We need a public banking system that does not take advantage of citizens or municipalities. A public bank would offer a decent interest rate for depositors who want to save some money. It would not have ridiculous fees for loans and would discourage citizens from taking on too much debt. There is such a thing as saving for what you want without going into debt. It's called "delaying gratification."
When the bank is a public utility, it will not be interested in making gigantic profits or paying extravagant salaries and bonuses. It will not be interested in investing in tricky derivatives either!
Here's another take on banks:
Cities: Be Like Oakland and Walk Away from Interest Swap Payments to Goldman and Banks!
By Gary Anderson, Strategic Default Books (Business Insider)
. . . .
And I personally view this whole interest rate swap story just like I view the CDO story. It was a scam from the beginning. It was a scam even without LIBOR.
The scam was that the banks knew what the central banks were going to do with regard to interest rates. The handwriting of financial weakness was on the wall in 1997, when these contracts were set up. The banks knew which way the winds were blowing, and the governments were not privy to that information.
LIBOR and the UK financial system seems far away, but in fact, it is an integral part of the scam.
Globalization was understood by these bankers, but not by government. Government remembered the 1970's and inflation. But that was then and this is now.
If you think government was stupid, look at the gold bugs and Peter Schiff and all those who remain dumfounded about how banks can continually manipulate rates lower. These are not stupid people. But they are being defeated in their investments by folks who are much more in the know and are more powerful in their manipulation of markets.
So, based upon all we have learned, I would hope all local and county governments who are being pushed around by JP Morgan, Goldman Sachs and others just walk away.