Postal retail banks would be immediately dramatically helpful to 34 million families in the country. Yesterday Sen Kirsten Gillibrand introduced legislation that would require every US post office to provide basic banking services. This is a service the Post Office offered until the 1950's.
Having the ability to cash checks and obtain low-cost short term loans at the local post office would free millions of people from the clutches of the unscrupulous, predatory payday lenders to which people routinely pay triple digit fees to borrow money for bills that come due before their next paycheck. If you need a typical payday loan of $375, expect to pay an extra $520 in interest and fees, according to Pew Charitable Trusts. These outrageous charges throw working people into a never-ending quagmire of debt just to keep the lights on.
Nearly a quarter of American households — one in four — are either unbanked or underbanked and rely on payday loans or “alternative” lenders, and the situation overwhelmingly impacts people of color.
In an interview with Daniel Marans in HuffPost, Gillibrand said:
“This is a solution to take on payday lenders, to take on the problems that the unbanked have all across the country. It’s a solution whose time has come. … Literally the only person who is going to be against this is somebody who wants to protect payday lender profits.”
Researchers at the St. Louis Federal Reserve reviewing Bitcoin and other cryptocurrencies say that a “Fedcoin” on the cryptocurrency model would not be feasible. What they recommend instead is that the Fed allow individuals to bank at the Fed in digital dollars, just as banks are allowed to do now. This ability would eliminate the risk of bank runs, since the Fed can’t run out of dollars, and would force private banks to raise the interest rates they pay on deposits if they want to keep their depositors. The Fed would be issuing digital dollars, expanding the supply of "legal tender" issued by the government. Currently legal tender is only 5% of the money supply (the 5% that is in paper dollars); the other 95% is issued privately by banks.
Now we just need to make the Fed truly “federal.” The Fed is actually our biggest “public” bank. The problem is — as we all know — it’s not really public. We need to nationalize the Fed, making it a true public utility!
From an article in CCN:
“In an effort to assign Bitcoin one of the above monetary categories, the researchers concluded that Bitcoin actually defied traditional categorization – it’s none of the above …
From the St Louis Fed report:
“We believe that there is a strong case for central bank money in electronic form […] central bank electronic money satisfies the population’s need for virtual money without facing counterparty risk.”
Ellen Brown’s latest article in TruthDig tackles the Fed’s current penchant for raising its benchmark interest rate — and the disastrous effects it’s already having. Ellen says the Fed’s reasons don’t pass the smell test. Instead, it’s another case of follow the money: Who benefits from increasing interest rates? Good guess ... the banking sector (and, naturally, the Fed’s seven member Board of Governors).
“Wall Street calls the shots, and Wall Street stands to make a bundle off rising interest rates. ... The Federal Reserve calls itself independent, but it is independent only of government. It marches to the drums of the banks that are its private owners. To prevent another Great Recession or Great Depression, Congress needs to amend the Federal Reserve Act, nationalize the Fed and turn it into a public utility, one that is responsive to the needs of the public and the economy.”
On the day of Bank of America’s shareholder meeting in Charlotte, North Carolina, an alliance of 14 organizations including Public Bank SF, Divest SF, Friends of Public Bank of Oakland, Mazaska Talks, California Nurses Association, Code Pink, SEIU and more rallied at a Bank of America financial center in San Francisco and marched to City Hall to call on the SF Municipal Task Force to create a fully functioning Public Bank within the next five years.
From the group's press release:
“Our organizations represent San Franciscans who want a greener, more LGBTQ friendly, anti-racist, decarcerated, pro-indigenous, and more affordable city. … The organizations cosponsoring today’s protest are concerned that public bank task force members may follow Santa Fe and Los Angeles officials in using exorbitant start-up and operational costs of a public bank as an excuse to continue the city’s relationship with Bank of America and other Big Banks. … [Startup costs] would pay off in the long-run as a public bank can provide lower interest rates than the ones offered by Wall Street banks for public infrastructure projects …”
A new report issued by the William J. Hughes Center for Public Policy at Stockton University touts the important specific benefits that New Jersey could expect from starting its own state bank. The report recommends that Gov. Murphy implement both a feasibility study and a draft business plan to help a state bank hit the ground running.
