Former PBI Chair Walt McRee joins Margaret Flowers, MD and Keven Zeese on their Clearing the Fog podcast show to discuss the Public Banking movement.
“Money moves the world. Banking moves money.” — Walt McRee
“Public Banks exist around the world. They are used to hold public dollars, such as taxes and fees, to keep the money local so it serves the public interest, instead of giving it to Wall Street banks who charge high fees and interest rates. There is only one public bank so far in the United States, the Bank of North Dakota. It has been in existence for almost 100 years. Now, thanks to the work of the Public Banking Institute, there is a vibrant movement to create more public banks in the U.S. at the city and state level. We speak with Walt McRee and John Comerford about the reasons to support public banks, how they would serve people instead of Wall Street profits and current efforts across the country.”
The state of Alaska joins Michigan and New Jersey in the growing circle of states formally working to establish a Public Bank as Rep Chris Tuck and Rep Scott Kawasaki introduce HB 376. The bill has been referred to the Labor and Commerce, and Finance Committees.
A compelling press release published in Alaska Business magazine quotes the co-sponsors:
“A state bank would offer Alaskans new opportunities to invest in themselves. Too many Alaskans who have the dream, desire and drive are denied bank loans and cannot access credit. This bank can help Alaskans build their own local business.”
“A state bank will allow us to control our own economic destiny by investing in industrial development to create value-added industries from our resources. This will create physical wealth for our state and insulate us from the swings of the banking markets, which can hinder us from necessary development.”
Board of Alderman President Louis Reed introduced a resolution Mar 9 to create a Task Force to study how a Public Bank of St Louis could address some of the city’s most pressing needs, including affordable housing, small business growth and financing for municipal projects.
The Clayton Times quotes Alderman Reed:
“When you look at the mass unbanked population, when you look at the challenges that people have with getting and receiving loans, and also being able to fund developments and things of that nature throughout the city, particularly in some of our more challenged neighborhoods, I believe there’s some benefit to looking at how we leverage our tax dollars.”
One model of Public Banking — postal banking — would be able to service an abandoned market of the unbanked and underbanked, all while rescuing the USPS from a manufactured crisis and protecting it from the vultures trying to force its privatization.
PBI Chair Ellen Brown writes in her latest article in TruthDig that the USPS has been successfully self funded throughout its long history, but it’s now struggling to stay afloat, due to a sabotaging congressional mandate that requires the USPS to prefund healthcare for its workers 75 years into the future:
“No other entity, public or private, has the burden of funding multiple generations of employees yet unborn. ... Meanwhile, the need for postal banking is present and growing. … The average underserved household spends $2,412 annually – nearly 10% of gross income – in fees and interest for non-bank financial services. More than 30,000 post offices peppered across the country could service these needs.
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.”
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
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|
|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|
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.
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.
“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.”
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?