[Cid_Yama]

There is currently talk of creating a National Bank to serve as toxic trashcan for the banks funded by the taxpayer.

I've got a better idea. How about the US create a National Depositor's Bank. A non-profit institution who's sole purpose is to hold deposits. No interest would be paid and a small transaction fee charged to cover operational costs.

No loans would be made, no debt purchased, sole assets would be the deposits.

Any commercial banks that survive can do the rest of the business, but no FDIC coverage, no federal funding or bailouts.

That way deposits at the depositors bank are always secure as the bank is unable to fail. No need for FDIC.

No need, ever to 'rescue' other financial institutions. So no socializing of losses.

[burtonridr]

There is currently talk of creating a National Bank to serve as toxic trashcan for the banks funded by the taxpayer.

I've got a better idea. How about the US create a National Depositor's Bank. A non-profit institution who's sole purpose is to hold deposits. No interest would be paid and a small fee charged to cover operational costs.

No loans would be made, no debt purchased, sole assets would be the deposits.

Any commercial banks that survive can do the rest of the business, but no FDIC coverage, no federal funding or bailouts.

That way deposits at the depositors bank are always secure as the bank is unable to fail. No need for FDIC.

No need, ever to 'rescue' other financial institutions. So no socializing of losses.

So why would anyone be motivated to deposit there money into such a bank instead of keep it at their house in a coffee can?

Without interest rate on your money it just looses value even faster, same as keeping it in a coffee can.

I propose the international bank of my coffee can to be reinstated

[Cid_Yama]

Primarily I was proposing it as a safe solution for transactions such as payrolls, which are usually too large for coverage by FDIC. Also, you avoid the problem of where to put your cash on the sidelines.

A safe place for institutions to drop large sums, where you don't have to worry what's happening to it.

A lot of the volitility in the markets has been caused by large sums trying to find a safe place to sit. Almost like musical chairs.

If you want interest, you accept the risk of placing your money elsewhere.

[Tyler_JC]

There is a such thing as a risk free investment.

The bank could investment in short term government bonds like the 6 month US treasury bill which yields 1.5%.

That would be better interest than most savings accounts and if they staggered the purchases, the bank would always have enough capital to allow for depositors to take out some of their money and pay for the upkeep of the fund.

Think of it as a low-yield, risk-free money market account.

Unfortunately...headline CPI is ragging at a minimum of 6% per year so putting your money in this account is not a very good investment.

[Cid_Yama]

The purpose of making no loans, purchasing no debt, basically making no investments is to make the bank fail-proof so insurance is unnecessary, and the bank cannot be 'looted'.

[burtonridr]

There is a such thing as a risk free investment.

The bank could investment in short term government bonds like the 6 month US treasury bill which yields 1.5%.

That would be better interest than most savings accounts....

I dont know where you bank but that is a horrible interest rate, 1.5% doesnt even keep up with inflation.

[Dreamtwister]

and the bank cannot be 'looted'.

Which is exactly why it will never happen.

[alokin]

I would like to have another type of bank ( even the depositors banks seems to be a good idea, but there are Islamic banks which runs without interest), well I would like to buy a piece of land. At the moment I cannot afford this. But I may be able to pay all the money I save into this bank. Meanwhile the bank buys land and gives it to those who saved up sufficiently. I might be able to buy the rights to 1 square meter each month of valuable land or ten square metres of desert land.
(And this bank should be in Australia, of course)

[MOCKBA]

...but there are Islamic banks which runs without interest...

This is a misconception. In Islamic culture lending money for a profit is a sin, yet "powerful master - powerless servant" is endorsed and encouraged. Effectively Islamic banks hide interest behind monthly rent or royalty payments but opperate under the same principle of "the future value of money"... they just do not disclose that "3 camels per month" for a palace that his highness build with the help of Allah, his might and other considerations is equivalent to 10-15% anually.

I personally know the future value of my money I lend out be it my bank, US government or whoever... Cid_Yama doesn't have any to offer to others so the concept is foreign to him...

[MOCKBA]

On somewhat related note, I like how T.Boone Pickens is spending his money to educate the masses that there is a solution to their oil addiction here today... only to make more money that he doesn't need but does deserve because he is brighter then the most...

The scheme proposed by Cid_Yama a self-proclaimed peak oil historian is how a bank (and there was just one) in Soviet Russia operated - the government deposited your paychecks into an institution that employed bunch of beurocrats but otherwise served no purpose... To this day (and this is over 10 years after commercialization) this bank would make you remember long forgoten written Russian by making you write two legal size sheets of paper in order to make a simple utility payment... Suits some people just fine I suppose... Could be good for some parts of US too, since definitely would improve literacy rates... No Internet, check card or any of that capitalist bullshit, just huge blanks where one need to write a lot and God forbid make a mistake (white-out is also capitalist thing) - corrections are not accepted on official Bank documents, gotta practice your writing skills, sorry... Definitely this is the thing we need to improve literacy... I nominate Cid_Yama for chairman!

Would be bad for environment though, so if you are green please forget about literacy and bank somewhere else....

[catbox]

My safe seems pretty SAFE these days!