PUBLIC DEBT:  PRIVATE ASSET

 Debt as an Asset.

 We all know what debt is when it is our own—we owe money to someone else.  On the other hand, it may not be so easy to understand that many of our financial assets are someone else’s debts.  For example, to a consumer a savings account at a bank is an asset.  However, to the bank it is a debt.

 The bank owes us the money that is in our account.  We let the bank hold the money for us because it promises to pay us back with interest.  The bank then uses our money to make loans and to invest in other debt, including the government’s.

 Like the savings account, most of us think of the $25 savings bond we received from grandma as a financial asset.  However, it is also a debt our government owes us.

 Just as there must be a buyer for every seller in a sales transaction, for every debt incurred someone acquires a financial asset of equal value.  Debt, then, is considered an asset of the creditor, and a claim against the assets and earnings of the debtor.

 In terms of the national debt, every dollar of the government’s debt is someone’s asset.  Corporations, brokerage houses, bond-trading firms, foreign nationals, and U.S. citizens, both here and abroad, are all willing to loan money to the U.S. government.  They view the loan as an investment, an asset that increases their wealth.

 00:32:50

 National banking corporations are agencies or instruments of the general government, designed to aid in the administration of an important branch of the public service, and are an appropriate constitutional means to that end.  Pollard v. State, Ala 1880, 65 Ala 628.  See, also, Tarrant v. Bessemer Nat. Bank, 1913, 61 So 47, 7 Ala App 285.

 00:35:00

 Note:  An agent represents another person, by contract.  An agency or instrument is actually a part of the organization it represents.  It got its rights from the organization.  In this case we are talking about the agency being an extension of the government.

 00:35:50

 FOIA as it applies to banks (same as govt)

Asked for delegation of authority.  Whether bank has delegation of authority.

Treasury Delegation Order for Fifth Third Bank:  1.  Pursuant to Section 265 of Title 12, USC 90, 12 USC 266, and 12 USC 1464K, the Secretary of the Treasury has the authority to designate financial institution to be depositories and financial agents of the United States.

2.  By signing this memorandum the depository warrants or promises that it meets the requirements stated in 31 CFR part 202 to be designated as a depository financial agent of the government.

 00:38:30

 A national bank cannot lend its credit or become the guarantor of the obligation of another unless it owns or has an interest in the obligation guaranteed especially where it receives no benefits therefrom.  Citizens’ Nat. Bank of Cameron v. Good Roads Gravel Co., Tex.Civ.App 1921, 236 S.W. 153, dismissed w.o.j.

Note:  if you lend money to the bank, the bank does have a fiduciary interest.

A national bank has no power to guarantee the performance of a contract made for the sole benefit of another.  First Nat. Bank v. Crespi & Co., Tex.Civ.App. 1920, 217 S.W. 705, dismissed w.o.j.

 National banks have no power to negotiate loans for others.  Pollock v. Lumbermen’s Nat. Bank of Portland, Or. 1917, 168 P. 616, 86 Or. 324.

 A national bank cannot act as broker in lending its depositors’ money to third persons.  Byron v. First Nat. Bank of Rosenburg, Or. 1915, 146 P. 516, 75 Or. 296.

 A national bank is not authorized to act as a broker in loaning the money of others.  Gro v. Cockrill, Ark. 1897, 39 S.W. 60, 63 Ark. 418.  See, also, Keyser v. Hitz, Dist Col 1883, 2 Mackey, 513.

 Officers of national bank in handling its funds are acting in a fiduciary capacity, and cannot make loans and furnish money contrary to law or in such improvident manner as to imperil its funds.  First Nat. Bank v. Humphreys, Okla. 1917, 168 P. 410, 66 Okla 186

 Representations made by bank president to proposed surety as to borrower’s assets, in connection with proposed loan by bank, held binding on bank.  Young v. Goetting, C.C.A.5 (Tex.) 1926, 16 F.2d 248.

 Bank if liable for its vice president’s participation in scheme to defraud depositor by facilitating prompt withdrawal of his money.  National city Bank v. Carter, C.C.A.6 (Tenn) 1926 14 F.2d 940

 A National bank receiving the proceeds of a customer’s note and mortgage with authority to pay out the same upon the first mortgage lien of real estate is acting in ultra virus and liable for breach of duty.

