When Vancouver-based Adbusters magazine launched what has become Occupy Wall Street, the idea was that big money needed to be taken out of U.S. politics. The suggested focus was for the creation of a presidential commission to investigate corporate funding of politics, and find alternatives ways to finance election candidates.

The Occupy movement now covering a multitude of cities has become something else. Protestors want to know why out-of-luck banks got bailed out, while bad-break mortgage holders got evicted from their homes? Are unemployed college graduates struggling to repay tens of thousands of dollars in students loans undeserving of debt relief? And the big question: who allowed public money for bank bailouts to end up as bonuses in the pockets of bank executives?

The focus on bankers, a.k.a. banksters, is appropriate. Banking and finance is where power lies: power to satisfy individual greed, or power to act in the general interest. In the U.S., since Bill Clinton, the Democratic party has become captive of Wall Street. In Canada for decades the major chartered banks were the main funders of both the Conservatives and the Liberals.

To exercise power, bankers and financiers need the support of the entire political and legal framework of society. This explains the attention big money pays to electoral politics, and suggest why the links between politicians, and banking matters so much to Americans, or Canadians.

Finance accounts for a larger and larger share of the economy. While the non-military public sector that provides real services to people, for health care, education, income security, cultural goods, social housing, urban transit, amateur sports and recreation has been shrinking, the non-productive of anything but profits for themselves financial sector has been growing. Famously, banks became too big to be allowed to fail, so when crisis struck in 2008, the financial sector got bailed out, receiving $12 trillion in the U.S. and $200 billion in Canada.

The conventional view is that banks exist to allocate money and capital to productive enterprises; they are mere financial intermediaries, taking in deposits, and making loans. The North American reality is that financial corporations have been raking in an increasing share of overall corporate profits. Even from a market perspective this makes little sense. Why should over 30 per cent of U.S. profits be reserved for the financial intermediary? Could not capital be allocated in a less costly way?

Deposit taking institutions do not have to be profit maximizing. Banks could, and should be public utilities run in the general interest, seeking only to recover costs, not to generate profits. In Canada, financial institutions should be Crown Corporations, or co-operatively owned like credit unions.

Bank borrowers pay interest on the loan, and depositors receive a (much) lesser amount of interest. Banks keep the difference, which adds to bank profits. Profit hungry banks tax customers by charging for services. In Canada, these service charges have accounted for a larger and larger share of profits.

Banks get in trouble when loans go bad and borrowers cannot repay. Capitalist crisis hits banks hard, but they have back-up to dream for, a central bank, ready to act as the lender of last resort to banks in trouble.

There is no real mystery to how banks work. A customer deposits $1,000 in a bank, another customer comes in and borrows $1,000. Is it the same $1,000? No. Guess what happened? Both customers now have $1,000. The bank loan created money. Loans make deposits. Banks do not only lend out money they receive from depositors: they create money — by adding it to bank accounts as loans on one side of the ledger (the asset side); and as deposits on the other (the liabilities side).

Banks chose who gets newly created credit. Look out around you. Franchise operations abound, serving industrial food, and providing made-in-sweatshop clothing. Cheaply built apartments, strip malls, and ugly commercial buildings are what makes up our streetscape. For the environment alone, it is hard to imagine a worse use of money than the appalling suburban sprawl of our cities. All these activities were financed and brought to you by our banks, who cared mainly that their loans would be repaid with interest, so as to keep growing their bottomline.

As the Occupy movement spreads in Canada, the focus should be clear: nationalize the banks. The 1981-82 “Great Recession” led the Canadian Labour Congress to adopt a resolution to that effect at its convention. Even the NDP proposed to nationalize one bank. Now is the time to take up the issue again.

Bank credit is created based on our ability as a society to repay loans out of future economic activity. The public should decide democratically what projects should be undertaken in the general interest, and allocate credit accordingly. Public credit for private profit makes no sense at all, unless the general interest is being well served. What people are saying is that the system works for one per cent of the population, leaving 99 per cent adrift. Making banking a public utility is the way to turn the situation around.

Duncan Cameron is the president of rabble.ca and writes a weekly column on politics and current affairs.