Democratizing the Economy - Public Banking

AB 857 signed into law by governor Gavin Newsom 

(Oct 2, 2019)

OPEN FORUM On Democratizing the Economy  
Banking On The People

By Marc Armstrong (2012)

A public bank functions like a private bank but the ownership resides exclusively with the government, whether state, county or city. Why would we even need to consider creating another bank, when we seemingly have one on every corner in many areas of San Francisco?

Bank of America has been occupying City Hall for far too long - it uses our public tax revenues for its own benefit. Maybe it's time to look at public banking as an alternative.

Don't confuse banks with available credit, something that is part of public policy in other countries, states and municipalities. As we saw in 2008 and continuing to this very day, it was a credit crisis that caused the recession. Many businesses ceased expansion and now hoard cash. Tax revenue shortfalls have led to the government balancing its budgets on the backs of the working class.

The bankers were bailed out by the American taxpayer in 2008 but, what about the City of San Francisco? Was it offered loans at 0.25 percent by the Federal Reserve? Did it receive 100 cents on the dollar for "poorly performing" assets? No? Well, maybe we should create a bank simply to level the playing field for all members of the public.

Why give our money to Bank of America, only to have it lend us our own money at high interest rates or with ridiculous fees? We could hold onto our money, save quite a bit in fees, and lend it back to ourselves and to the businesses and people of San Francisco at more affordable rates.

In 2008, Ellen Brown authored "The Web of Debt," an analysis of the U.S. banking system that now is even more pertinent in light of the Occupy Wall Street movement. The thesis is that the power to create money has been usurped by a private international banking cartel, which issues our money as debt and lends it back to us at interest. The cartel makes it appear that governments are creating our money, and governments get blamed when things go wrong; but they are just pawns of the cartel.

We the people can regain our government and our republic only by reclaiming the power to create our own money. We can use the same credit system that private banks use, but administer it as a public utility - that is, monitored and overseen by public servants on the model of libraries and courts. To be a sustainable system, profits need to be returned to the community rather than siphoned off into private coffers.

Other countries recognize that the money supply should serve both a private and public function. Germany's state-backed Landesbanks and smaller foundation-owned Sparkassen banks were able to dominate the credit market throughout post-war Germany. Switzerland has the WIR (from the German word Wirtschaftsring) Bank, a business membership exchange that funds loans in two currencies - the Swiss Franc and bank-issued WIR credits. And in North Dakota, the state-owned Bank of North Dakota has a commercial lending program that requires one new hire for every $100,000 that is loaned.

How's that for a job program? This is a public policy that uses credit for the good of the people.


Marc Armstrong is executive director of the nonprofit Public Banking Institute, the host of the "Future of Banking Summit" in Philadelphia in February.



Nov. 5 - Bank Transfer Day
Saturday has been dubbed Bank Transfer Day by grassroots activists upset with rising bank fees. Consumers are being encouraged by Bank Transfer Day organizers, including the Move Your Money project, to switch their accounts to credit unions or community banks on that day.

https://www.publicbankinginstitute.org/
Public Banking Institute is a partner of the Move Your Money project, a nonprofit campaign that encourages individuals and institutions to divest from the nation's largest Wall Street banks and move to local financial institutions.