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HOW TO FIX the 6 serious defects in our Money and Banking System ...

Establish 4,000 Community Banks working together as a "Sovereign System of Banking”

(1) This plan provides for the establishment of 4,000 Community banks (Bank) -- one in each community area of about 75,000 people.

(2) Each Bank will be given a State Charter that will spell out, in some detail, what that Bank will be doing. For the most part, at the beginning of this program all Banks will focus on placing 4% / 30-year mortgages on single-family, owner-occupied homes wherein the owners have put down 20% of the purchase price as a down payment and have sufficient verified income such that the mortgage payment will not exceed a to-be determined percentage of that verified income (probably between 20 and 30%).

(3) All levels of government (see #5 below) will be involved in this plan in a very simple arrangement that will thereby serve to naturally provide the checks and balances that are inherent in the Constitution.

(4) Those checks and balances are missing from our existing banking system that is essentially run by the Federal Reserve System that is outside any of the branches of government established by the
Constitution.

(5) Participants in the new Money and Banking system and what they will do:

(a) Legislative Branch of the Federal Government:
Will pass laws telling how the money and banking system will operate. These will be absolutely
transparent and will not be hidden in internal rules and regulations that are not available to the public.

(b) Executive Branch of the Federal Government:
Will manage the money and banking system in accordance with laws which will be passed by Congress.

(c) The Federal Reserve System:
Will be put into the Executive Branch of the Federal Government and will work in concert with the
Treasury Department of the Executive Branch and renamed “The Sovereign Bank of the United States”.
If the Federal Reserve System or any existing individual bank does not want to operate in this way -- it can liquidate its assets by trading them for Government bonds, dollar for dollar.

(d) The 50 States:
Will, in contractual agreements with Local Goverments, set the terms of the charters which will specify, for each bank, which specific duties the Community Banks will perform and the rules under which the banks will operate. The new “Sovereign Banking System” will have, as a minimum, all the money creating rights given in the Constitution to Congress.

(e) Local Governments:
Will manage the Community Banks with government employees who will work only for the banks.

ASSUMPTIONS:
(6) Banks will be extremely narrow -- no deposits will be accepted. That will cut overhead to an absolute minimum. Deposits will be handled separately by a system of “Saving Banks” that will handle only (a) savings accounts and (b) the sale of 6% government bonds to citizens who will use these accounts to save money for whatever they value -- including college educations and retirement expenses.
(7) There are 50 million owner-occupied homes in the country.
(8) There are 300 million people in the country.
(9) 20 million homes will be covered by these 4% mortgage loans.
(10) There will be 4,000 banks -- one for every community-area of 75,000 people.

FOR EACH BANK:
(11) The loans will cover only owner-occupied homes.
(12) Owners must have a 20% down payment. That money can come from money suppllied by private citizens or charities that will hold second mortgages on the homes involved.
(13) Mortgage payments must not exceed 20 % of family income from all sources.
(14) The average loan on each home will be $100,000.
(15) Each Bank will issue and hold 5,000 mortgages. A total of $500 million / Bank.
BANK CAPITALIZATION:
(16) Assume $50 million capital for each bank. This can come from any source, preferably local people. Investors will be given a 6% return (dividend) on their investment. That will result in a dividend payout of $3 million / year. That will reduce each bank's profit to $16.5 million / year. If the $50 million can’t be raised easily, the money can be advanced by the Sovereign Banking System and paid back at the rate of 6% / year
BANK INCOME:
(17) INCOME PER LOAN: -- For each Bank, there will be a Bank income of $4,000 / year on mortgage income per home.
(18) TOTAL INCOME PER BANK: -- Each bank’s mortgage income will therefore be $20 million / year. (5,000 mortgages -- each returning $4,000 / year).

BANK EXPENSE: Note that there are zero expenses to the Bank for money lent to borrowers. That money is created by the Sovereign Banking System in accordance with the ageless, natural, sovereign right of the government to create whatever money is needed for the common good of the people.
(19) Each Bank will operate with 4 employees.
(20) Bank payroll will average $80,000 / year per employee. Maximum amount per employee -- $100,000. Minimum -- $60,000
(21) Total payroll wil be $320,000 / bank / year. ( #19 times #20)
(22) Insurance, overhead and whatever / employee will be 50% of pay. That will add to $160,000 / bank / year.
(23) Floor space will be 400 square feet / bank. Can be in any existing government facility.
(24) Rent, utilities and overhead will be $12 / per square foot / year or $5,000 / bank / year.
(25) Total expenses / bank / year will be:
(a) Employees -- $320,000 (from #21 above) + $160,000 (from #22 above) or $480,000 total.
(b) Space -- $5,000 / year ( from #23 above)
(c) Total -- $485,000 / year -- adding (a) & (b) -- round to $500,000

BANK PROFIT:
(27) Profit / bank / year -- (a) below -- minus (b) -- minus(c)
(a) Income -- $20 million (from #18), minus c & d below
(b) Expenses -- $1/2 million (from # 25c)
(c) Dividends -- $3 million (from #16)
(d) Total profit / bank -- $16.5 million / bank. That is 33% on an invested capital of $50 million.
(28) Total profit for entire system of 4,000 banks -- $66 Billion / year.
(29) That is $66 Billion / year profit total for all 20 million homes.
(30) That profit can be spent by the community for any general common good spelled out in the Bank’s Charter.

If you capitalize that $66 Billion / year at 4%, it comes to a present value of $1.65 Trillion (66 Billion times 25) -- ask your accountant what "present value" is.

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