What It Will Take For Public Banking To Win
Above Photo: From Occupy.com
THE TALE OF SANTA FE
In 2014, then-Santa Fe Mayor Javier Gonzales recognized that poverty and shrinking city budgets were problems that needed out-of-the-box solutions. Deeply concerned with inequality, Gonzales welcomed a discussion about public banking and even participated in a conference featuring leading figures in the movement. He later cheered on his Santa Fe City Council’s approval of a feasibility study that concluded that a city-owned bank would have an impact of millions of dollars a year in savings and investment potential for the city.
After the study, though not particularly because of it, Gonzales’s position would gradually move from supportive to lukewarm. This should have come as no surprise. Whenever a citizens group pushes for the public takeover of any sector of the financial industry, bankers and financial professionals push back. The most progressive people in the financial industry are still skeptical about alternatives to privatization.
Like other public banking campaigns around the country, activists in Santa Fe had tried to get community bankers and more elite financial stakeholders behind the idea of establishing a public bank – which would, after all, help keep the city’s industries busy and employed. Even though they ought to know better, community bankers often assume their interests align with Wall Street, so they’re finicky when it comes to stepping outside the box. All of this despite the overwhelming success of Bank of North Dakota in keeping community banks thriving in that state. As a veteran activist once told me, community bankers tend to see themselves as temporarily embarrassed Wall Street bankers. Some want to be bought out; it’s a good package for them and their families.
So as Santa Fe’s private financial interests were making noise and wringing their hands – and no doubt making Gonzales and the council listen to their lamentations – the city appointed a citizen task force, roughly half of whom were affiliated with private financial business, and only one of whom officially represented the public banking movement.
The task force seemed concerned with finding and listing all the ways the private sector could meet the needs outlined in the city’s case for a public bank. The earlier feasibility study had shown similar concern, suggesting ways Santa Fe could improve the city’s economy without creating a public bank. Those recommendations included educating the public about the nature of debt – a metaphysical trap I discussed in Part 4 of this series, and heavy reliance on philanthropic investment funds.
The task force’s [final report](https://www.santafenm.gov/media/archive_center/PBTF_Final_Report.pdf] is filled with optimistic language about the “improved performance” of the city’s portfolio and the successful refinancing of its debt. It boasts of “an opportunity for the development of a clear directory on the City’s website of existing City-sponsored or philanthropic-sponsored financial opportunities for public projects.”
The report concludes against Santa Fe creating a public bank. But thanks to the stepped-up efforts of the city’s now six-year-old public banking movement, the task force was compelled to preserve at least the idea of public banking, suggesting the State of New Mexico explore the creation of a state bank.
However, the energy generated around the calls for a public bank forced the city to immediately create new public-private solutions to the lack of investment in the area. Specifically, the city created the Verde Fund, a $300,000 allocation to fund community initiatives to “reduce systemic poverty, achieve carbon neutrality, and empower Santa Fe’s workforce.”
That’s one hidden benefit of radical demands – they bring some sound incremental changes. But one wonders what would have happened if even only a few thousand people had demanded a Public Bank of Santa Fe, instead of a few hundred. The problem with philanthropy, and city-funded initiatives, is that they last only as long as the financial elites want them to last.
In March of this year, progressive Democrat Alan Webber succeeded Gonzales in a landslide victory. Webber was once a strong and enthusiastic supporter of public banking. Meanwhile, State Treasurer Tim Eichenberg is reportedly open to the idea of a state-owned bank.
So Santa Fe, or perhaps New Mexico more broadly, will get another bite at the apple. But without an overwhelming show of demand from a wide array of public interest groups and residents – we’re talking about people ready to show up at city hall, or in the state capitol, making the single, repeated demand for a public bank – my prediction is history will repeat itself, again and again, the way it has in all of 15 or more states where officials have “explored” public banking in the last several years.
The private sector’s fair-weather progressivism always has limits. Public officials will always get nervous. People who don’t really know what they’re talking about – and definitely don’t know what we’re talking about – will dominate supposedly objective city task forces. Having a good idea is not enough to get results. But the ability to manipulate the private sector into fulfilling at least some of the purpose of a public bank isn’t, in itself, a reason not to create one.
