I'm Steve Laffey's economic advisor. Since discussing his candidacy on Economics Matters -- the Podcast, Steve's been garnering a huge amount of media attention. He's appeared on or has been covered by Good Morning America, CNBC, ABC News, NewsMax and many other outlets.
In this podcast, Steve and I discuss Limited Purpose Banking (LPS), a plan to transform leveraged, opaque, failure prone, trust-me banking into LPS. LPS eliminates the two evil twins of our financial system -- leverage and opacity. It requires all financial corporations from retail banks, to commercial banks, to brokerage firms, to private equity funds, to mortgage companies, to credit unions, to you-name-it to operate as 100 percent equity-financed mutual funds.
Since no financial enterprise will ever be in debt, none can ever go bankrupt. Hence, LPS will end banking/financial/most economic crises for good. That's why the Financial Times, other top media, and many central bankers, including Mervin King, former Governor of the Bank of England have taken and continue to take a strong interest in Limited Purpose Banking.
One hundred percent equity finance means that the fund (essentially a small, unleveraged bank) doesn't borrow to obtain money to invest. Instead, it sells shares to the money raised and invested. LPB also establishes a federal agency to verify and disclose all mutual fund assets and do so in real time. This will make closed-end mutual funds (mutual funds that buy and hold assets, like mortgages and small business loans, through maturity) highly liquid. The full details of LPB are laid out in this article. But this terrific podcast with Steve will give you the basics.
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Economic Matters - The podcast is hosted by Laurence Kotlikoff and moderated by Alex Kotlikoff.