We are a coalition working to create local public banks that are socially and environmentally responsible and that keep our money working for our communities.
Watch the Colorado Public Banking Town Hall!
Over 85 Organizations, Businesses & Community Leaders:
| 350 Colorado | Eco-Justice Ministries |
| 350 Roaring Fork | Fort Collins Sustainability Group |
| 350 Denver | 350 Northern Colorado |
| Arvadans for Progressive Action | Groundwork Non-Profit |
| Be the Change USA | Longmont Food Rescue |
| Boulder dot Earth | North American Climate, Conservation and Environment(NACCE) |
| Call to Action Colorado | Our Children’s Trust – Colorado |
| Catholic Network | Our Sacred Earth |
| Center for Biological Diversity | Physicians for Social Responsibility |
| Clean Energy Action | Phoenix, Colorado’s Transgender Community Choir |
| Climate Reality Denver- Boulder Chapter | Rainforest Action Network |
| Community for Sustainable Energy | Red Cloud Renewable |
| Colorado Communities for a Livable Climate | Rocky Mountain Peace and Justice Center |
| Colorado Environmental Advocates | Rocky Mountain Public Banking Institute |
| Conejos Clean Water | Songs of Discovery |
| Colorado WINS | Together Against Neighborhood Drilling |
| Divest Ed | Together Colorado |
| Public Banking & Justice | Embracing Conflict |
| DeSmog Denver | Unite North Metro Denver |
| Compost Colorado | Denver DSA |
| Rocky Mountain Employee Ownership Center | Women In Transformation |
| ACCDAN: Adams County Communities for Drilling Accountability NOW | Front Range Mutual Aid Network |
| Regenerative Recovery Coalition | The Alliance Center |
Show your support! Sign onto this letter for banking options in Colorado
Businesses
| Amulet Arts by J Dewey Designs LLC | Northwest Builders |
| Arouge Art Jewelry | Guitar Instruction by Phil Westfall |
| Baker’s Dozen Consulting |
REEVAAS Public Benefit Corporation (Renewable Energy Electric Vehicles As A Service)
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| Boulder Homeopathy | Robert L Parker Studios |
| Breathe English LLC | Stonebridge Farm |
| Capitol Solar Energy | Spector and Associates |
| CocoLicious Chocolates | Sunshine Shave Ice LLC |
| Denver Counseling and Art Therapy, LLC | Teach Learn Master LLC |
| Intergrative Massage Solitions | Venner Consulting, Inc. |
| InterTran Energy Consulting | Weiss Consulting |
| Leyla Steele Real Estate Boulder Luxury Group | Worldly Exposure Photography and Earth |
| Gregory K. Marsh & Associates, LLC | Chambliss Architects |
| New Moon Multimedia | Evolve to Love, LLC |
| Future Impact Partners, LLC |
Show your support! Sign onto this letter for banking options in Colorado
Community Leaders
| Anna Koop, Sister of Loretto | Juan Marcano, Aurora City Council |
| Candi Cedebaca, Denver City Council, District 9 | Micheal Melio, Secretary, Rocky Mountain Public Banking Institute |
| Caroline Gleich, Professional Ski Mountaineer | Patrick Roybal, District 1 Vice President, Colorado WINS |
| David Ruchman, Board of Directors, Colorado WINS | Sam Weaver, Mayor, City of Boulder |
| Galina Nicoll, Candidate for CO Senate, District 23 | Skip Miller, President, Colorado WINS |
| Jane Wilson, Secretary, Colorado WINS | Stephanie Vigil, Candidate for HD 16 |
| Edie Hooton, State Representative, HD10 | Thomas Lundy, Secretary, Energy & Environmental Initiative of the CO Democratic Party |
Also supported by over 1,500 forward-thinking Coloradans who have signed on as individuals in support of banking choice
Show your support! Sign onto this letter for banking options in Colorado
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copublicbankingcoalition@
Instagram: @ColoradoPublicBankingCoalition
Facebook: Colorado Public Banking Coalition
Twitter: @ColoradoPublic
About Us
Russ Bramlet Photography
What is The Colorado Public Banking Coalition?
We are a coalition of public banking advocates working to create local public banks that are socially and environmentally responsible and that keep our money working for our communities. We advocate for banking options in Colorado, in order to protect and invest back into our Colorado communities. Over 60 organizations have signed on in support of public banking in Colorado. Click here to sign on in support of public banking in Colorado.
What is Public Banking? How Does it Help Me?
A public bank is a bank that is owned and operated by a city, county, or state. This kind of banking cuts out the middle person and allows the funds that the bank makes to go directly back into the city, county or state instead of into the hands of private shareholders. This allows the community to reinvest in things that are important to them: green energy, new infrastructure, better schools, and much much more.
