Alexis Goldstein's excellent coverage of the culmination of Vermont's struggle for a public bank raises a vital point about being in a movement. In Vermont, advocates didn't get (haven't yet gotten) the holy grail of a bonafide public bank. But the compromise they facilitated still constituted a win over big Wall Street banks.
The Vermont campaign for public banks, in which PBI played a key role, and which was quite unprecedented in its grass roots success, led to Vermont State Senator Anthony Pollina and his colleagues putting forward multiple demands, including not only the creation of the bank, but also the designation of ten percent of the state's reserves to fund it, and an advisory committee on local investment.
Unfortunately, the big banks were able to scare off state legislators from actually implementing the bank itself. But Vermont got a pretty sweet deal anyway. Goldstein explains:
They may not have gotten the state bank they wanted, but they were able to pass new rules that make the Vermont state treasury’s cash balances available for low-cost loans to local projects.
The step Vermont took is called “10 Percent for Vermont.” Under this law, passed in June, up to 10 percent of the state treasury’s cash balance—which as of November was about $350 million—can be used for lending and investment within the state. The law also created a Local Investment Advisory Committee to advise the treasurer on “funding priorities” and “mechanisms to increase local investment.”...
In 2014, the treasurer’s office made several local investments that counted toward the “10 Percent” total, but were authorized under previous laws. One example is the Vermont Clean Energy Loan Fund, which allocated $6.5 million in loans to encourage energy efficiency in residential home projects in the state, such as in Shelburne and Rutland counties. Another is a $2.8 million loan to Vermont’s Housing Finance Agency to support 111 units of multifamily affordable housing. A third is a loan fund approved in June that allocated $8 million for improved energy efficiency in state government buildings, with the goal of reducing their energy use by at least 5 percent (the state currently spends $14 million a year on energy bills).All told, in 2014, Vermont’s treasury lent out $24.5 million to local projects. Even though this money was authorized by prior legislation, it still counts toward the 10 percent of the state’s cash balance—that is, $35 million—that the treasury may lend to the community. That means there is still approximately $10 million in additional funds available for local investment—money that the treasurer would not have been able to lend were it not for the 10 percent program.
Public bank advocates, state Treasurer Beth Pearce, and the Vermont Bankers Association (VBA) all agree that 10 Percent for Vermont is off to a good start. Christopher D’Elia of the VBA said the program has “worked very well under the treasurer’s leadership” and that he believes “the taxpayers will receive a very nice rate of return.”
But the road to get there began with the more dramatic goal of a true public bank in Vermont.
"Power concedes nothing without a demand," Frederick Douglass wrote, and this is what movement politics is all about. Public banking is a vision; a movement. Pushing that vision will eventually result in public banks becoming a reality in the United States, but in the meantime, there are additional external benefits to the push. As PBI Executive Director Gwen Hallsmith wrote in an article for Justice Rising last year:
Creating public banks can be the democratic camel’s nose under the tent of the privatized monetary system. We start with public control of public money – creating banks where deposits of taxpayer dollars are used to finance economic development, education, and infrastructure. Over the long term, these public banks can be used to catalyze real change that is needed to transform the money used to drive the economy.
If you're hesitant to formally join the public banking movement because it seems so difficult to get to that end state, the actual implementation of more public banks, the Vermont experience reminds us that we are winning all kinds of victories along the way. We're creating the space for all kinds of positive economic reforms. We are part of a movement to democratize money, and that movement is already paying dividends for us all.
Become a supporter of the Public Banking Institute today, and help us make those changes--the incremental small ones, and the big revolutionary ones.