The Wealth Concentration Engine: Rethinking America’s Financial Plumbing

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By Ellen Brown

A Jan. 17 article on Quartz Markets by Catherine Baab reports that JPMorgan Chase, Goldman Sachs, Wells Fargo, Citigroup and Bank of America returned nearly all of their 2025 profits to shareholders. Goldman Sachs returned $16.78 billion on $17.18 billion in earnings, meaning 97.7% of its earnings went to shareholders. Wells Fargo, Citigroup, JPMorgan, and Bank of America collectively returned tens of billions more. Across the six largest banks, roughly $100 billion flowed to shareholders in a single year.

Banks enjoy a long list of public privileges — federally guaranteed deposits, public charters allowing them to create deposits on their books as loans, access to the Fed’s discount window for emergency credit, and federal bailouts when they get into serious trouble. Even the Federal Reserve’s own profits, which once flowed to the Treasury, now flow to the banks. 

They are currently paid 3.65% on their reserves (substantially more than the banks pay on their customers’ deposits), simply for holding them in reserve accounts rather than using them to capitalize new loans. Tens of billions of dollars that were once remitted to the Treasury now land on bank balance sheets with no public benefit attached.

We subsidize the banks’ safety, underwrite their liquidity, and reward them for sitting on assets, without requiring them to invest in communities, build public wealth, or serve any public purpose. It all seems pretty outrageous; but as it turns out, the banks are doing what U.S. corporate law requires them to do. If they don’t follow the “shareholder primacy rule,” they could actually be sued by their shareholders.

The Rule of Shareholder Primacy

The rule comes from a 1919 Michigan Supreme Court case, Dodge v. Ford Motor Co., in which the court required Ford Motor Company to issue an extra shareholder dividend of $19.3 million that year. The court said:

A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of men to attain that end and does not extend to a change in the end itself, to the reduction of profits or to the nondistribution of profits among stockholders in order to devote them to other purposes. [Emphasis added.]

According to Robert Rhee in a 2023 Stanford Law Review article, the case sat quietly for decades in the law books. He writes, “Dodge was never influential among courts and was ignored by academics until the neoliberal turn of the 1980s.”

The shareholder primacy rule is thus a judge-made doctrine, revived during an era of deregulation and financialization, which is now deeply embedded in corporate law. It is not a constitutional requirement, not a statute passed by Congress and not a democratic choice of the taxpayers. In fact, it directly contradicts the original American understanding of what a corporation was to be. 

In the 18th and 19th centuries, corporations were not private profit engines but were public institutions, created by state legislatures to serve explicit public purposes — building bridges, canals, turnpikes, water systems and banks. Their charters limited duration, capped profits, restricted activities and could be revoked if the corporation violated its public obligations. As Rhee notes, early corporations were “public bodies designed to serve public purposes.” The idea that corporations exist solely to maximize shareholder value was an early 20^th century judicial holding brought out of obscurity in the neoliberal era for political ends.

From Dividends to Buybacks: The Casino Model

For most of the 20th century, corporations returned profits to shareholders through dividends. But in 1982, the Securities Exchange Commission changed Rule 10b‑18, effectively legalizing large-scale buybacks of a corporation’s own stock. By reducing the number of shares outstanding, buybacks inflate earnings per share and drive up stock prices. They also enrich executives, whose pay is tied to stock price and who get bonuses in stock shares.

Unlike dividends, which are transparent, predictable, and relatively stable, buybacks follow the dynamics of a casino. The profit is paid, not by the company, but by the next buyer of the stock. That means someone down the line becomes the “greater fool.” And the corporation still has possession of its own stock.

Meanwhile, according to Gallup, nearly 40% of Americans own no stock at all; and of those who do, a much smaller percentage owns bank stock. The Federal Reserve confirms that the top 10% of the population owns more than 90% of all equities. So when banks return their profits as shareholder buybacks, most Americans are not even at the gaming table.

A White House Critique

In her Quartz article, Catherine Baab observes:

[T]he White House has suddenly become very interested in both bank pricing and corporate buybacks. Last weekend, President Donald Trump warned that credit card issuers would be “breaking the law” if they didn’t cap interest rates at 10% for one year.

Never mind that no such law exists and he lacks the authority to create one. The threat was enough to trigger a Monday sell-off in bank stocks.

