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Public Banks

A Rochester Credit Union Wants The Local Government To Create A Bank

Melissa Marquez inherited her mother’s deep desire to make the banking system work for those whom it has long excluded. At 14, she saw her mother break down in tears again and again after coming home from work as a loan officer at a bank. The bank refused to lend to their community in Barrio Logan, an epicenter of Chicano culture in San Diego, her mother told her. Barrio Logan residents would come in, make their deposits and stay faithful customers to the bank, but still couldn’t get access to credit. That memory from 1974 has driven Marquez to help lead a coalition of tenant organizers, community land trusts, community development lenders and elected officials that has spent the last few years calling for more government-owned banks across New York.

Tackling California’s Budget Crisis: Taxes, Cuts, Or Form A Public Bank?

In 2022, the state of California celebrated a record budget surplus of $97.5 billion. Two years later, according to the Legislative Analyst’s Office, this surplus has plummeted to a record budget deficit of $73 billion. Balancing the budget will be challenging. Unlike the federal government, the state cannot just drive up debt and roll it over year after year. The California Balanced Budget Act, passed in 2004, requires the state legislature to pass a balanced budget every year. The usual solutions are to cut programs or raise taxes, but both approaches are facing an uphill battle. Raising taxes would require a two-thirds vote of the legislature, which would be very challenging, and worthy public programs are in danger of getting axed, including homelessness prevention and funding for low-income housing.

More Banks To Fail? Not In North Dakota

U.S. banks are again in the crosshairs. Standard and Poor’s has downgraded five new middle-tier banks and put three others on negative outlook. This follows sweeping downgrades earlier in August by Moody’s, which cut credit ratings on 10 banks and placed four of the 15 largest U.S. banks on review for possible downgrade. As with the banks going into receivership earlier this year, concerns include interest rate risk due to unrealized losses from long-term securities. Meanwhile, the U.S. government itself has been downgraded by Fitch Ratings, which questions the government’s ability to finance its nearly $33 trillion federal debt.

Public Banking Efforts Are Gaining Momentum In California

Prince Osemwengie has been looking into every tool in the toolbox to help stem the tide of local businesses being displaced due to rising rents and rising property values in South Los Angeles: Technical assistance and legal aid for small business owners, commercial rent subsidies, tax credits for small business oriented economic development, community ownership of commercial real estate, and all the above. But with the financial system so tilted against local businesses, especially Black- and Brown-owned businesses, he believes the time has come for a more drastic solution: L.A.’s first city-owned bank. And with a recent city council vote, that solution is one step closer.

Squeezed By The Shorts: Time To Ban Short Selling?

Short sellers have made a killing in the recent banking crisis, scalping $14.3 billion from bank stock owners just in March of this year. Short sellers “borrow” stock they don’t own and immediately sell it, driving the price down. Then they buy it back at the lower price, return the stock, and pocket the difference. Bankers say the practice is threatening the stability of the banking system and are calling for a ban on short sales of bank stock. The Securities Exchange Commission (SEC) is expected to decline but is investigating whether the practice constitutes illegal market manipulation intended to deceive investors.

As Mayor, Brandon Johnson Should Establish A Public Bank In Chicago

When the cryptocurrency exchange FTX opened its US headquarters in Chicago last May, Mayor Lori Lightfoot heralded it as a win for communities that historically had been denied access to quality banking and financial services. She announced that FTX would donate $1 million to help expand a program to provide formerly incarcerated Chicagoans with a universal basic income. She calledthe initiative ​“a mechanism and a tool to bring historically underrepresented and ignored populations into the world of crypto so they can take ownership and control over their own financial destiny.”

Philadelphia Passes Public Banking Law

With all the obstacles to public banking, a small but significant step was taken in Philadelphia last March. The Philadelphia City Council, with one exception, voted unanimously to establish the Philadelphia Public Finance Authority. Its purpose is to provide credit lines for making loans to help small businesses unable to obtain regular loans from private financial institutions. Many of these enterprises are started by those without access to capital—usually working-class people and people of color. Although not a bank in the traditional sense (the Authority is unable to take deposits from private sources), it can utilize the city’s financial resources to facilitate loans that benefit the community and help stimulate the local economy.

Electric Co-ops Are Well Situated To Lead The Green Energy Transition

To maintain a livable climate, the United States must make immediate and drastic changes to its energy policies. Perhaps the most important change is the need for a transition away from fossil fuels toward cleaner, more renewable sources of energy. A new report by the Democracy Collaborative has found that community utilities — those that are publicly or cooperatively owned — are better suited for a green transition than their for-profit corporate counterparts. The report also found that many community utilities, as they currently exist, must be significantly reformed to fulfill their full potential. Electric co-ops operate in pretty much the same way as investor-owned utilities companies, like PG&E.

