Giving More Power to the Most Powerful Corporation

Obama finance “reform” plan would give more authority

What is the most powerful business corporation in the US?

At one time some might have said General Motors. That was when GM was the #1 automaker on the planet and “what was good for GM was good for America” was the mantra on Capital Hill.

Many would nominate today Wall-Mart (#1 in revenue), Exxon-Mobil (#1 in profits), Citibank (the nation’s biggest bank), General Electric (arguably the most diversified) Microsoft (the computer giant), Google (information gatekeeper), or AT&T (communications behemoth). A fine case can be made for each of these not only being economically dominant but politically influential in shaping public policy effecting our lives, communities and the natural world.

None of the nominees come remotely close to the power and influence of one business corporation few even consider to be a business corporation: the Federal Reserve – a privately-owned and mostly independent financial institution.

The Federal Reserve System is grossly misnamed. It’s hardly federal at all (if federal is implied to be “public”) but, rather, established under the 1913 Federal Reserve Act as a private corporation composed of 12 regional Federal Reserve banks with the all-mighty power and authority to coin and issue our nation’s money and to regulate the volume of money through interest rates. It has, thus, the role of the nation’s central bank, yet it’s beholden largely to its major stockholders – private banks who hold all the stock in the regional banks in proportion to their size. The federal government cannot own stock, nor can the public. The largest stockholders in the Federal Reserve corporation are the nation’s biggest banks – JP Morgan Chase, Citibank, Bank of America, etc.

The President, Congress and the courts have little control over the Federal Reserve bank or their policies. The major exception is Presidential appointment and Senate confirmation of the seven Board of Governors – currently headed by Ben Bernanke. Once appointed for 14-year terms, Board Members function mostly independent from public control. Annual reports to Congress and twice-a-year appearances of the Fed Chair are about the only opportunities to learn what the Fed is up to (all the most urgent since the Fed’s books haven’t been audited).

Meanwhile each of the 12 regional banks have their own boards. They are all composed of member banks.

The corporate underpinning of the Fed was clarified and reinforced by a 1982 case, Lewis v. United States which declared the Federal Reserve Banks are “independent, privately owned and locally controlled corporations”, and there is not sufficient “federal government control over ‘detailed physical performance’ and ‘day to day operation'” of the Federal Reserve Bank for it to be considered a federal agency.

Highlights of the case are at
http://www.globalresearch.ca/index.php?context=va&aid=8518

The Fed creates our nation’s money. Actually, they buy the pieces of paper, called Federal Reserve Notes, which are printed by the US government for pennies on the dollar. Quite a profitable scheme. They use these Federal Reserve Notes then to buy US government bonds.

Why doesn’t the US government itself print US government money rather than selling government IOUs for Federal Reserve Notes that must be paid back with interest (which constitutes our national debt)? Fabulous question. It’s a democratic question that needs to be asked to every federal public official and brought up before the media and before groups we are a part of. Why? Because government debt is crippling the nation and preventing us from meeting our real needs and acting independently.

Obama plan shifts oversight duties

All this is background to the proposal this week by the Obama administration to “reform” the nation’s financial institutions. Some of the proposals changes are good, specifically the creation of a new agency to protect consumers by taking over the oversight of mortgages and prohibiting the Federal Reserve bank from use emergency powers to bail out failing banks

On the other hand, the proposal would give the Fed sweeping new powers to oversee the securities and insurance businesses and all other firms whose failure could threaten the economy. . These regulatory powers, as proposed, could duplicate and even overrule other regulators.

Giving a private financial corporate the power and authority to be master regulator of financial corporations is profoundly anti-democratic.

Congress will be debating this proposal over the weeks and months ahead.

Here’s 4 actions to take:

1. Learn more about the Federal Reserve. There are many excellent materials (books, articles, etc.) which expose this mighty corporation.

2. Tell your US Senators and Representatives to oppose any financial “reforms” that give the Federal Reserve any new power.

3. While you’re at it, ask your federal elected representatives to support HR 1486 calling for an independent audit of the Federal Reserve.