THE TALE OF LOS ANGELES
In the last year, the City of Los Angeles has jumped to the forefront of the banking revolution. In July 2017, seven L.A. City Council members signed a motion to create a public Bank of Los Angeles. In December, the council voted unanimously to disqualify Wells Fargo from city banking services. Then, in February, a council committee approved a resolution supporting a state bill to create a public bank that could take deposits from legal marijuana businesses. And finally, last month, the L.A. County Democratic Party, which represents over 2.4 million Democrats, voted to endorse the Public Bank of Los Angeles.
How did L.A. – and I should add here that Oakland and San Francisco are also pushing aggressively ahead with their city councils – get here so quickly? And what will it take to overcome the barriers that seem to have blocked every other contemporary public banking campaign?
Prior to 2017, the California public banking movement had been poking along for years – decades, in fact, if you recall the Peace and Freedom Party’s early advocacy – with just a handful of activists in several cities. Progressive West Coast candidates have been pushing city- or state-owned banks in every election cycle for a generation.
But the movement began to reach critical mass when both cannabis banking and divestment from law-breaking banks with fossil fuel portfolios began driving cities to look for banking alternatives. Activists from the divestment movement, the Standing Rock protests in North Dakota, and community empowerment groups across the state began having meetings with public banking advocates.
I got to attend two of those meetings in 2017, one in Santa Cruz and one in Los Angeles, on behalf of Commonomics USA. Among those who showed up for the very crowded and intense L.A. meeting were advocates for the homeless and against evictions, Alliance of Californians for Community Empowerment, Revolution L.A., Insurgency Now, Divest L.A., and other groups. Attendees included people who had lost their homes to Wells Fargo foreclosures. But in addition to acknowledging the wide array of organizations in the room, we also asked which groups were not in the room and resolved to make connections with them.
The meetings had two main agenda items: connecting public banking to the myriad economic and ecological justice issues that had brought people together, and figuring out how to win (the word “win” was used repeatedly). Out of the L.A. meeting, and many subsequent meetings, came the resolve, political strategy and public banking narrative that culminated in those momentous City Council and County Democratic Party decisions.
The L.A. group has also taken advantage of the fact that it represents one of the largest cities in the country, with a trillion-dollar economy. Two founding leaders of Public Bank LA, Trinity Tran and Phoenix Goodman, have been interviewed on The Young Turks and by The Progressive, while popular socialist economist Richard Wolff has interviewed PBLA’s Legislative Director David Jette.
Finally, where Santa Fe and nearly every other public banking movement actively courted local bankers, the divestment-public banking movement of Los Angeles emphasized all the rest of the stakeholders (environmentalists, unions, immigrant rights groups, Democratic Socialists of America, and the progressive wing of the cannabis legalization movement, among others). It didn’t so much court the bankers as inform them that Wall Street’s days were numbered, and financial sector professionals were welcome to jump ship to the side of economic justice. The presence of the divestment movement was critical in that respect; in fact, because L.A. has already voted to divest, presumption is now against the big banks in the debate about public banking.
And what about getting over those barriers? Can L.A., or other cities in California, push through the ideologically biased feasibility studies and ambivalent public officials? How will they handle the lies and threats of the big bank lobby? Last week, I asked Tran and Goodman how L.A. would address those challenges.
“There needs to be consistent visibility and positive dialogue from activists and constituents,” Tran told me. “As we saw through the Divest LA campaign, a critical part of successful movement building is to work an inside-outside game, leveraging visibility from a wide network of grassroots advocates to deliver the needed public pressure to guide legislators in a laser-pointed direction.”
Goodman told me that the movement needs to move its optics beyond looking like technocrats and financial reform nerds. “The problem with public banking movements up to this point is that they have been mostly technical-minded, smart, well-meaning people playing at the higher level trying to enact legislation,” he said, “but lacking in the general people-power movement that would provide the fuel that would force the agenda.” Goodman believes that lack of a mass movement is why Jerry Brown shut down a state bank feasibility study in 2011. Sure, Goodman said, we need “high-level networking” with officials, but equally important is a mass advocacy campaign, “articles, infographics, public events, town halls,” and things like the recent “street event in San Francisco” thrown by activists.
“The point is to make it political suicide not to endorse public banking.” he said.