The New Economy Project is looking for someone to work as a public bank organizer! Is it you?
… one of the catalysts for the vote was the city’s determination to review its banking relationship with Wells Fargo, after that institution failed a review of its community lending activities under the Community Reinvestment Act. This followed the 2016 revelation that the bank opened new accounts for existing customers without their permission, leading to legal actions resulting in hundreds of millions of dollars in settlements. In addition, the group DCReinvest has drawn attention to Wells Fargo’s funding of the controversial Dakota Access Pipeline.
Although this article was written before the Santa Fe City Council approved the task force, that step is now also complete and the work is beginning.
Eight months before the end of his four-year term, Mayor Javier Gonzales is recommending appointments to a task force responsible for research that could lead elected officials to dramatically change the way Santa Fe’s city government does its banking.
The task force will help determine requirements to establish a public bank. The nine-member panel must complete its work within six months of its first meeting, possibly making the idea of a public bank a major campaign issue in next spring’s mayoral election.
Public banking leverages a government’s assets to stimulate investment in the community. Examples of public banking include offering low-interest loans to local businesses or low-cost financing for public projects, such as housing and infrastructure.
We are especially pleased that Elaine Sullivan (pictured above), president of the key public banking advocacy group Banking on New Mexico , is a member of the task force. We eagerly await their results.
Our progressive neighbor city, Richmond, California, voted on May 23, to:
- support Oakland’s efforts to create a public bank;
- direct the Richmond City Manager to investigate the possibility of forming a mutually beneficial partnership; and
- consider, if Oakland’s initial feasibility study yields positive results, providing funds for a future business plan.
Six councilmembers voted in favor, and the Mayor of Richmond voted against. Fortunately, being mayor isn’t like being king …
Craig Brandt presented our case to Richmond. Maybe the fact that he’s now famous turned the tide? Anyway, Craig, our effort, and public banking in general received fine press from The Nation
hen Craig Brandt marched into the City Council chambers in Oakland, California, in the summer of 2015, he was furious about fraud. W The long-time local attorney and father of two had been following the fallout from the Libor scandal, a brazen financial scam that saw some of the biggest banks on Wall Street illegally manipulate international interest rates in order to boost their profits. By some estimates, the scheme cost cities and states around the country well over $6 billion. …
After the City Council turned him down, he started looking for other ways to wean Oakland off Wall Street. That’s when he fell in with a group of locals who have been nursing an audacious idea. They want their city to take radical action to combat plutocracy, inequality, and financial dislocation. They want their city to do something that hasn’t been done in this country in nearly a century, not since the trust-busting days of the Progressive era. They want their city to create a bank—and, strange as the idea may seem, it’s not some utopian scheme. It’s a cause that’s catching on.
The night owls at Daily Kos also found and discussed the Nation article.
Here in Oakland, we’ve been attending the budget meetings of all the City Councilmembers and making our case for funding the public bank feasibility study now. One of our key messages is that the city is throwing away $200,000 a day for every day we don’t have a functioning public bank. This number is based on the $70M of savings profit the bank would generate per year, which in turn is based on roughly 50% of what the Bank of North Dakota generated this year, as Oakland’s budget is about half the size of North Dakota’s
Here we are, speaking at Councilmember Kalb’s budget hearing on May 13:
Meanwhile, outside of Oakland, the Santa Fe, New Mexico City Council has voted unanimously to set up a public bank task force! All kudos to our allies at Banking on New Mexico, who made this happen.
And on May 20, at the California State Democratic Party Convention, candidate for governor Gavin Newsom gave a rallying cry for a public bank in California:
But that’s not enough. We need an econ that breaks Wall Street’s chokehold on state finance. It’s time to develop our own state bank…
— Gavin Newsom (@GavinNewsom) May 20, 2017
Oakland councilmembers: If you want to be first, you’d better get moving!
Bernie Sanders calls for a Vermont public bank!
Philadelphia, already working on a public bank, divests from Wells Fargo:
Efforts by Wells Fargo to move beyond its bogus accounts scandal have been set back by the loss of a big government contract.
The Philadelphia City Council voted Monday to change handlers of its $2 billion payroll account, according to published reports. Instead of continuing the arrangement with Wells, the city chose to hire Citizens Bank for the next fiscal year starting in July.
A fine op-ed in the L.A. Times by Jonathan Tasini:
The need to rebuild the nation’s infrastructure might provide an opportunity to overcome big bank opposition to public banking. The high cost of building and fixing roads, bridges, airports and the like is only increased by the fees and interest payments charged by private banks and by bond issuers. Public banks could mitigate those costs.
Consider the cost of the new Oakland-to-Yerba-Buena-Island span of the San Francisco Bay Bridge. It was completed in 2013 for a reported $6.4 billion. But the actual price tag will be more like $13 billion because of the interest payments on bonds privately capitalized through Wall Street institutions and their investors. For every dollar spent on the actual project, another dollar will ultimately go to paying off that debt. If a state bank had financed the project the interest and fees could have been lower to begin with, and they would have gone back into California’s coffers, not Wall Street’s.
