Why banking needs to be treated as a public utility

State Bank of India

Photo by Anniekanwar


Public Banks have strong footholds around the world. In India they hold 70 percent market share. As global interests push to privatize India's Public Banks, a recent article in Economic Times argues that how we view the nature of banking is the central question — and how we answer it has direct relevance to banking in the US and globally.

“In simple terms, are banks meant to be turbo-charged return on equity (ROE) machines, driving innovation, risk-taking and high returns for shareholders? Or should they be public utilities meant to provide low-risk plumbing for the real economy, not blowing up, and if they do, not presenting catastrophic outcomes for society? The question has always been around banking, but the question has become centre-of-plate since the financial crisis in 2008. At the core is the realisation that banking losses, irrespective of the nature of ownership, is a public liability.”

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VIDEO: “Plan V” a Vermont Public Bank

A new video by Vermont Independent and Vermonters for a New Economy features many local advocates including Gwendolyn Hallsmith, Rep Valerie Fraser, and Henry Jacqz to explain why a Vermont Public Bank is a vital need. It’s full of great quotes and is part of a larger documentary film project by Rob Williams.

“The benefits for issuing money go to private institutions and are largely responsible for the growing gap in income inequality.” — Gwen Hallsmith

“My tax money goes to big banks and those big banks can use it for what they choose. One of those choices that TD Bank is making is to invest in fossil fuel industry and fossil fuel infrastructure, which is destroying the environment, undermining indigenous culture.” — Rep. Brian Cina

“Private banks do not serve the people. And in fact sometimes do the opposite.” — Jim Hogue, historian

“If we can work within the system by borrowing money at a fraction of what we borrow it at now, that would really be the biggest help.” — Rep Valerie Fraser

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City of Seattle releases RFP for Public Bank Feasibility Study



Seattle has made their effort to create a Public Bank official by issuing a request for proposals for a Seattle Public Bank feasibility study. The city expects the final report to be submitted by August 1, 2018. Full RFP text here.

For more information and contact details, click here.

Timeline for RFP below: 

Schedule of Events  Date/Time
Solicitation Release 2/26/2018
Deadline for Questions  3/12/2018 5:00 PM PST
Response Deadline  3/19/2018 5:00 PM PST
Announcement of Successful Proposer(s)  3/27/2018 5:00 PM PST
Anticipated Negotiation Schedule  3/28/2018 – 4/9/2018
Contract Execution  4/10/2018 5:00 PM PST

Big banks got huge tax cuts, then hiked states' and cities' interest rates


US bank holdings of municipal bonds and loans.


The monster banks get monster tax cuts … then turn around and hike interest rates for states and cities. The hikes could translate into millions of dollars of extra costs for cash-strapped municipalities.

Creating Public Banks would cut these middlemen — along with the enormous soaring drain of interest payments and fees — out of public budgets. 


“It takes away from money that would help the state’s reserve, or it takes away from money the state may appropriate for other statewide public purposes,” said David Erdman, the capital finance director for Wisconsin, whose payments on a $279 million loan will jump by about $750,000 next year.

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Top cannabis regulator says Massachusetts should create a state Public Bank


Cannabis Control Commission chairman Steve Hoffman. Photo courtesy the Boston Globe


Recreational pot sales are scheduled to begin in July in Massachusetts, and as yet, there are no banking services for the industry predicted to have $1 billion in sales by 2020. Cannabis Control Commission chairman Steve Hoffman said in the Boston Globe, “There’s a high degree of urgency, so it’s something we need to start talking about.”

Hoffman suggests the state should consider creating a state-run bank. That adds Massachusetts to the list of states — including California and Ohio — considering Public Banking due to the urgent needs of the legalized marijuana industry.

Hoffman continued:

“Unfortunately, it’s a real possibility that the recreational industry won’t have access to any banking services. We’re working as hard as we can to preempt that, but we can’t force any bank or credit union to service this industry.”

PBI Board member Nichoe Lichen said in a related American Banker article:

“There are many different uses or possible purposes for a public bank, and pot has been identified by some states as a possible focus for a public bank. Cannabis brings about a sense of urgency to the need to be able to deposit funds somewhere safely.”

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Citigroup will refund $330 million to credit card customers it overcharged



Oops. $330 MILLION is a rather large mistake. Citi hiked credit card holders’ interest rates immediately after two late payments, then never corrected them as required after the customers paid on time for the next six months. Half of the credit card customers got no reduction to interest rates at all. Half got only a small reduction.

