The Public Banking Institute doesn't endorse (or anti-endorse) political candidates, obviously, but we are concerned with public banking policy. As Senator from Vermont, Bernie Sanders has probably displayed better understanding of public banking as a matter of policy than any other national elected official in recent memory. But apart from his much-lauded support for resurrecting postal banking (a call that was little more than a flash in the pan in his campaign), we haven't heard anything about that understanding in almost two years.
Sanders has proposed the creation of a public lending bank for worker cooperatives--legislation which, if had gone anywhere, would have brought together two critical elements of a worker-owned economy. But without a vocal movement behind it, and the support of a few other members of Congress, this wasn't going to go anywhere.
But why no mention of public banks in Sanders' presidential campaign? Bernie's public bank amnesia is one of the oddest stories (nonstories?) of the 2016 presidential race. It's curious for two reasons. First, Sanders wants to break up big banks, but in his speeches, he hasn't articulated an alternative. He's been equally critical of the Federal Reserve, which he sees as a stalking horse for the big banks. His powerful OpEd in the New York Times outlines specific and substantial policy changes at the fed, including:
1. "prohibit commercial banks from gambling with the bank deposits of the American people."
2. "the fed must stop providing incentives for banks to keep money out of the economy."
3. Fed should charge a fee on the reserves that would be used to finance direct loans to small business.
4. Transparency at the Fed--transcripts of its Open Markets Committee meetings within six months (Sanders says this would have alerted Americans to the 2004 housing bubble).
5. Ban banking industry executives from serving on the board, and fill the board with labor reps, homeowners, urban residents, small business owners, farmers
6. Break up the big banks
The extent of big banks' colonization of the Fed is obvious, as Sanders points out:
During the Wall Street crisis of 2007, Jamie Dimon, the chief executive and chairman of JPMorgan Chase, served on the New York Fed's board of directors while his bank received more than $390 billion in financial assistance from the Fed. Next year, four of the 12 presidents at the regional Federal Reserve Banks will be former executives from one firm: Goldman Sachs.
But, no talk of public banking, making the Fed a public utility, or any such creation of a public finance option.
Second, Sanders is on record as supporting public banks specifically. OpEd News's Rob Kall, a PBI ally, interviewed Sanders in July 2013, and this exchange took place:
Rob Kall: Have you looked at public banking? That's a growing movement advocating for what North Dakota has already done, and what about 40% of the nations in the world have. What do you think about that?
Bernie Sanders: I'm strongly supportive of it. North Dakota did it I think in the 1920s, not quite a new concept there.
Rob Kall: Yes.
Bernie Sanders: Obviously you have this very Conservative State that is very proud of their State-owned bank, and by the way, it is something that citizens in Vermont are looking at, and is something that I strongly support. The issue here is the degree to which we take out savings, and we invest it in a public bank which then makes investments -- invests in our communities and earns a decent rate of return, rather than giving this money to some Wall Street bank that engages in whatever fraudulent activities they engage in - makes a lot more sense to me to invest in local financial institutions who are going to invest locally - in housing, in small business, in agriculture. To me, that makes a whole lot of sense.
And everyone knows Sanders supports postal banks--essentially public savings and consumer banks. In fact, a few reporters attributed the idea itself to Sanders, when the idea has a much longer pedigree and rich history. But Public banking isn't on Sanders' campaign website, nor does he mention it in his stump speeches. Perhaps his handlers think it too complex. Perhaps it's an issue that really is too dangerous to treat. Perhaps there is fear of being branded a novelty candidate. Perhaps it just hasn't even occurred to any of Sanders' old school liberal campaign staff.
Nomi Prins, another PBI ally, is on Sanders' Federal Reserve advisory committee, but while she is all about breaking up the big banks, she isn't going to bat for public banks. Even Sanders' public Twitter statements are met with calls from other tweeters for public banks.
Of course, none of this should be interpreted as this blogger taking a position in the Democratic primary campaign. But curiosity about the omission is warranted.
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