 00:33:21

 Who is the bank?

  Who has standing?

 00:42:15

 National bank is not authorized under national banking laws to lend deposited money on depositor’s behalf.  Carr v. Weiser State Bank of Weiser, Idaho 1937, 66 P.2d 1116, 57 Idaho 599.

 Under this section, a national bank had no authority to enter into a contract for loaning money of a depositor kept in a deposit account through its cashier authorized by the depositor to draw thereon to make loans.  Holmes v. Uvalde Nat. Bank., TexCiv.App. 1920, 222 S.W. 640, error refused.

 A bank has no right to loan the money of other persons.  Grow v. Cockrill, Ark. 1897, 39 S.W. 60, 63 Ark. 418.

 A “deposit for a specified purpose” is one in the making of which a trust fund is constituted with respect to which a special duty as to its application is assumed by the bank.  Cooper v. National Bank of Savannah, GA.App. 1917, 94 S.E. 611, 21 GA.App. 356, certiorari granted 38 S.Ct. 423, 246 U.S. 670, 62 L.Ed. 931, Affirmed 40 S.Ct. 58, 251 U.S. 108, 64 L.Ed. 171.

 Fund, deposited in bank for special purpose subject to depositor’s check, remains property of depositor.  U.S. Shipping Board Emergency Fleet Corporation v. Atlantic corporation, D.C. Mass. 1925, 5 F.2d 529, error dismissed 16 F.2d 27.

 ‘In the case of a special deposit, the bank assumes merely the charge or custody of property, without authority to use it, and the depositor is entitled to receive back the identical money or thing deposited.  In such case, the right of property remains in the depositor, and if the deposit is of money, the bank may not mingle it with its own funds.  The relation created is that of bailor and bailee, and not that of debtor and creditor.’ 3 R.C.L. 522, Tuckerman v. Mearns, App.D.C. 1919, 262 F. 607, 49 App.D.C. 153

 00:43:20 Modern Money Mechanics

 People would redeem their “deposit receipts” whenever they needed gold or coins to purchase something, and physically take the gold or coins to the seller who, in turn, would deposit them for safekeeping, often with the same banker.  Everyone soon found that it was a lot easier simply to use the deposit receipts directly as a means of payment.  These receipts, which became known as notes, were acceptable as money since whoever held them could go to the banker and exchange them for metallic money.

      Then, bankers discovered that they could make loans merely by giving their promises to pay, or bank notes, to borrowers.  In this way, banks began to create money.  More notes could be issued than the gold and coin on hand because only a portion of the notes outstanding would be presented for payment at any one time.  Enough metallic money had to be kept on hand, of course, to redeem whatever volume of notes was presented for payment.

      Transaction deposits are the modern counterpart of bank notes.  It was a small step from printing notes to making book entries crediting deposits of borrowers which the borrowers in turn could spend by writing checks, thereby printing their own money.

00:47:00

Concerning mortgages

 USCA

Footnote 10, Promissory notes are only evidences of debt, and not debts themselves.  Wheeler v. Sohmer, comptroller of the State of New York

 Question:  Where’s the debt?

 The publications want you to believe that the note is payment.  And they are enforcing them in court by calling them obligations.

 An obligation for one is an asset for another.  The banks are calling notes obligations aka assets.  Because a promissory note cannot be a debt, it also cannot be an asset.  “The notes are but the evidence of debt.”...“The debt due, of which the notes are evidence, is property vested in the owner.  Except, perhaps, where he has conferred authority upon someone else as his agent to loan, manage, receive, and collect the same for him, in such case it might be reasonably held that the situs of the property was the domicile of the agent.”  Wheeler v. Sohmer, comptroller of the State of New York.

In other words, the situs is the legal bond between you and the bank.

 We now know that notes are not debt.  It can’t be a debt, it can’t be an asset.  We know that they can’t use the depositor’s money.  So, where does this money come from that they claim we owe them, and how did bank say they have the right to say we have an obligation?

 FRB definition:  Money:  Anything that serves as a generally accepted medium of exchange, a standard of value, and a means of saving and storing purchasing power.

- jk