Dennis Kucinich and George Bailey

During the US House of Representatives debate of the “Audit The Fed” bill, Rep. Dennis Kucinich channeled George Bailey while tearing down the Federal Reserve mystique.

Wish you were in George Bailey’s shoes?

It’s a Wonderful Life (1946)

George Bailey: Just a minute… just a minute. Now, hold on, Mr. Potter. You’re right when you say my father was no businessman. I know that. Why he ever started this cheap, penny-ante Building and Loan, I’ll never know. But neither you nor anyone else can say anything against his character, because his whole life was… why, in the 25 years since he and his brother, Uncle Billy, started this thing, he never once thought of himself. Isn’t that right, Uncle Billy? He didn’t save enough money to send Harry away to college, let alone me. But he did help a few people get out of your slums, Mr. Potter, and what’s wrong with that? Why… here, you’re all businessmen here. Doesn’t it make them better citizens? Doesn’t it make them better customers? You… you said… what’d you say a minute ago? They had to wait and save their money before they even ought to think of a decent home. Wait? Wait for what? Until their children grow up and leave them? Until they’re so old and broken down that they… Do you know how long it takes a working man to save $5,000? Just remember this, Mr. Potter, that this rabble you’re talking about… they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn’t think so. People were human beings to him. But to you, a warped, frustrated old man, they’re cattle. Well in my book, my father died a much richer man than you’ll ever be!


FDIC Proposal Classifies Gold As Tier 1 Capital

If there is any doubt of the role of gold (that barbarous relic) in the banking system, let’s ponder its role as Tier 1 capital by the Federal Deposit Insurance Corporation:

Key Aspects of the Proposed Rule on Regulatory Capital Rules: Standardized Approach for Risk-weighted Assets; Market Discipline and Disclosure Requirements


The agencies are issuing a notice of proposed rulemaking (NPR, proposal, or proposed rule) to harmonize and address shortcomings in the measurement of risk-weighted assets that became apparent during the recent financial crisis, in part by implementing in the United States changes made by the Basel Committee on Banking Supervision (BCBS) to international regulatory capital standards and by implementing aspects of the Dodd-Frank Act. Among other things, the proposed rule would:

  • revise risk weights for residential mortgages based on loan-to-value ratios and certain product and underwriting features;
  • increase capital requirements for past-due loans, high volatility commercial real estate exposures, and certain short-term loan commitments;
  • expand the recognition of collateral and guarantors in determining risk-weighted assets;
  • remove references to credit ratings; and
  • establish due diligence requirements for securitization exposures.

This addendum presents a summary of the proposal in this NPR that is most relevant for smaller, less complex banking organizations banking organization that are not subject to the market risk capital rule or the advanced approaches capital rule, and that have under $50 billion in total assets. The agencies intend for this addendum to act as a guide for these banking organizations, helping them to navigate the proposed rule and identify the changes most relevant to them. The addendum does not, however, by itself provide a complete understanding of the proposed rules and the agencies expect and encourage all institutions to review the proposed rule in its entirety.  

A. Zero Percent Risk-Weighted Items

The following exposures would receive a zero percent risk weight under the proposal:

  • Cash;
  • Gold bullion;
  • Direct and unconditional claims on the U.S. government, its central bank, or a U.S. government agency;
  • Exposures unconditionally guaranteed by the U.S. government, its central bank, or a U.S. government agency;
  • Claims on certain supranational entities (such as the International Monetary Fund) and certain multilateral development banking organizations
  • Claims on and exposures unconditionally guaranteed by sovereign entities that meet certain criteria (as discussed below).

For more information, please refer to sections 32(a) and 37(b)(3)(iii) of the proposal. For exposures to foreign governments and their central banks, see section L below.


Hmm…you don’t have to be a “gold bug” to recognize that gold has a role in the history of money that simply cannot be discounted, especially when fiat currencies are merely political coupons.

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