Blum's firm Blum Capital is also an adviser to CalPERS, the California Public Employees' Retirement System, which also got caught in the LIBOR-rigging scandal. "Once again," said CalPERS Chief Investment Officer Joseph Dear of the LIBOR-rigging, "the financial services industry demonstrated that it cannot be trusted to make decisions in the long-term interests of investors." If the financial services industry cannot be trusted, it needs to be replaced with something that can be.
Remedies
The Public Sociologists of Berkeley recommend renegotiation of the onerous interest rate swaps, which could save up to $200 million for the UC system; and evaluation of the university's legal options concerning the manipulation of LIBOR. As demonstrated in the new FDIC suit, those options include not just renegotiating on better terms but rescission and damages for fraud and breach of contract. These are remedies that are could be sought by local governments and public entities across the state and the nation.
The larger question is why our state and local governments continue to do business with a corrupt global banking cartel. There is an alternative. They could set up their own publicly-owned banks, on the model of the state-owned Bank of North Dakota. Fraud could be avoided, profits could be recaptured, and interest could become a much-needed source of public revenue. Credit could become a public utility, dispensed as needed to benefit local residents and local economies.
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Ellen Brown is an attorney, founder of the Public Banking Institute, and a candidate for California State Treasurer running on a state bank platform. She is the author of twelve books, including the best-selling Web of Debt and her latest book, The Public Bank Solution, which explores successful public banking models historically and globally.
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