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Monday, February 20, 2012

Marilyn MacGruder Barnewall Interviewed by The Daily Bell

Marilyn MacGruder Barnewall on the Problems of Central Bank 'Debt Capitalism' and the Promise of US-Style State Banking
Sunday, February 19, 2012 – with Anthony Wile

"The Daily Bell is pleased to present this interview with Marilyn MacGruder Barnewall (above).

Introduction: Marilyn MacGruder Barnewall served as president of The MacGruder Agency, Inc., a bank financial consulting firm, from 1979 through 1993. She was known as the "guru" of North American Private Banking (so-called by Town and Country and Trust and Estates magazines) and a 1989 issue of Forbes magazine called her the "Dean of American Private Banking." Today, Ms. Barnewall is retired and has devoted her energies to writing books, articles and legislation focused on state banking and, generally, the devolution of American banking. Some of her ideas are similar to those of "public-banking" advocate Ellen Brown.

Daily Bell: Tell us more about your background and how you got into this field.

Marilyn MacGruder Barnewall: I became a banker quite by accident in 1972. I worked at Denver's largest bank and I started the first private bank in the United States. I started the MacGruder Agency when I left the bank in 1979, and was a consultant implementing credit-driven private banks until 1993.

I have also written a number of books. The first book I wrote, which I think is still one of the only books on private banking, is called Profitable Private Banking: The Complete Blueprint, which was published by the American Bankers Association and sold for $5,000 a copy. I went back to writing and have written hundreds of articles for Internet publications since.

Daily Bell: What is "credit-driven private banking"?

Marilyn MacGruder Barnewall: There are two types of private banking, and it is different than what you might think. Traditionally, private banking is and always has been the management of other people's money or assets. The one I created was a credit-driven form of private banking.

Basically, credit-driven private banking is done in a way that strengthens and broadens the middle class. During my time as a bank advisor, I basically created a concept of banking that enabled lenders to make business purpose loans based on personal assets and cash flow. So a business-purpose loan, a commercial loan, depends for repayment on the purpose of the loan. If the purpose of the loan is to make cars, then the source of repayment comes from the sale of those cars, the dealers or the public. In other words, individuals can't do that because they aren't in the business of selling cars or building condominiums. It's recognizing all the potential available.

Daily Bell: Tell us about the work you have been doing in relation to state banks and the resolution for the State of Colorado.

Marilyn MacGruder Barnewall: I recently wrote the legislation for the State of Colorado for state banks. The movement to create state banks is a growing one. I started writing about state banks a little over two years ago. Many people are very confused about what a state bank is. Basically, it is two things: it is an administrator and it is a correspondent bank. That's it. It is not the bank that sits on Main Street. A state bank also takes in tax revenues; all of the fees that are taken in by the state are held in the state bank instead of being sent to Washington or a money center bank. In a state bank, the money is held within the state.

All the banks in, say, North Dakota, are privately owned by investors and they are chartered by the state bank of North Dakota. Now, national banks also still do business in the state of North Dakota. Wells Fargo can be there, Bank of America can be there, but there are about seven state chartered banks that are privately owned by private investors. The other part of state banking is the correspondent bank relationship. Right now, when an independent bank has a loan that is too large for it to make, it goes to a money center bank or a bigger bank to partner in that loan with them. So those are the two things that a state bank does.

People tend to hear "state bank" and think it's a socialized system of banking with the state owning the bank that sits on Main Street but it isn't. It's very much the opposite of that and a very conservative approach to banking.

Daily Bell: There are numerous additional states that are investigating the possibility of state banks.

Marilyn MacGruder Barnewall: Correct. The problem we have is too much centralized power in Washington, DC and a lot of states have figured that out. Right now you have Washington, Oregon, California, Hawaii, Montana, Colorado, Illinois, Florida, Virginia, Maryland, Massachusetts and a few others that are actively investigating the possibility of their own state bank. Let's go back to North Dakota, and look at the reasons why they did and the results they had and why other states are looking at state banks now.

North Dakota formed their state bank in 1919, 94 years ago. They have a tremendous history and a population of about 650,000 people. The North Dakota state bank, during the last 10 years, has paid the state treasurer more than $325 million from bank profits. In 2010, the worst economy in recent history, North Dakota had its largest budget surplus in the state's history. North Dakota tops the list of state economies year after year.

Now, state economies should be the number one concern of the people. State unemployment statistics are another issue and anyone who believes the stats that are being handed out right now are accurate is crazy. In Mesa County, where I live, the unemployment rate is 19.3%. In North Dakota the unemployment rate is 3.3%. In 2009 and 2011 there were tax reductions in North Dakota. There are tremendous financial advantages to being a state bank and having a state bank and that's why all these states are looking into it.

Daily Bell: How does that differ from what Ellen Brown says?" (snip) ...

Read the complete interview at this website:


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