the wealthy. Money also can hire public relations firms to improve one’s image or make large donations to universities and cultural entities such as museums, music halls, and art galleries. Wealth in the form of stock ownership can be used to control whole corporations, which today have inordinate influence in society, media, and government.
And just as wealth can lead to power, so can power lead to wealth. Recent presidents such as Lyndon B. Johnson and Richard M. Nixon entered office without an extraordinary amount of money but left as millionaires. This is because those who control a government can use their positions to feather their own nests. Domhoff said this can be done by means of a favorable land deal for relatives at the local level or perhaps a huge federal government contract to a new corporation run by friends who will hire you when you leave government. “If we take a larger historical sweep and look cross-nationally, we are well aware that the leaders of conquering armies often grab enormous wealth, and that some religious leaders use their positions to acquire wealth,” commented Domhoff.
PUBLIC DEBT, PRIVATE PROFIT
W HETHER RICH OR POOR , most Americans believe their finances are safe, thanks to a federal government corporation created in the Great Depression year of 1933.
About eight-four hundred American banks participate in the Federal Deposit Insurance Corporation (FDIC), an independent agency created by the Congress to maintain stability and public confidence in the nation’s financial system by insuring deposits, supervising banks for safety and soundness, and managing receiverships. These banks allocate a small portion of their profits to collectively insure bank deposits in cases where a bank fails.
And fail they did in late 2008 and 2009. Between the two years, 111 banks failed and many more teetered on collapse, effectively depleting the FDIC reserve fund from $52.8 billion in 2008 to a mere $10.4 billion in the first quarter of 2009, its lowest point since the height of the savings and loan scandal in 1992.
But what is more disturbing is that this reserve fund, much like Social Security, is merely an illusion.
In 2008, the former chairman of the FDIC, William M. Isaac, wrote an article titled “The Mythical FDIC Fund,” in which he revealed the FDIC’s insolvency: “When I became Chairman of the FDIC in 1981, the FDIC’s financial statement showed a balance at the U.S. Treasury of some $11 billion…. I decided it would be a real treat to see all of that money, so I placed a call to [then] Treasury Secretary Don Regan.”
The conversation went like this:
I SAAC : Don, I’d like to come over to look at the money.
R EGAN : What money?
I SAAC : You know…the $11 billion the FDIC has in the vault at Treasury.
R EGAN : Uh, well you see, Bill, ah, that’s a bit of a problem.
I SAAC : I know you’re busy. I don’t need to do it right away.
R EGAN : Well…it’s not a question of timing…. I don’t know quite how to put this, but we don’t have the money.
I SAAC : Right…ha ha.
R EGAN : No, really. The banks have been paying money to the FDIC, the FDIC has been turning the money over to the Treasury, and the Treasury has been spending it on missiles, school lunches, water projects, and the like. The money’s gone.
I SAAC : But it says right here on this financial statement that we have over $11 billion at the Treasury.
R EGAN : In a sense, you do. You see, we owe that money to the FDIC, and we pay interest on it.
I SAAC : I know this might sound pretty far-fetched, but what would happen if we should need a few billion to handle a bank failure?
R EGAN : That’s easy—we’d go right out and borrow it. You’d have the money in no time…same day service most days.
I SAAC : Let me see if I’ve got this straight. The money the banks thought they were storing up for the past half century—sort of saving it for a rainy day—is gone. If a storm begins brewing and we
And just as wealth can lead to power, so can power lead to wealth. Recent presidents such as Lyndon B. Johnson and Richard M. Nixon entered office without an extraordinary amount of money but left as millionaires. This is because those who control a government can use their positions to feather their own nests. Domhoff said this can be done by means of a favorable land deal for relatives at the local level or perhaps a huge federal government contract to a new corporation run by friends who will hire you when you leave government. “If we take a larger historical sweep and look cross-nationally, we are well aware that the leaders of conquering armies often grab enormous wealth, and that some religious leaders use their positions to acquire wealth,” commented Domhoff.
PUBLIC DEBT, PRIVATE PROFIT
W HETHER RICH OR POOR , most Americans believe their finances are safe, thanks to a federal government corporation created in the Great Depression year of 1933.
About eight-four hundred American banks participate in the Federal Deposit Insurance Corporation (FDIC), an independent agency created by the Congress to maintain stability and public confidence in the nation’s financial system by insuring deposits, supervising banks for safety and soundness, and managing receiverships. These banks allocate a small portion of their profits to collectively insure bank deposits in cases where a bank fails.
And fail they did in late 2008 and 2009. Between the two years, 111 banks failed and many more teetered on collapse, effectively depleting the FDIC reserve fund from $52.8 billion in 2008 to a mere $10.4 billion in the first quarter of 2009, its lowest point since the height of the savings and loan scandal in 1992.
But what is more disturbing is that this reserve fund, much like Social Security, is merely an illusion.
In 2008, the former chairman of the FDIC, William M. Isaac, wrote an article titled “The Mythical FDIC Fund,” in which he revealed the FDIC’s insolvency: “When I became Chairman of the FDIC in 1981, the FDIC’s financial statement showed a balance at the U.S. Treasury of some $11 billion…. I decided it would be a real treat to see all of that money, so I placed a call to [then] Treasury Secretary Don Regan.”
The conversation went like this:
I SAAC : Don, I’d like to come over to look at the money.
R EGAN : What money?
I SAAC : You know…the $11 billion the FDIC has in the vault at Treasury.
R EGAN : Uh, well you see, Bill, ah, that’s a bit of a problem.
I SAAC : I know you’re busy. I don’t need to do it right away.
R EGAN : Well…it’s not a question of timing…. I don’t know quite how to put this, but we don’t have the money.
I SAAC : Right…ha ha.
R EGAN : No, really. The banks have been paying money to the FDIC, the FDIC has been turning the money over to the Treasury, and the Treasury has been spending it on missiles, school lunches, water projects, and the like. The money’s gone.
I SAAC : But it says right here on this financial statement that we have over $11 billion at the Treasury.
R EGAN : In a sense, you do. You see, we owe that money to the FDIC, and we pay interest on it.
I SAAC : I know this might sound pretty far-fetched, but what would happen if we should need a few billion to handle a bank failure?
R EGAN : That’s easy—we’d go right out and borrow it. You’d have the money in no time…same day service most days.
I SAAC : Let me see if I’ve got this straight. The money the banks thought they were storing up for the past half century—sort of saving it for a rainy day—is gone. If a storm begins brewing and we
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