The Real Antidote To Inflation

The Federal Reserve is caught between a rock and a hard place. Inflation grew by 6.8% in November, the fastest in 40 years, a trend the Fed has now acknowledged is not “transitory.” The conventional theory is that inflation is due to too much money chasing too few goods, so the Fed is under heavy pressure to “tighten” or shrink the money supply. Its conventional tools for this purpose are to reduce asset purchases and raise interest rates. But corporate debt has risen by $1.3 trillion just since early 2020; so if the Fed raises rates, a massive wave of defaults is likely to result. According to financial advisor Graham Summers in an article titled “The Fed Is About to Start Playing with Matches Next to a $30 Trillion Debt Bomb,” the stock market could collapse by as much as 50%. 

Why Shouldn’t The People Own The Banks?

Even as the pandemic devastated New York City, megabanks like JPMorgan Chase and Bank of America continued to do a roaring trade. And now those financial behemoths are set to manage the funds that New York City and other municipalities will be deploying for the recovery. But financial justice advocates want to see the City move its money from the Wall Street titans to a public bank, owned and operated by the people. A municipally chartered public bank would enable the city government to place its deposits into an institution that is not beholden to a commercial banking sector notorious for fueling the Great Recession, saddling working-class communities of color with toxic debt, and imposing predatory and discriminatory lending on the most vulnerable households.

Public Banking Can Improve The Lives Of Workers And Help Save The Planet

The movement to create public banks is gaining ground in many parts of the U.S., particularly as part of an effort among activists and progressive lawmakers to extend banking access to low-income communities and communities of color in the post-COVID-19 economy. But how does public banking help protect the local community and assist with development? If public banks become part of the Federal Reserve — as a bill introduced by Representatives Rashida Tlaib and Alexandria Ocasio-Cortez aims to do — what would be the consequences? Leading progressive economist Gerald Epstein, professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts at Amherst, has studied the issue of public banking extensively and sheds ample light on these questions in this exclusive interview for Truthout.

Why The Fed Needs Public Banks

On November 20, US Treasury Secretary Steven Mnuchin informed Federal Reserve Chairman Jerome Powell that he would not extend five of the Special Purpose Vehicles (SPVs) set up last spring to bail out bondholders, and that he wanted the $455 billion in taxpayer money back that the Treasury had sent to the Fed to capitalize these SPVs. The next day, Powell replied that he thought it was too soon – the SPVs still served a purpose – but he agreed to return the funds. Both had good grounds for their moves, but as Wolf Richter wrote on, “You’d think something earth-​shattering happened based on the media hullabaloo that ensued.” 

World’s Public Banks Gathered At First-Ever Summit

"There is no excuse for the continued funding of billions of dollars in coal, gas, or oil projects. This must stop now," Sophie Richmond, a coordinator with Big Shift Global, said in a statement. The event in question was the four-day Finance in Common Summit, which ended Thursday. Hosted by France, the virtual summit was billed as a way "to stress the crucial role of Public Development Banks (PDBs) in reconciling short-term countercyclical responses with sustainable recovery measures that will have a long-term impact on the planet and societies."

Neoliberalism’s Death Knell?

In the latest It’s Our Money podcast, PBI Chair Ellen Brown and co-host Walt McRee speak with renowned economist Michael Hudson, member of the Public Banking Institute Advisory Board. Walt introduces the episode: The global economic devastation produced by market-driven profiteering has resulted in distressed and deprived citizens taking to the streets by the hundreds of thousands in cities around the globe and continues its destructive exploitation of our planet’s resources. The culprit is an aging “neo-liberal” economic system which produces historic social inequality while consolidating power in the hands of a few. Our guest, renowned economist Michael Hudson, says this system is more neo-feudal than neo-liberal – and that its inherent excesses are on the verge of bringing it down. Ellen reports that one example of its demise may be in Mexico where its new president is creating new public banks to help address some of its neo-liberal market inequities.

How A Public Bank Could Free S.F.’s Money From Wall Street

Of all the vivid characters in Hustlers, from Jennifer Lopez’s magnetic Ramona to Cardi B portraying her own lived experience, the 2008 financial crash is the one that will be familiar to most contemporary Americans. In the movie, the Great Recession spurs a crew of New York strippers into making a living by drugging rich-looking men to spend lavishly at clubs as their own twisted way of surviving in a system that doesn’t protect people like them. “We got to start thinking like these Wall Street guys. You see what they did to this country?
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