Executive Summary

Whenever a bank needs government protection or a bailout, they begin lying about their public service function.

Introduction

During the Continental Bank bailout, the same old arguments about the public service function of the bank were raised to build sympathy for the bank.

This is explained in the following quotation.

The bankers argued that Commonwealth must not be allowed to fold because it provided “essential” banking services to the community. That was justified on two counts: (1) it served many minority neighborhoods and, (2) there were not enough other banks in the city to absorb its operation without creating an unhealthy concentration of banking power in the hands of a few. It was unclear what the minority issue had to do with it inasmuch as every neighborhood in which Commonwealth had a branch was served by other banks as well. Furthermore, if Commonwealth were to be liquidated, many of those branches undoubtedly would have been purchased by competitors, and service to the communities would have continued. Judging by the absence of attention given to this issue during discussions, it is apparent that it was merely thrown in for good measure, and no one took it very seriously. In any event, the FDIC did not want to be accused of being indifferent to the needs of Detroit’s minorities and it certainly did not want to be a destroyer of free-enterprise competition. So, on January 17,1972, Commonwealth was bailed out with a $60 million loan plus numerous federal guarantees. Chase absorbed some losses, primarily as a result of Commonwealth’s weak bond portfolio, but those were minor compared to what would have been lost without FDIC intervention. Since continuation of the bank was necessary to prevent concentration of financial power, FDIC engineered its sale to the First Arabian Corporation, a Luxembourg firm funded by Saudi 1. Sprague, p. 68.

Source: Creature From Jekyll Island

https://www.scribd.com/doc/54912935/The-Creature-from-Jekyll-Island-G-Edward-Griffin

Banks Sloughen Off Their Low and Moderate Income Customers

When banks sloughed off their low and moderate income customers and opted out of lending to the poor, a new “fringe lending” industry popped up to meet their needs and has grown ever since. There are a variety of fringe loans across the country. The most common are payday loans, which are currently permitted in thirty-eight states.

Source: How the Other Half Banks

https://www.amazon.com/How-Other-Half-Banks-Exploitation/dp/0674286065

Yes, banks have left many borrowers at the mercy of payday lenders.