Public Banking

The Promise Of Public Banking In Seattle

July 5, 2015 Anna Bergren Miller, www.shareable.net Create! Finance and the Economy, Public Banking, Seattle

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.

Can Activists Turn The Bank Of Canada Back Into A Public Bank?

March 7, 2015 Matt Stannard, www.occupy.com Create! Canada, Debt, Public Banking

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.

Vermont Pushes For Public Bank, Wins Local Investment

January 13, 2015 Alexis Goldstein, www.yesmagazine.org Organize! Finance and the Economy, Public Banking, Vermont

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 Considering Creation Of A Public Bank

December 24, 2014 Matt Stannard, www.publicbankinginstitute.org Create! Law, Public Banking, Seattle

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.

Are Public Banks Unconstitutional? No. Are Private Banks? Maybe.

May 21, 2014 Ellen Brown, www.ellenbrown.com Educate! Finance and Economy, Public Banking, Wall Street

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?

Mutuals: A Longstanding Force In Banking

May 12, 2014 Andy Mullineux, www.thenews.coop Educate! Cooperatives, Public Banking

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.

Organized Labor, Public Banks: Keys To A Worker-Owned Economy

May 3, 2014 Matt Stannard, www.occupy.com Create! Cooperatives, Labor, Public Banking

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.

Public Banking Advocates Make Their Voices Heard In Vermont

March 20, 2014 Matt Stannard www.publicbankinginstitute.org Create! Public Banking

A press release from Vermonters for a New Economy offered a clue to the source of the proposal's alleged "unpopularity," pointing out that "opposition to the legislation is well-represented on the schedule of [Senate Finance Committee] testimony – Chris D’Elia from the Bankers Association and the Deputy Treasurer are listed, who both oppose the bill, along with Senator Anthony Pollina, one of the bill’s main supporters. No representatives from the public, from the 18 cities and towns who passed a resolution directing the legislature to establish a public bank, or from Vermonters for a New Economy were invited to testify.

Warren’s Post Office Proposal: Greg Palast Gets It Wrong

March 18, 2014 Ellen Brown, www.huffingtonpost.com Educate! Post Office, Public Banking

Investigative reporter Greg Palast is usually pretty good at peering behind the rhetoric and seeing what is really going on. But in tearing into Senator Elizabeth Warren's support of postal financial services, he has done a serious disservice to the underdogs -- both the underbanked and the U.S. Postal Service itself. In his February 27 article "Liz Warren Goes Postal," Palast attacked her support of the USPS Inspector General's proposal to add "non-bank" financial services to the U.S. Postal Service, calling it "cruel, stupid and frightening" and equating it with the unethical payday lending practices it seeks to eliminate.

Vermont Votes for Public Banking

March 12, 2014 John NIchols, www.thenation.com Create! Finance and the Economy, Public Banking

When the prairie populists of the North Dakota Non-Partisan League swept to power a century ago, with their promise to take on the plutocrats, one of the first orders of business was the establishment of state-run bank. They did just that. And in just a few years the Bank of North Dakota will celebrate a 100th anniversary of assuring safe stewardship of state funds, providing loans at affordable rates and steering revenues toward the support of public projects. After the 2008 financial meltdown, and the failure of Congress to regulate “too-big-to-fail” banks, activists and progressive legislators across the country began to explore the idea of replicating—or even expanding upon—the North Dakota model in other states.

Prosperity For Main Street, Not Wall Street

February 7, 2014 Rudy Avizius, www.PopularResistance.org Educate! Finance and the Economy, Government, Public Banking

The key reason that communities are struggling is the huge burden of interest payments that are flowing to the big banks. Think about this, if you buy a home for say $100,000 dollars, typically you will have paid $250,000 once the loan is paid off. This means the typical loan will incur $150,000 in interest charges. The same concept applies when a community builds an infrastructure project such as school, road, bridge, sewer or other project. That $1 million dollar school could end up costing taxpayers in the community $2.5 million after interest charges. So taxpayers are paying more to the financiers of the project than to those who supplied the materials and actually did the labor to build it. Are you OK with them acting as a middleman sucking prosperity from our communities? Any good business model dictates the efficiency of eliminating middlemen.

Nationalize Banks That Overwhelm Regulation

January 13, 2014 Gar Alperovitz, www.nytimes.com Educate! Finance and the Economy, Public Banking

If regulation was likely to fail to solve problems like those involved in the Madoff scheme, what then might be done with very large institutions? An alternative — now being urged by several Senators is that very large institutions be broken up. The problem here, a number of the Chicago School leaders pointed out, was that the anti-trust process was also commonly taken over by the large institutions. Milton Friedman later came to the same basic judgment. Furthermore, once broken up, significant institutions have a way of reconsolidating power, and are commonly soon back operating at the same scale or larger (as anti-trust efforts in connection with Standard Oil and AT&T also demonstrate.)

Public Banking: Overthrow the Speculators

December 30, 2013 Chris Hedges, www.truthdig.com Educate! Finance and the Economy, Public Banking

The potential windfall for communities through the establishment of public banks is huge. In a study prepared in Vermont in support of establishing a public bank it was estimated that a public bank could make loans equal to 66 percent of state funds on deposits, or $236.2 million in credit for economic development in the state. This would expand the total credit supply available for state lending agencies by $236.2 million. Furthermore, the credit would be at a low cost to the state because public banks do not have to borrow money by selling bonds. Public banks make loans based on deposits. Interest returns to the state on loans and deposits. In essence, the state lends money to itself. The availability of $236.2 million in new lending, the study estimates, would create 2,535 new jobs, $192 million in value added (gross state product) and a $342 million increase in state output. “If used to finance state capital expenditures, funding through a public bank could save close to $100 million in interest costs on [fiscal year] 2012-13 capital spending, due to most interest payments no longer leaving the state,” the report says.

Do Bank of America and Wells Fargo Run Vermont’s Capitol City?

December 30, 2013 William M. Boardman, www.readersupportednews.org Resist! Finance and the Economy, Public Banking

“To repeat myself ad nauseum, I still don't see how our city's chief economic development officer can hold and promote views that are fundamentally anti-capitalist in nature.” – March 19, 2013, email from the Montpelier mayor to the city manager. When a city employee promotes a point of view that happens to center on an aspect of populist economics that seeks to serve the public good, and the democratically-elected mayor of that city has an opposing ideology that he’d rather not debate openly, why would anyone expect the resolution of this conflict to be anything but ugly? That describes the often-covert, year-long struggle by minions of the private banking industry in 2013 to strangle the nascent idea of a Public Bank for Vermont in its cradle before the public might begin to admire it and help it grow. In this preliminary outline of the circumstances that appear to have culminated in a process so blatantly unfair as to be laughable if it were in a movie, the three main actors all worked for the City of Montpelier.

The Amazing Success Of Public Banking In Costa Rica

November 12, 2013 Ellen Brown, www.globalresearch.ca Educate! Finance and the Economy, Public Banking

In Costa Rica, publicly-owned banks have been available for so long and work so well that people take for granted that any country that knows how to run an economy has a public banking option. Costa Ricans are amazed to hear there is only one public depository bank in the United States (the Bank of North Dakota), and few people have private access to it. The Costa Rican model is particularly instructive at a time when US citizens are groaning under the twin burdens of taxes and increased health insurance costs. Like the Costa Ricans, we could reduce taxes while increasing social services and rebuilding infrastructure, if we were to allow the government to actually make some money itself. And a giant first step would be for it to establish some publicly-owned banks.

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