Imagine Legislation That
Provides New Banking Rules That Are Equitable To All
 

Using today’s accounting methods for bank-issued mortgages, the typical cost factor for a 30-year note at 7.5 % is approximately 2.5. That means borrowers pay approximately 2.5 times the principal they borrowed.

Under NESARA, at the same monthly payment rate, that cost factor changes to approximately 1.5, meaning borrowers pay back approximately one half (½) times the principal they borrowed.

In other words, after NESARA becomes law, banks make only about one-third (1/3) of the profit on one 30-year note as they would have made before NESARA changed the rules. Makes great news for borrowers but, at first glance, this observation seems to argue that banks have no incentive to support NESARA.

However, observe that under NESARA, at the same monthly payment rate with principal being repaid before the monetization fee, the time required to repay the loan is much shorter. In other words, bankers can provide more loans under NESARA’s Section 7F provisions than they can now under current methods. Banks earn less profit per loan but can recover that difference in a higher volume of loans for the same period. The real benefit to all parties is that those profits are obtained through more transactions with each transaction facing much less risk.

Under NESARA, fractional reserve banks see principal on secured loans repaid before they start collecting their monetization fee. This change in bank lending practice will do several things for the banks:

1. Borrowers build equity much faster so they remain highly motivated to repay the loan in full.
2. Because loan repayment times are shorter and the overall debt burden reduced, banks need not always foreclose poorly performing loans but will be more willing to work with borrowers during difficult times.
3. If a bank must foreclose on a bad secured loan, the borrower’s higher equity makes the process less painful for both parties.
4. By collecting principal first, bankers free their reserves much faster. This early increase in reserves, coupled with much safer secured loans, will encourage bankers to commit more reserves to make more loans.
5. Under NESARA, banks become fiduciary public service institutions, highly unlikely to ever fail in the absence of fraud or other criminal activity, therefore FDIC insurance is no longer needed. This reduces bank operating costs and, simultaneously, releases several billion dollars which could be applied to worthy public works projects or refunded to taxpayers.
6. Because borrowers build equity faster on their current loans, they can provide banks with much better collateral when applying for future loans.

Under current rules banks make their profits early in the life of a loan and recover their reserves later. Currency inflation works to their advantage. Their profits are worth more to them today than they will be next year and the book value of their loan collateral will be worth more to them next year than it is today. Now consider what happens when NESARA reverses that process. Banks collect a monthly service fee for bookkeeping early in the life of a loan but their profits come years later. Inflation now works against them. They will be very unhappy receiving their profits in depreciated dollars and will undoubtedly lobby Congress and the new Treasury Reserve Board to maintain the purchasing power of the currency.

Of course, the happy coincidence is that eliminating inflation is the moral thing to do and, after NESARA becomes law, that coincidence will also be in the best interest of the nation’s financial institutions. Everybody wins again!

More information about, and a copy of the bill, are located on this web site. A spreadsheet is also available.