The end of private banking: Why the federal government should own all banks

I have suggested that private banking in the United States should end, and all banking operations should be taken over by the federal government. I recognize that may be anathema to those who believe the government is too big and too powerful, and that private control always is better than public control.
Yes, "socialism" has become a popular pejorative. Yet, many aspects of our life are controlled by the federal and local governments, and we are better served for this control: The military. Road, bridge and dam building. Food and drug inspection. The courts.
Private ownership can be better, but not always. Sometimes public ownership provides better service.
I live near Chicago. The previous mayor sold Chicago's parking meters and an important toll road to private industry. Parking costs and tolls immediately rose stratospherically, with zero improvement in service. The new meters are harder to use, and the road still needs work. Clearly, the people of Chicago were not well served by the transition from public to private ownership.
The private sector works on the profit motive, which often does not provide protections or service to the public.
Read the following excerpts, and see what you think about public ownership of the banking industry.

Global Economic Intersection :
Dallas Fed: Break Up the TBTF
March 30th, 2012
The Federal Reserve Bank of Dallas and its president Richard Fisher are generally known as conservative, hard money proponents. Often conservative economic thinkers are strong laissez-faire proponents. That is why the 2011 annual report of the Dallas Fed, released this month, has been such a surprise. A focal point of the report is very interventionist, calling for direct government action to force the break-up of the nation's largest banks, the so-called TBTF (too big to fail) institutions.
The focus of the report is an essay by Harvey Rosenblum, Executive Vice President and Director of Research. Key points by Rosenblum include:

[Dodd-Frank] may not prevent the biggest financial institutions from taking excessive risk or growing ever bigger.
TBTF institutions were at the center of the financial crisis and the sluggish recovery that followed. If allowed to remain unchecked, these entities will continue posing a clear and present danger to the U.S. economy.
When competition declines, incentives often turn perverse, and self-interest can turn malevolent. That's what happened in the years before the financial crisis.
The term TBTF disguised the fact that commercial banks holding roughly one-third of the assets in the banking system did essentially fail, surviving only with extraordinary government assistance.
A bailout is a failure, just with a different label.
The machinery of monetary policy hasn't worked well in the current recovery. The primary reason: TBTF financial institutions. Many of the biggest banks have sputtered, their balance sheets still clogged with toxic assets accumulated in the boom years.
TBTF undermines equal treatment, reinforcing the perception of a system tilted in favor of the rich and powerful.
" virtually nobody has been punished or held accountable for their roles in the financial crisis.
" zero interest rates are taxing savers to pay for the recapitalization of the TBTF banks whose dire problems brought about the calamity that created the original need for the zero interest rate policy.
A financial system composed of more banks--numerous enough to ensure competition but none of them big enough to put the overall economy in jeopardy--will give the United States a better chance of navigating through future financial potholes, restoring our nation's faith in market capitalism.

Taking apart the big banks isn't costless. But it is the least costly alternative, and it trumps the status quo.
The road to prosperity requires recapitalizing the financial system as quickly as possible. Achieving an economy relatively free from financial crises requires us to have the fortitude to break up the giant banks.

Moving back to the Dallas Fed President's letter, Fisher has not suddenly sprung this position of forced break-up of the largest banks out of thin air. He has been speaking out on that subject, as documented by Bloomberg last November:
"I believe that too-big-to-fail banks are too-dangerous-to-permit," Fisher said in the text of remarks given in New York today. "Downsizing the behemoths over time into institutions that can be prudently managed and regulated across borders is the appropriate policy response. Then, creative destruction can work its wonders in the financial sector, just as it does elsewhere in our economy."

carrying banker float
(image by OccupyFightsForeclosures)

The reason to break up the TBTF banks is simple: They cannot be trusted to work in the best interests of the public. Breaking them up presumably would make them easier to control (regulate), and less likely to do damage. Why can't banks be trusted? Their motive is profits, not service to the public. Their misdeeds have caused the recession, damage to the economy and the growing gap between those people with high income (1%) and the rest (99%). Congressional conservatives will not supervise the bank's insatiable thirst for profits, which motivates all bank activities. Damage control by the federal government has become an increasing need.

All bank problems boil down to the profit motive. Rather than breaking up the TBTF banks into smaller, (hopefully) more controllable pieces, we should eliminate their fundamental problem, the profit motive. And, what better way to eliminate the profit motive, than to put banks under total government control, i.e. ownership?