By Sheng Thao for Cowboys On The Commons – The Resolution, co-sponsored by Councilmembers Kaplan, Kalb, and Guillen, directs the City Administrator to look into the scope and cost of conducting a feasibility study for public banking in Oakland and possibly the larger region. It also directs City Staff to solicit input from community stakeholders about the feasibility study, including suggestions of potential contractors and funding sources; and makes it clear that the study should cover the legality and feasibility of banking the cannabis industry. The Resolution generated support from Councilmembers and community members alike.
By Shara Smith for Public Banking Institute – In response to long-term economic instability and disappointment with the mainstream banking system, the Oakland City Council voted Tuesday to investigate a public banking feasibility study funded by money left over from the Goldman Sachs Debarment Proceedings. The resolution, co-sponsored by Councilmembers Kaplan, Kalb, and Guillen, also directs city staff to solicit input from community stakeholders about the feasibility study, including suggestions of potential contractors and funding sources.
By Kevin Zeese and Margaret Flowers for Popular Resistance. Last April after the killing of Freddie Gray Baltimore experienced an uprising. It was not what was shown on television, which highlighted a few hours of burning cars and buildings, but a week long event that brought the city together. People of all ages and races called for transformation of the city so it corrected the injustices of decades of neglect and racism in the poor black communities of East and West Baltimore. As you can hear from our first two guests the problems of police violence continue to plague Baltimore but residents or also organizing to make the call for change a reality. A year later there is a lot of community organizing going on, as you can hear from Derrick Chase and Abdul Salaam below, which will take time to show results. The city is also going through a major local election where a new mayor and city council will be elected.
By Nichoe Lichen for Green Fire Times – The crash of 2008 just keeps on giving. We didn’t make it happen, but somehow it’s ours to fix. Historically, governments look to raising taxes and cutting jobs and services to “fix the problem.” So it goes in the city of Santa Fe this year. This may be a short-term necessity, given the city’s current financial crisis, but Banking on New Mexico believes the time is right for a better long-term strategy that includes a public bank that will invest our public funds—interest earned from those taxes, fees and fines we all pay—back into our community.
By Stephen J. Butler in Occupy – I personally think the time has come to set wheels in motion to organize a state-owned bank here in California. North Dakota has operated its own bank since the early 1900s and it has made money for taxpayers while strengthening the state’s own regional banks. The net effect has been to keep bank profits in North Dakota. The only losers have been the “too-big-to-fail” banks that would otherwise have enjoyed making the spread on money borrowed by, and throughout, the state. Of course, there is little political will to organize anything this effective in California because the banking lobby deploys too much money throughout the political process. However, our state’s initiative process offers voters an option to do an end-run around elected officials.
By Anna Bergren Miller for Shareable. Seattle, like other cities, is strapped for money. We’re the fastest-growing city in the country, and we need to build infrastructure to support that growth. We would also like to build more affordable housing, and create good family-wage jobs. We are close to our debt limit. Because Seattle and Washington state have the most regressive tax systems, we’re constantly having to go to the levy system to get more money, or borrow it. We’ve borrowed [billions of] dollars. Big banks, mostly, have bought those bonds—they loaned the money to us. So even though Seattle is prosperous compared to Detroit, or Baltimore, it still has a lot of needs. To start a public bank in Seattle, we would need a capital investment. We see that coming from the investments that Seattle already makes, mostly in savings treasury bonds and CDs. I think [they are valued at] about $800 million. We’re only getting 0.67 percent [interest] on those investments right now—that’s not much of a return. We’re thinking some of that investment money [could be used to start the bank]. It takes at least $100 million—but the more robust, the better. We could get a much higher rate of return through our own bank.
The Bank of Canada was nationalized in 1938 and is wholly owned by the Canadian people. Between 1938 and 1974, the federal government borrowed at low or no interest from the bank. But all that changed. In 1974, Canada turned to monetarism, a paradigm holding that expansion of the money supply is inflationary, and a partner to neoliberal economic policy. This shift compelled the federal government to borrow from private foreign banks to finance Canada’s pension plan and a whole host of public projects from transportation to health care, airports, seaports and more. In the 40 years since, Canada’s privatization of finance has led to an unprecedented level of public debt. It has commodified and effectively privatized the “human capital expenditures” originally articulated in the Bank of Canada’s charter.