Deborah M. Figart, PhD, Distinguished Professor of Economics writes:
"Every $10 million in new lending by the State Bank of New Jersey would yield an additional $16 - $21 million in state output (Gross State Product), raise state earnings by $3.8 - $5.2 million, add 60 – 93 new state jobs, and increase state value-added by roughly $9 – $12 million. ...
"Despite numerous accounts documenting the Bank of North Dakota's longstanding success, [currently the only Public Bank in the US], this exemplary model has only recently generated serious consideration by other states, including New Jersey."
Community members and public officials alike often ask how would a Public Bank be run? In true keeping to the nature of "public", ultimately, the structure of a Public Bank is the responsibility of the community to actively decide. The values of the community it serves would be reflected in the charter of the Public Bank.
Determining those values could include surveying the population and voting on the bank's principles.
As one example, the Oakland advocacy group Friends of the Public Bank of Oakland has completed a comprehensive bank governance document put together by its governance committee. Their proposed Oakland Public Bank policy outlines:
- Strong progressive values
- A Board of Directors with a majority of members drawn from the community, as well as representation from various experts
- Board decisions by consent, rather than simple majority rule
- An Academy to train Directors (based on the practice of the Sparkasse public banks in Germany)
- Expansive and community-centered loan policies
Pennsylvania Green Party endorsed long-time Public Bank advocate Paul Glover as candidate for Governor at their state convention on March 18. A resident of Philadelphia, Glover is a long-time social entrepreneur who has founded 18 campaigns for ecology and justice. He has authored six books on community power and previously taught urban studies at Temple University and ecological economics at Philadelphia University.
"As governor, I will support progressive taxation, alternatives to incarceration, funding equity for public education, regional organic agriculture, expanded rail systems, decriminalization of marijuana, bolder union organizing, and a state bank whose deposits serve Pennsylvania."
PBI Board Member AZ Rep. Pamela Powers Hanley is actively working to create a Public Bank that will work for Arizona. She posted on Facebook her latest take on progress.
Rep. Pamela Powers Hanley:
“Today we debated and voted on multiple bills, including SB1150, proposed by Senator David Farnsworth. Although we have our differences of opinion, Senator Farnsworth and I agree that helping small local businesses and community banks will grow our state’s economy. We also have a common interest in the economic development potential of public banking. Giveaways don’t work.”
Matt Stannard has launched the first of a ten-part series on the Public Banking movement in Occupy.com. It will feature interviews with economists, historians, and activists of varying levels of involvement in the economic justice movement in general, and the public banking movement specifically.
Matt Stannard writes:
"Recognizing that the generation and value of money are artificial, and that how we pay for things is fundamentally a political question, advocates of financial democracy see banking – the power to lend money and to create value through the act of lending – as an enormous power. Such power should be democratic, not autocratic."
The Public Banking Institute brought together in early March representatives from key active Public Bank initiatives for a strategic planning summit. The group included over 50 diverse, experienced professionals — former bankers, legislators, authors and academics, as well as grassroots organizers, political organizers, and labor leaders. All attending spent their weekend devoted to strategizing how to make Public Banks that have a mandate to serve the public interest a reality for our states and cities.
How’d it go? Read this inspiring Twitter thread from David Jette of Public Bank LA for a taste of the shared energy.
Watch this short video from grassroots organizer extraordinaire Carlos Marroquin of the Bernie Sanders Brigade and Yes CA Public Bank to see how hard at work we all were at the ongoing workshops.
What’s next? Look for a media and social media primer as well as many other important initiatives to support those hard at work on the ground.