Take a look at this animation made by the Public Banking Institute to see an overview of what a public bank can do for a community and why it is a better choice for Colorado than a Wall Street bank.
Why Wall Street Banks Aren’t Cutting It
All profits and benefits reaped from the banking process in a Wall Street Bank go to private shareholders and owners of the bank. This means that there is no benefit for the community that chooses to bank with the institution. In 2008, these Wall Street Banks contributed to an enormous recession, because they weren’t looking out for the interests of the people or of the communities that they rely on to do business.
Currently cities and counties in Colorado do not have banking options other than FDIC insured Wall Street banking entities. We advocate banking choice in Colorado, including enabling public banks.
Click here to sign on in support of public banking in Colorado.
For more detailed information on Public Banking read our FAQs.
Contact Us!
copublicbankingcoalition@
Facebook: Colorado Public Banking Coalition
All About Public Banking
Russ Bramlet Photography
Public Banking:
What is a Public Bank?
A Public Bank is a bank owned by a national, state, or local government in which all of its funds, taxes, and revenues are deposited. It is mandated to serve a public mission that reflects the values and needs of the public it represents.
What is its Purpose?
A commercial bank is in business to make profits to enrich shareholders, whereas a public bank is in business to make and leverage money to serve the needs of the people of the community it serves and to make low cost loans to finance civic needs.
A public bank has the same privilege a commercial bank has – to make loans for up to nine times its actual deposits. It can also borrow money through the Federal Reserve System at very low interest rates. This allows it to make low cost loans for many civic projects.
For more detailed information on Public Banking read our FAQs.
What Types of Benefits Can a Public Bank Provide for a Community?
A public bank would provide any number of public benefits to the community, for example:
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- Low-interest loans for infrastructure projects.
- Low-interest loans for public housing, both new construction and capital improvements.
- Online depository banking services to under-banked and unbanked residents where private banking has not met their needs.
- Commercial loans to businesses, but only in partnership with Community Banks and Credit Unions.
- Creating and supporting Community Development Financial Institutions (CDFIs) to drive community revitalization.
- Other community redevelopment goals and benefits as chosen by those governing the bank.
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How Does a Public Bank Serve the Community?
Rather than deposit its money in commercial banks and borrow money at high-interest rates and fees, a city, county, or state can deposit some or all of its money in its own bank. The bank can use those deposits to leverage loans back to the community at rates of 1% or 2% for a variety of public purposes. On average, roughly 45% of the total cost of infrastructure projects, for instance, goes simply to cover bank interest and fees on loans.
While commercial banks can invest in any projects they choose, a public bank would invest only in loans serving the needs of the immediate community.
It would not compete with local community banks for deposits or in making loans, but instead would make loans in partnership with community banks and credit unions, making them stronger and increasing total lending.
A public bank could immediately start saving money for its government by refinancing its debt at a lower rate of interest. Refinancing debt would also produce immediate income for the bank while it builds up lending in other areas
Do Other Public Banks Exist Now?
The Bank of North Dakota is the largest of a few public banks in the United States and a good example for new public banks. Founded in 1919, it manages the state income and lends it to serve the needs of the people of North Dakota. However, it also regularly makes the highest return on equity of all U.S. banks. It regularly transfers these profits to the people of the state through low interest loans, increased services or regular deposits to the state general fund (which decreases taxes).
California also recently ratified a measure to allow communities to build their own public banks. Since this legislation passed many communities have created their own banks: Los Angeles, East Bay, Santa Barbara, and San Diego are some of the first.
For more detailed information on Public Banking read our FAQs.
Contact Us!
copublicbankingcoalition@
Facebook: Colorado Public Banking Coalition
Resources
Public Banking Handout
Public Banking FAQs
Bring on the Power of Public Banking: Town Hall Recording with Ellen Brown of Public Banking Institute (2020)
Why Public Banking is Needed Now: Town Hall Recording (2020)
Visit our Blog
Find Us on Social Media
Facebook: Colorado Public Banking Coalition
Email us:
copublicbankingcoalition@
FAQs
The Basics:
What is a Public Bank?
Answer: A Public Bank is a bank owned by a national, state, or local government in which all of its funds, taxes, and revenues are deposited. It is mandated to serve a public mission that reflects the values and needs of the public it represents.
What is the most basic difference between a public and private bank?
Answer: The most fundamental difference is that a public bank has a mission to serve the public interest while private banks are owned by shareholders and their primary goal is to maximize profit for their shareholders, which can work against the public interest.
Why is Public Banking important now?
