What if Congress chartered a
new class of federally guaranteed savings banks that were limited to taking
deposits and making loans only within certain defined geographies: zip codes or
Congressional Districts perhaps?
These savings accounts would
be guaranteed to earn at least market rates (by holding a certain percentage of
its outstanding loans in T-bills – and depending upon the performance of its
other loans, even better. They probably
wouldn’t do better than the stock market (they conceivably could), though they
would be much safer, and they would certainly do better than the current Social
Security system, and that’s the point. The deposits held by the bank would be directed there by citizens paying
into Social Security. They are accounts
held by the individual that cannot be drawn upon until the point at which that
citizen is able to start receiving Social Security payments. Also, the depositor would be limited to
choosing to keep their money in banks located within their locale.
This seeks to achieve
multiple aims:
1) It would help foster the “ownership society,” one of the few good
ideas from President Bush (politicians opposed to anything from the other side
are tiresome)
2) It would protect grandma’s retirement money, and probably enhance
her returns (not to mention my own and those of my three sons.)
3) It would be a boon to entrepreneurial activity as the loans would
be targeted to helping small, and especially micro businesses everywhere,
though particularly in poorly served neighborhoods
4) If grandma, myself, my children – all of us – are vested in the
loans made in our neighborhoods, we can encourage positive social pressure on
loan recipients to honor their obligations, lest they harm their neighbors in a
very tangible way
A lot of details are lacking
here, but it is a start. What do you
think?
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