and dispensaries criminal enterprises. The arrangement results in massive US profits.
As the will of the people moves rapidly toward legalization in light of mounting evidence of cannabis’ significant therapeutic value, the industry remains in banking limbo. Ellen writes: “If the government can accept marijuana money for taxes, banks should be able to accept it.”
To that end, a bipartisan coalition of state attorneys general sent a letter Jan 16 to leaders in Congress requesting legislation to “provide a safe harbor” for banks that provide financial products or services to state-legal marijuana businesses.
“The government makes a massive profit off the deal, snatching up to 70 percent of the proceeds of the reporting businesses, as opposed to the more typical rate of 30 percent … [since they] are not entitled to deduct their costs when reporting their income.
This is not only a clear case of the unequal protection of the laws but is a clear admission by the government that it is knowingly accepting illegal funds. The government is a principal beneficiary of a business the government itself has made illegal.