4. Ask your federal elected representatives to introduce legislation calling for the democratization of our currency. The creation of money is too important of a national function to be farmed out to a private corporation – as well as to banks. It’s time for money creation to be a public responsibility.

As Thomas Jefferson declared, “If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.”

Order in the Court: Full Public Financing of Judicial Elections

This week’s US Supreme Court ruling that a West Virginia Supreme Court judge who received a huge political campaign contribution (or “investment” depending on your viewpoint) from Massey coal corporation should have recused himself from a case involving that corporation is raising serious questions within Ohio legal…and media… circles. Ohio is one of 39 states that elect some or all judges.

Will all elected judges now have to recuse themselves from all cases involving big campaign donors?

What if a big campaign donor/investor is only a minor party in a legal case?

Is there a contribution/investment threshold amount above which judges must recuse themselves?

Is it time to ditch direct election of judges altogether in favor of appointment by the Governor based on a merit selection system?

Glaringly absent from reports of this story containing comments from Ohio Chief Justice Thomas Moyer and political science and constitutional law professors is one solution that addresses many problem of private money in public elections: full public financing.

Maine, Arizona and other states provide candidates who agree not to accept any private money from any source (business corporations, labor unions, themselves) a fixed amount of public funds. Unfortunately because of the 1976 US Supreme Court Buckley vs Valeo nonsensical decision equating money with free speech, forcing candidates to accept public funds or imposing campaign spending limits is illegal. Also, because of several US Supreme Court decisions anointing business corporations as “persons,” it is illegal to prevent corporations from exercising their free speech “rights” by shelling out corporate cash to candidates, ballot campaigns, political parties, and third party issue front groups.

Nevertheless, a candidate who voluntarily accepts “Clean Money” in a full public finance system can in the course of his/her campaign point out how they are, in fact, beholden to their funders (the public) rather than to the funders of candidates who receive corporate donations.

A full public financing system serves, therefore, to both educate constituents on the insidious “pay to play” funding system of privately funded elections as well as provides a real choice for candidates and voters. Candidates who opt for public funding can spend the bulk of their campaign talking to voters rather than having to spent an inordinate amount of time dialing for dollars. Once elected, publicly funded candidates can freely work to reward their funders (i.e. the public) by acting for the common good. In the case of judges, that means making decisions on the merits of cases without having to worry about whether and how much plaintiffs or defendants may have contributed/invested in their political campaigns.

Voluntary public financing is by itself not enough to break the powerful link between corporations and candidates. We must also reverse the Buckley and corporate personhood Supreme Court decisions. Money is not speech. It’s property. Corporations are not people. They’re creations of and subordinate to the state and public.

Voluntary public financing, however, is a stepping stone to more democratic elections.

Taken for a Ride

Citizens and General Motors workers are being taken for a ride by the Obama administration’s plan to restructure GM.

The first article linked below , by Greg Palast, details how Obama’s “Car Czar,” Steven Rattner, is illegally pushing for the seizing of workers’ pension funds to pay off GM’s creditors — namely JP Morgan Chase financial corporation and Citibank financial corporation.

The second link, an article by POCLAD principal Mike Ferner, critiques the effort to reform the auto corporation. Needed, instead, is a commitment to replace GM with a cooperative economic structure which converts industrial infrastructure to producing light rail, bullet trains and cleaner buses — reliable and sustainable transportation.

Grand Theft Auto: The Bankruptcy of General Motors
by Greg Palast
http://www.globalresearch.ca/index.php?context=va&aid=13812

We Don’t Need the General Motors Corp.
by Mike Ferner
http://www.commondreams.org/view/2009/06/05-8

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This is What Democracy in Ohio Looks Like: Ohio’s Democratic/Self-Determination Infrastructure
http://www.afsc.net/PDFFiles/InfrastructureDecember08.pdf

We are in the process of updating this publication which lists alternatives to corporations, corporate governance and elite control across the state. If you know of any documents, policies, institutions, structures, or groups that should be included, excluded, or revised — please let us know.

Please send any suggested changes to Adam Fischer at afischer@afsc.org by Friday, June 19.

Thank you.