Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
Economy
Related: About this forumBanks Assert Constitutional Right to Billions in Subsidies
https://theintercept.com/2016/04/29/banks-assert-constitutional-right-to-billions-in-subsidies/Rob Nichols, the chief lobbyist for the American Bankers Association, argued in a comment letter Thursday that a recent federal law reducing the dividend on the stock that banks purchase as part of membership in the Federal Reserve system violates the Fifth Amendment clause banning the uncompensated seizure of property.
Congress reduced the dividend as part of a deal to pay for transportation projects. Dividends for the stock, which cannot be bought or sold, had been set at 6 percent since the Federal Reserves inception in 1913. Banks cannot ever lose money on the stock; theyre even paid out if their regional Fed bank disbands. So the dividend represented a risk-free profit, earning back its investment in full every 17 years.
The dividend cut, from 6 percent to the current interest rate on the 10-year Treasury note, is estimated to reduce the banks payments by roughly $7 billion over 10 years. The change only applies to banks with more than $10 billion in assets.
The Takings Clause of the Fifth Amendment provides that private property shall not be taken for public use, without just compensation, Nichols wrote in his comment letter to the Fed, which is preparing to implement the dividend cut. Nichols added, The dividend rate remained unchanged for over 100 years, and it has long been considered fundamental to the Federal Reserves ability to attract member banks.
Contrary to Nicholss statement, nationally chartered banks are required by law to become members of the Federal Reserve system. And while state banks can opt in or out, they must nevertheless abide by the standards of membership. Moreover, Fed membership offers many perks, from the ability to process payments to access to cheap borrowing, through the Feds discount window. So the dividend is just a vestigial sweetener that never went away, pumping billions of dollars in public money to the banks for no discernible reason.
InfoView thread info, including edit history
TrashPut this thread in your Trash Can (My DU » Trash Can)
BookmarkAdd this thread to your Bookmarks (My DU » Bookmarks)
2 replies, 935 views
ShareGet links to this post and/or share on social media
AlertAlert this post for a rule violation
PowersThere are no powers you can use on this post
EditCannot edit other people's posts
ReplyReply to this post
EditCannot edit other people's posts
Rec (10)
ReplyReply to this post
2 replies
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
Banks Assert Constitutional Right to Billions in Subsidies (Original Post)
eridani
May 2016
OP
Petrushka
(3,709 posts)1. Note: Friday is the last day for public comments on this dividend change.
In addition to the American Banking Association's letter, there are only 7 other comments at present.
You'll find those comments at the following link . . . and, if you can make a comment by clicking on
"Electronic Request Form" at the top of the page:
http://www.federalreserve.gov/apps/foia/ViewAllComments.aspx?doc_id=R-1533&doc_ver=1
99th_Monkey
(19,326 posts)2. Why doesn't the 5th amendment prevent seizings
related to suspected 'drug dealers' assets?