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Public Banking Before It Is Too Late

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• In Bellingham,

“Local governments have been in bondage to Wall Street ever since the19th century despite multiple efforts to rein them in. Regulation has not worked. To break free, we need to divest our public funds from these banks and move them into our own publicly owned banks.”

These words are from Ellen Brown, Chairman of of the Public Banking Institute in a recent article entitled How America Can Free Itself From Wall Street. The article focuses on the city of Los Angeles but the objections and hurdles faced by LA echo across the United States where the powerful banking interests squeal like stuck pigs at the thought of public banking. Such is the case in Olympia where several clear headed and forward thinking legislators have been fighting for years for public banking, unfortunately without much help from counties and municipalities and with stiff opposition from the private banking shills. Despite years of work in Olympia by state representatives, they have not been able to legislate to definitively allow public banking in Washington State at any level, be it state, county or municipal.

Why the urgency? Very simply is that we are still in the same crisis that began in 2007-2008 but the big banks that failed are bigger, their behavior is riskier, the regulation from Washington is monumentally weaker and debts are choking the economy. In order to provide some shelter from this at a national level, big banks should be nationalized. On the local level, creation of state, county and city public banks will provide shelter from these financial storms much like the public Bank of North Dakota did ten years ago.

At the Washington state level, proponents of public banking have been able to secure from the legislature $480,000 (over 2 years) starting this year to study the feasibility of state bank. Seattle is very active in this effort and its own quest to establish a public bank for the city. Unfortunately, two years from now may be too late. What looks like progress with this study may merely be a delaying tactic by the private banksters. Death by study.

    But what has Bellingham done? I brought this issue to the city council a few years ago but no action was taken by them nor has the city hall executive pursued the issue - and yes, I checked.

    This awaits all communities who break out of the sclerotic and confiscatory private banking environment and create public banks:

    • Viable solutions to the present economic crises in US states.

    • Counter-cyclical, meaning they [public banks] are capable of reducing the negative impact of recessions, because they can make money available for local governments and businesses precisely when private banks decrease lending.

    • Potentially available to any-sized government or community able to meet the requirements for setting up a bank.

    • Owned by the people of a state or community.

    • Economically sustainable, because they [public banks] operate transparently according to applicable banking regulations

    • Able to offset pressures for tax increases with returned credit income to the community.

    • Ready sources of affordable credit for local governments, eliminating the need for large “rainy day” funds.

    • Required to promote the public interest, as defined in their [public banks] charters.

    • Constitutional, as ruled by the U.S. Supreme Court

    From the Seattle Public Bank Coalition

    At a minimum, it is time for some subdued excitement from Bellingham on public banking.

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    About Dick Conoboy

    Editor • Member since Jan 26, 2008

    Dick Conoboy is a recovering civilian federal worker and military officer who was offered and accepted an all-expense paid, one year trip to Vietnam in 1968. He is a former Army [...]

    Comments by Readers

    Dick Conoboy

    Oct 12, 2018

    Just received this in an email from John Repp of the Seattle Public Banking group:

    Dear public banking advocates,

    It is time for a report on what has been happening with the Seattle Public Banking Feasibility Study and with the Washington State Senate’s Public Banking Caucus.

    Last year the Seattle City Council appropriated $100,000 for a feasibility study. Last Friday that study was turned over to the Council. A company HR&A from New York did the study. They had only two stake holder meetings where they reported on their work. The first was before they had started and the second was after they were finished. A meeting halfway through their study which the stake holders expected did not happen. I am reporting from the draft we were given at the second stake holders meeting.

    The study said a Seattle public bank was feasible but due primarily to a state law requiring collateral of up to 100% for any bank holding public tax money, the bank could make very few loans. It would just be a “public depository” and would need to be subsidized by the city.. The law was designed to protect public money deposited in private banks. A public bank would not need the same regulation if the ordinance to charter such a bank were well written and strictly adhered to. A bank that cannot make loans, which is where banks make their money, is not really a bank in my opinion, and I said so. How banks make money from their loan portfolio is explained by a scientific experiment, the first in thousands of years of banking practice, which is reported here:  http://www.sciencedirect.com/science/article/pii/S1057521914001070  Another obstacle could be the Federal Reserve Bank which refused for two years to give an account to a public bank that American Samoa wanted to charter.

    Last year the Washington State legislature appropriated $400,000 to make a business plan for a state bank. Department of Financial Institutions has contracted with William Longbrake to do the plan, working with the Evans School.    See bio of Longbrake.  https://www.rhsmith.umd.edu/directory/william-longbrake  The final report on the business plan is due in June of 2019: an interim report this December. There are now 21 Washington State Senators who have formed a public banking caucus. On Oct 9, 2018 in Kane Hall at the University of Washington, Bob Hasagawa chaired a state bank forum. Here is a link to the two hour forum. https://www.tvw.org/watch/?eventID=2018101038  Bob said that a public bank requires a “philosophical change”. Currently, the thinking is “private is always better than public”. There is no proof of that. In fact, in some cases the opposite is true. A public bank holding public money with a loan portfolio that keeps the public money working locally is such a case.

    Sincerely,

    John [Repp]

     

    Read More...

    Dick Conoboy

    Oct 18, 2018
    Excerpt:“The road to financial independence can be long, but that doesn’t discourage the cities, counties, and states leading the movement to create public banks in the United States.”
     
    In Washington State, legislators are now just three votes away from passing a bill to adopt a business plan to create a state bank. The path they took is instructive to cities, counties and other states looking to form their own banks”.
     
    Read more here.
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