Meanwhile, Trump’s housing chief, Bill Pulte, told the Wall Street Journal that homebuilders are “making, in some cases, more money than they’ve ever made, and they’re buying back stock like never before.” Pulte hinted at penalties for companies that don’t help the administration in its purported efforts to push housing costs down. …

But no one in the administration, at least as of this writing, is saying a word about bank buybacks. In fact, the administration pushed to change rules that limited banks’ ability to do that — just months ago.

Baab was referring to a November 2025 move by federal banking regulators to finalize a proposal to ease capital requirements on the nation’s biggest banks. She writes:

After the change, Goldman sent 97.7% of earnings to shareholders. Wells Fargo, Citigroup, JPMorgan, and Bank of America collectively returned tens of billions, too. 

Baab concludes:

Trump’s populism isn’t just hollow. It’s counterproductive, targeting prices in ways that harm affordability while the financial structures that concentrate wealth with those who already have it continue to accelerate.

Some Counter-arguments

While critics accuse the Administration of indulging corporate interests, Reuters reports that the White House is preparing an executive order to restrict dividends, buybacks, and executive compensation for defense contractors whose projects are over budget or behind schedule. This is a direct challenge to one of the most entrenched, bipartisan power centers in Washington.

Meanwhile, at the local end of the financial spectrum, Treasury Sec. Scott Bessent has been making the case for reviving America’s community banks — the institutions that actually lend to small businesses, farmers, first‑time homebuyers and local governments.

In remarks before the Federal Community Bank Conference on Oct. 9, 2025, Bessent 

emphasized the collapse of new bank formation since 2008, the regulatory tilt toward megabanks, the need to restore local lending ecosystems, and a goal of “Parallel Prosperity” — Wall Street and Main Street rising together. He affirmed, “No longer will regulation serve to entrench big banks and empower Washington bureaucrats to the detriment of community banks and the clients they serve.” 

This is a pro‑community move, and it opens the door to a deeper solution.

The Public Banking Alternative: When the People Are the Shareholders

If the law requires corporations to serve shareholders, then the simplest way to align banking with public needs is to make the public the shareholder. The best working model in the United States today is the Bank of North Dakota (BND) — a century‑old publicly-owned bank in a conservative state that partners with community banks to support local lending. 

The BND finances infrastructure, keeps capital circulating in-state, and returns profits to the public treasury. It does not replace local private banks but strengthens them. And it proves that banks can do productive things with their money if the institutional design rewards it.

If the U.S. wants to redirect capital from buybacks to productive investment, it needs institutions designed for that purpose.

At the national level, H.R.5356, the National Infrastructure Bank Act of 2025,  has been unanimously endorsed by the National Association of Counties among a long list of other endorsers. It mobilizes private capital for public infrastructure, creating long-term, low‑cost financing for projects that generate real economic value; and it is the kind of institution that China and other countries with modern infrastructure already have.

The Deeper Issue: America’s Financial Plumbing Is Misaligned

The real problem is that America’s financial plumbing is not aligned with the needs of the productive economy. We have built a system optimized for shareholder extraction and short‑term returns, which favors megabanks over community banks, the already-rich over struggling families, and private profit over much-needed public infrastructure.

If the problem is in the rules that banks are required to follow, then the solution is either to change the rules or to build institutions that serve the community while operating under the existing banking framework. This can be done with public-community banking partnerships on the model of the Bank of North Dakota and with a national infrastructure bank that serves public infrastructure needs.

At a time when we seriously need to bring the warring factions of our economy together, these banking arrangements can appeal to all political persuasions — to conservatives who value local control, to liberals who value public investment and to independents who are tired of a financial system that seems to serve no one but itself.

Tens of billions of dollars that once went to the public now land on bank balance sheets with no public benefit attached. Banks need to return to their original purpose to serve as public utilities. When the people own the banks, or at least some of them, maximizing shareholder profit means generating profits that flow back into the public arena, available to build schools, bridges, water systems, housing and the modern infrastructure needed to compete on the international stage.

Ellen Brown is a regular contributor to ScheerPost. She is an attorney, founder of the Public Banking Institute, and author of thirteen books including the best‑selling Web of Debt. Her latest book is Banking on the People: Democratizing Money in the Digital Age, and her 400+ blog articles are available at EllenBrown.com.

Here is more of Ellen’s work:

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