A New Anti-Redlining Program for Banking By Anthony Faber, B.A., J.D. M.B.A., Phd.

(C)Copyright in the Public Domain (2011 A.D.) Federal Banking Law has provisions which require that Banks do not redline, that is, that they do not discriminate in lending practices against those who are creole (multi-ethnic), mulatt, racial minorities such as blacks, native americans, the physically handicapped, and the mentally handicapped. These laws refer to car loans, house loans, and small business loans. The banks sometimes object that if they do this then they will lose money on more defaulting loans. The response has been to use Federal Reserve money to back these loans so that the banks do not lose money. I have an even better idea. Here it is: FDIC regulations require that banks use a double entry accounting system. Thus, for every credit in one account there must be a corresponding debit in another account. Thus, if a banking customer deposits $100 in his checking account which is credit account, that checking account must be credited $100 while the banks deposits on hand, debit cash account must be debited $100. Now, instead of having to hassle the Federal Reserve for money, what not do the following instead? Joe Blanks Credit Card with $15,000 Credit Limit Credit Entry Account start $10,000 charged $5,000 debit balanced owed ($10,000 - $5,000) = $5,000 Joe Blanks Checking Account Credit Entry Account $500 checking account balance $5,000 credit ($500 + $5,500) = $5,000 balance

Now, the above entries meet the requirements of a dual entry accounting system, and, the result is that without the use of any outside money, Joe Blank now has his charge card balance owed reduced from $10,000 down to $5,000, and, his checking account balance is increased from $500 to $5,500. All of this is done legally and without violating any Generally Accepted Accounting Principles. This accounting method avoids red lining by the bank and in essence the money is produced ex nihilo, out of nothing, so that no tax dollars or bank dollars are needed. This also has the effect of increasing the M1 Money Supply, which helps the overall economy. As an aside, I suppose this accounting technique could be used to fund welfare programs without the use of any tax dollars. The poor do not starve, and the cost is virtually free.