Citigroup said it would refund about $330 million to consumers after discovering it had overcharged 1.75 million credit card accounts on their annual interest rates.

The mistake was discovered after a “periodic internal review,” not via an external regulator, and the mistakes had been going on since 2011. That’s seven years of overcharging 1.75 million customers on their interest rates, which seems a very long time to take to discover a mistake of this magnitude, especially when you consider customers are punished immediately after just two months of being late on a payment date.

Which begs the question, how many other megabanks are making these kinds of “mistakes”? And why are we allowing banks with this kind of track record for punishing customers to hold public funds?

[Read the full article]

Nomi Prins: Groundhog Day at the Fed


Photo courtesy Truthdig


Author Nomi Prins weighs in on the end of Janet Yellen's reign as chair of the Federal Reserve, and the bloody markets yet to come. There’s a fight going on.

Nomi Prins on Truthdig:

"The decade of cheap money crafted by the Fed, and dispersed through collusion among the world’s major central banks, is more powerful than any new head of any one central bank. More volatility will characterize this year, but these major central and private bankers will have one another’s backs. That means the global status quo of cheap money turboboosting the financial markets will continue, Elon Musk rocket style. It’s all these central bankers know. …

This doesn’t mean a financial crisis of greater magnitude isn’t brewing. It is. But central bankers will fight like hell to avoid it, using the only weapon in their arsenal: an unlimited, unregulated and unchecked ability to fabricate capital for the financial system. ...

Cheap Money Hasn’t Worked for Main Street

The markets (read: big banks) got upset that their flow of cheap money might dare come to an end. Yet the stated goal for this money flow, boosting the overall economy, hasn’t been achieved … except in the eyes of politicians, central and private bankers, and people blind to the correlation and causation of cheap-money policy with asset bubbles. 

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Groundswell of interest in Public Banks has advocates pondering how they could transform their cities


SF Supervisor Malia Cohen, photo courtesy Next City


An inspiring new article in Next City takes the pulse of key San Franciscans as they consider starting a Public Bank. The article mentions PBI and delves deeply into the benefits the city could gain. Ellen Brown and Walt McRee are among those quoted.

It includes a particularly good analysis on governance and how the city is already making the same sort of loans the Public Bank would make without running into political issues. A Public Bank would simply expand the city’s ability to make the types of loans it is already making. Supervisor Malia Cohen wants to get the Public Bank incorporated by the end of this year. 

Author Oscar Perry Abello writes:

“As [Supervisor Maria] Cohen and others see it, modeling a city-owned bank after the Bank of North Dakota would go beyond protecting public dollars from being used in ways that contradict public values and priorities — it could also help utilize those dollars as a powerful tool to advance those values and priorities."

Supervisor Malia Cohen:

“The key thing I took away from the [community responsive banking] report was this is doable. There’s a lot of moving parts in our financial banking and payroll system, but San Francisco has a lot of talent, and the legal framework already exists.

It’s my goal to have a thoughtful directive from the task force by the summertime, so we can move forward in the fall to introduce legislation to get this incorporated by the end of this year.”

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David Dayen asks: A CA public bank for pot entrepreneurs? How about the rest of us?


Photo courtesy Los Angeles Times


In a recent LA Times article, David Dayen explains how creating a Public Bank for the cannabis industry in California would be a tremendous step forward, but also a tremendous missed opportunity:

A public bank could do so much more than hold deposits for a handful of entrepreneurs. At a time when California has so many pressing needs, from transportation to water delivery, a public bank could help stretch scarce dollars and rebuild the state. …

A public bank could also be tasked with lending money to support critical public needs. Ethical developers have trouble financing affordable housing, and nonprofit entrepreneurs have trouble securing small business loans; a California public bank could operate as a lifeline.”

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LA City Council committee approves resolution supporting state bill to create a Public Bank for marijuana businesses


Photo courtesy LA City Council


Things are moving fast in California. A Los Angeles City Council committee approved a resolution February 16 to support the recently introduced state bill that would create a Public Bank that could take deposits from legal marijuana businesses.

California Senate Bill 930, introduced at the end of January, would establish a state-chartered bank that would “allow a person licensed to engage in commercial cannabis activity to engage in banking activities in California”.

The LA resolution to support SB 930 was proposed by Council President Herb Wesson and approved by the council’s Rules, Elections and Intergovernmental Relations Committee.

Wesson proposed creating a Public Bank for the City of Los Angeles in July 2017.

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