Answer: The 2020 Colorado budget is $12.6 billion and the projected deficit is at least $3 billion. This means that either the difference is made up by the federal government, which is highly improbable, or that vital services to the people of Colorado must be substantially curtailed. Public banks in Colorado could avoid that disastrous effect assuming they are adequately funded. Rocky Mountain Public Banking Institute has conducted informal surveys of needs in Colorado indicating that cities, counties, the state, and educational systems are strapped for funds, face cuts of services, and in some cases a request to sell off valuable assets. A public bank could enable local governments to make much more money available by loans for urgent needs such as affordable housing, clean energy, infrastructure (roads, bridges, parks), health care, education, student loans, environmental cleanup, sustainable agriculture, broadband, and independent media, according to the community’s needs, creating a much larger tax base to restore the lost funds, and some of the banks’ income could be paid into the government’s general fund. For more information, please see this blog post discussing how Public Banks could help solve Colorado’s financial crisis.
How will public banks help during the current pandemic?
Answer: Public banks could make loans to greatly increase the purchase of necessary COVID-19 testing equipment and all necessary protective gear for first responders such as doctors, nurses, and EMTs, as well as to make loans to facilitate the use of the most effective means found to treat and cure the infection.
Secondly, to overcome the financial crisis caused by COVID-19, public banks could lend much more money to state and local governments to build affordable housing and infrastructure, and can lend money to restore small businesses, to refinance student loans, and to convert from fossil fuels to clean energy, including job retraining. For more information, please see this blog post that discusses how German Public Banks have helped post-Covid-19 recovery.
More Information on the Benefits of Public Banking
Are public banks legal under the Colorado constitution?
http://world.350.org/cpbc/legalities-of-public-banking/
How could a city or county establish a public bank?
http://world.350.org/cpbc/legalities-of-public-banking/
Would a public bank be subject to the limits on revenue and expenditures imposed by the TABOR Amendment?
http://world.350.org/cpbc/legalities-of-public-banking/
What are some common objections to Public Banking?
http://world.350.org/cpbc/how-common-objec…-can-be-resolved/
How do we know a public bank won’t be improperly run by politicians and insiders for their own benefit?
http://world.350.org/cpbc/how-common-objec…-can-be-resolved/
Where does the money for a public bank come from?
http://world.350.org/cpbc/where-does-the-money-come-from/
How can I get in touch with Colorado Public Banking Coalition?
Contact Us!
copublicbankingcoalition@
Facebook: Colorado Public Banking Coalition
How would a Public Bank be structured?
Take Action/Contact Us
Ways that You Can Take Action & Get Involved:
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Want to get involved or have a question? Email us at copublicbankingcoalition@
Tim Benko Photography
In Response: Public Banks Would Shore Up Economy
A response piece written by Rocky Mountain Public Banking Institute, published in Colorado Politics.
Earl Staelin is an attorney and chair of the Rocky Mountain Public Banking Institute Steering Committee of the Colorado Public Banking Coalition. Alec Tsoucatos, Ph.D., is an economist and vice-chair of the Rocky Mountain Public Banking Institute Steering Committee of the Colorado Public Banking Coalition. The following was published in Colorado Politics on Feb. 15th, 2021. Click here for the full article.
Recently, Michael Van Norstrand, president of the Independent Bankers of Colorado (IBC), wrote an op-ed for Colorado Politics: “’Public banks’ would pose risks, play politics.” The commentary made numerous incorrect assumptions and assertions.
Public banks, as advocated by Colorado Public Banking Coalition and Rocky Mountain Public Banking Institute, will be modeled on the 102-year-old state-owned Bank of North Dakota (BND):
- The BND has greatly reduced the risk of banking and has never failed or been bailed out.
- North Dakota has many more community banks per capita than any other state.
- A Colorado public bank would have one depositor: The state of Colorado, which currently deposits most of its tax, fee, licensing and other revenue with JP MORGAN CHASE and WELLS FARGO, major Wall Street banks far removed from the unique economic needs of the state and its residents.
- Public banks would meet many underserved needs for loans in Colorado — for infrastructure, affordable housing, home loans without redlining, small businesses, education and lower-cost student loans, conversion to clean energy, broadband, transportation, and paid family medical leave. The lending in these areas presently provided by the private banks of Colorado fall far short of the real needs.
- BND has averaged 20% return on equity over the last 19 years, far outperforming Chase and Wells Fargo where Colorado governments place most of their deposits. The major banks received massive bailouts from taxpayers in 2008, even though they created the bubbles and risks that caused the crash.
Thanks to BND, North Dakota perennially has the lowest unemployment rate, one of the lowest home foreclosure rates, and the lowest credit card and student loan default rates. North Dakota’s community banks strongly support the BND.