Right before 2014 came to a close, Wall Street won an enormous victory in the year-end spending bill. The so-called “CRomnibus” bill, which included language written by Citigroup lobbyists, gutted a key piece of Wall Street reform meant to prevent future bailouts of big banks with taxpayer money. This win came after the financial industry spent years chipping away at the Dodd-Frank Wall Street Reform and Consumer Protection Act, which passed in 2010. Wall Street lobbyists gained little victories along the way, but never stopped asking for more. By making bold and ongoing asks, Wall Street was able to win, even when lawmakers sought a compromise.
Seattle is at the forefront of cities taking back democracy. Seattle’s city council knows that the antecedents of democracy are material — the ability to provide services, the ability to absorb the impact of economic shifts, the ability to make citizens feel invested in their communities. But one way the city can finance even more audacious and prosperous democratic participation, housing, social services and mass transit is with a public bank. The Wall Street Journal, the New York Times,Salon, and other national publications have recently touted the benefits of public banking; even the conservative Wall Street Journal admits that the Bank of North Dakota (the nation’s only current public bank) outperforms “too big to fail” Wall Street banks.
The movement to break away from Wall Street and form publicly-owned banks continues to gain momentum. But enthusiasts are deterred by claims that a state-owned bank would violate constitutional prohibitions against “lending the credit of the state.” California’s constitution is typical. It states in Section 17: “The State shall not in any manner loan its credit, nor shall it subscribe to, or be interested in the stock of any company, association, or corporation . . . .” The language sounds prohibitive, but what does it mean? Hundreds of state and local government entities extend the credit of the state. State agencies make student loans, small business loans, and farm loans. State infrastructure banks explicitly leverage the credit of the state. Legally, state and local governments are extending their credit to private banks every time they deposit their revenues in those banks. When money is deposited, it becomes the property of the bank by law. The depositor becomes a creditor with an IOU or promise to be repaid. The state or local government has thus lent its money to the bank. How can these blatant extensions of the state’s credit be reconciled with the constitutional prohibitions against the practice?
On this day 12 months ago, a downgrade by ratings agency Moodys started a process that led to the end of full co-operative ownership of the Co-operative Bank. It wasn’t the only mutual bank by any means, but to look beyond the story of the year that followed, it is helpful to look back. What role do mutuals play in banking? Well, a mutual savings bank is a bank which takes savings deposits from its members, who are also the owners and makes loans, sometimes to members only, and sometimes also to non-savers, who may then become members and owners.The loans are commonly to households, but in some cases may be to small businesses (and in turn, in some cases, those businesses, such as farmers, may be the member owners). A history of mutual banking They are commonly retail banks, funded by retail deposits collected through branches, rather than larger wholesale deposits from other banks or businesses through the money markets, including the ‘interbank’ market. Typically, in aggregate, small local retail savings banks collect more deposits than they can lend and they are net lenders to larger commercial banks.
Worker-owned cooperatives build economic democracy, but how do we build more worker-owned cooperatives? Here are three valuable allies to help us get there. Before his death in February, Jackson Mississippi Mayor Chokwe Lumumba was helping his constituents chart an economic plan whose main component was worker-owned cooperatives. In her recent article about Lumumba and cooperatives, Laura Flanders cites Collective Courage author Jessica Gordon Nembhard’s point that African-American leaders from Marcus Garvey to W.E.B. DuBois were proponents of cooperatives. DuBois, Garvey and Lumumba understood that worker democracy was necessary for economic sovereignty and community solidarity. For Richard Wolff, whose most recent book is Democracy at Work: A Cure for Capitalism, this time-honored form is also the key to arenewed movement for economic democracy. For Wolff, a synergy of labor and the left around worker-owned cooperatives promises to be an “unapologetically anticapitalist” strategy, challenging “the essence of the capitalist organization of production—the employer-employee relationship” and reshaping it in an egalitarian fashion.