Various private sector players would have an institutional or personal self-interest to guard against fraud and abuse because each would have something to lose in the marketplace for not guarding against fraud and abuse. Private sector safeguards include:
- The individual citizen-owner
- Educational system reforms to raise the level of financial sophistication of new owners and their families
- Competitive financial advisory services, with lawyers, CPAs and other professionals to assist individual borrowers
- The chief financial executive of a new or expanding enterprise in need of new productive assets who makes the initial feasibility determinations of each new EDA equity issuance
- The enterprise’s outside financial advisors, attorneys and asset appraisers on new equity issuances
- The commercial loan officer of the local bank who determines the commercial feasibility of loans for industrial, commercial, and agricultural projects and local infrastructural improvements and who approves each investment of EDA no-interest, insured capital credit and asset-backed money.
- Capital credit insurance and re-insurance for bad loans, where insurance companies would assess the relative risk of each EDA loan
- The trust officer of the local bank or financial institution who administers the COA assets as fiduciary on behalf of the citizen-owner
- Companies competing for assessing risk categories of newly issued shares from growing enterprises, pooling risk premiums paid as part of the debt service payments on EDA loans, and paying capital credit insurance to lenders on loans in default
- Capital credit reinsurance companies competing for the EDA credit market by spreading further the risk of the growing capital credit insurance industry
- One or more bundlers of bank loans, acting like Fannie Mae or Freddie Mac to help establish standards and uniformity among bank lenders, which would take syndicated EDA loans to the discount window of the regional Fed for monetizing expanded bank credit for financing regional growth through COAs.
In addition, the newly issued COA shares would be full voting, full dividend payout shares, with companies allowed to deduct from corporate tax incomes all dividend payouts. These features, not generally available under the current tax and corporate financing system, would add to the accountability and transparency of corporate governance .
Furthermore, the existing machinery of Federal and state securities, banking and insurance regulators would catch what falls between the private sector “cracks.” These agencies include:
- The regional Federal Reserve Banks, which would certify and regulate “member banks” that make EDA loans to citizen-owners
- The Office of the Federal Comptroller of the Currency
- The Securities and Exchange Commission, which would regulate new securities issuances and receive periodic reports
- Internal Revenue Service, in reviewing tax returns of individuals and businesses, and governing tax-deferred equity accumulators like CHAs, ESOPs, CLBs, etc.
- State securities and insurance regulators
- Congressional and state legislative committees responsible for sound economic growth of the private sector