The San Francisco Chronicle weighs in against us:
At least since Andrew Jackson wrestled with Nicholas Biddle’s “hydra of corruption,” the president’s not-so-affectionate nickname for the Second Bank of the United States, America has had an uneasy relationship with public banking. Today, outside the Federal Reserve System, the Bank of North Dakota is the nation’s sole example of a government bank.
Public Banking Goes to Pot, from High Country News
[Councilmember Rebecca] Kaplan and activists in Oakland are inching toward a potential solution: a city-owned public bank that would service a chunk of California’s $7 billion cannabis industry and support the local economy without having to rely on Wall Street. The idea has recently packed community forums and sparked interest from neighboring Bay Area mayors. If it succeeds, Oakland will become the second place in America — and the first in nearly a century — to establish a public bank. Stacy Mitchell of the Institute for Local Self-Reliance, a community development nonprofit, predicts that “once one place does it, other places are going to follow much more rapidly.” The endgame is both a boon to the cannabis industry and a new economic model in which communities can call on local banks to fund infrastructure and low-interest loans.
A Bank Even a Socialist Could Love from David Dayen at In These Times:
At the heart of the public banking concept is a theory about the best way to put America’s abundance of wealth to use. Cities and states typically keep their cash reserves either in Wall Street banks or in low-risk investments. This money tends not to go very far. In California, for example, the Pooled Money Investment Account, an agglomeration of $69.5 billion in state and local revenues, has a modest monthly yield of around three-quarters of a percent.
When state or local governments fund large-scale projects not covered by taxes, they generally either borrow from the bond market at high interest rates or enter into a public-private partnership with investors, who often don’t have community needs at heart.
The title of this post is the headline for a March 31 Mother Jones article by Meagan Day, much of which is about our work here in Oakland!
Leading the push in Oakland are progressive City Council members Rebecca Kaplan and Dan Kalb. [Link is to the East Bay Express article featured in our previous post.] “Public banking can give us a bank that is more responsive to the needs of the community,” Kaplan told me, “rather than prioritizing the needs of shareholders who don’t live in our community or the needs of corporate profit.”
Kaplan says there are two key reasons Oakland should pursue public banking. The first is that it can help low-income people—and especially people of color who may face discrimination at corporate banks—secure loans at a fair rate. “Oakland has long suffered from redlining,” Kaplan points out, and for-profit institutions can’t necessarily be trusted to refrain from discriminatory tactics.
The other big impetus, Kaplan says, is to give local pot entrepreneurs a safe place to stash their cash—literally. ” …
“The beauty is that you could really tailor a public bank to target whatever a community’s needs are,” says Mehrsa Baradaran, a law professor at the University of Georgia and author of How the Other Half Banks. Baradaran, who worked on Wall Street for a decade, explains that the major banks are bad at meeting community needs because their end goal is “not to benefit the people—it’s to increase capital.” A public bank can pool local resources and apply its money to local concerns.
“Maybe a certain community has a problem with payday lending,” Baradaran offers. A public bank could provide free accounts and emergency loan services for low-income people without the predatory practices of subprime corporate lenders. “Or maybe another community has an affordable housing issue, or needs farm loans or student loans.”
The article goes on to quote Richard Wolff. Read the whole thing.
The more press, the better, we say!
Gabrielle Canon, writing for the East Bay Express, the pre-eminent free weekly in our part of the world, interviewed our own Susan Harman, along with councilmember Rebecca Kaplan and others, for this excellent article:
It hasn’t been easy — especially after Gov. Jerry Brown killed an initial state-level campaign — but six years later and Harman might finally witness a public-bank reality in her hometown.
Oakland is now considering establishing one of the first city-owned banks in the country. Officials argue that the bank could provide affordable financing for city initiatives, small businesses, and low-income residents.
Oakland’s bank could also accept the billions of dollars in capital from California’s cannabis industry, which cannot deposit money at commercial banks due to pressure from the feds.
“Public banking is a great way for us to put our money where our values are,” Councilmember Rebecca Kaplan told the Express.
This great graphic from the Washington Public Banking Coalition heads an extensive public banking article by John Lawrence, published in the San Diego Free Press.
Alarmed by the corruption and greed of Wall Street, many US cities and states are studying the feasibility of establishing public banks. Public banks are owned by cities, states or other jurisdictions and serve to keep funds local instead of being deposited on Wall Street. The funds are then used to support local economic activities like small business loans and student loans.
Washington state has already cut its ties with Wells Fargo because they funded DAPL. Now they want to get rid of Wall Street as a place to park their money making use of the local economy and profiting the people of Washington instead of the bankers of Wall Street. Bills were introduced on January 18 in both the House and Senate of the Washington State Legislature that add Washington to the growing number of states now actively moving to create public banking facilities.
Lawrence goes on to quote Ellen Brown, to describe what’s happening in New Mexico, to quote a lot of our resolution, and to give some background on the Bank of North Dakota (more info on New Mexico and North Dakota here). If you have friends who don’t understand the point of public banking, this is a great link to send them.