Contrary to IBC’s assertion, like BND, a Colorado public bank will not compete with community banks for depositors or in making loans, but lend in partnership with community banks, sharing 50-50 in making the loan and guaranteeing it. This arrangement will greatly benefit community banks and the communities they serve.
Thus, public banks reduce risk, while the major banks, some of which are IBC members, increase risk by inflating real estate values and engaging in high-risk lending and investment meant to maximize profit for shareholders. Major banks invest little in our local economies and small businesses, and compete with Colorado’s community banks. In contrast, public banks would be very beneficial for community banks and credit unions in Colorado, just the opposite of IBC’s assertions.
The IBC implies that public banks will be unduly influenced by politicians. Wrong. Like the BND, public banks in Colorado will be run by experienced professional bankers and will be strictly insulated from political and corporate influence and from conflicts of interest, in contrast to private banks whose goal is to maximize shareholder profit, which often conflicts with the public interest.
IBC asserts that public banks won’t work in Colorado because conditions here are different from North Dakota, a rural state with a small population. Wrong again:
- Alberta, Canada’s 83-year-old public bank, ATB Financial, has helped make Alberta the strongest economy in Canada, like the BND for North Dakota. Alberta’s population is 4.4 million. It has a mixed industrial and rural economy, like Colorado.
- Germany has 1,500 city-owned savings banks (Sparkassen), which have been the backbone of Germany’s economy and have made it the strongest economy in Europe.
The ability of public banks to create a strong, stable economy is unrelated to size or type of economy. Public banks succeed because tax revenue is deposited in the public’s own bank and loaned locally. Public banks operate with very low overhead, and make low-risk loans. The major banks prefer risky investments elsewhere to maximize profits for their shareholders, believing they’re “too big to fail.”
Public banks create a major new source of income (interest) and new loans for a state, county, or city, without raising taxes, and as a TABOR enterprise would not be subject to TABOR limits on revenue.
The public banking movement is advancing rapidly and should be established in Colorado. People may sign on in support at www.ColoradoPublicBankingCoalition.org.
The IBC article makes additional incorrect and misleading claims but limited space requires us to answer them in the Addendum of this complete version of our response.
Public Banks Will Strengthen the Economy, Reduce Risk, and Increase Accountability
Recently, Michael van Norstrand, president of Independent Bankers of Colorado (IBC), wrote an Op-Ed for CP: “Public Banks Would Pose Risks, Play Politics.” The Op-Ed makes numerous incorrect assumptions and assertions.
Recently, Michael van Norstrand, president of Independent Bankers of Colorado (IBC), wrote an Op-Ed for Colorado Politics: “Public Banks Would Pose Risks, Play Politics.” The Op-Ed makes numerous incorrect assumptions and assertions.
- Public banks, as advocated by Colorado Public Banking Coalition and Rocky Mountain Public Banking Institute, will be modeled on the 102-year-old public bank of North Dakota (BND).
- The BND has greatly reduced the risk of banking and has never failed or been bailed out.
- North Dakota has many more community banks per capita than any other state.
- Contrary to IBC’s assertion, like BND, a Colorado public bank will not compete with community banks for depositors or in making loans, but lend in partnership with community banks, sharing 50-50 in making the loan and guaranteeing it. This arrangement will greatly benefit community banks and the community they serve.
- Public banks would meet many underserved needs for loans in Colorado—for infrastructure, affordable housing, home loans without redlining, small businesses, education and lower-cost student loans, conversion to clean energy, broadband, transportation, and paid family medical leave. The lending in these areas presently provided by the private banks of Colorado falls far short of the real needs.
- In the Great Recession, the BND, in partnership with community banks in North Dakota, increased lending enough to offset the decline, making North Dakota the only state that suffered no recession in 2008 or after. Private banks in all other states cut lending, causing and deepening the recession.
- Thanks to BND, North Dakota perennially has the lowest unemployment rate, one of the lowest home foreclosure rates, and the lowest credit card and student loan default rates. North Dakota’s community banks strongly support the BND.
Thus, public banks reduce risk, while the major banks, some of which are IBC members, increase risk by inflating real estate values and engaging in risky lending and investments. They don’t invest much in small businesses or cooperate much with community banks in Colorado but compete with them. In contrast, public banks would be very beneficial for community banks and credit unions in Colorado, just the opposite of IBC’s assertions.
BND has averaged a 20% return on equity over the last 19 years, far outperforming Chase and Wells Fargo where Colorado governments place most of their deposits. The major banks received massive bailouts from taxpayers in 2008, even though they created the bubbles and risks that caused the crash.
The IBC implies that public banks will be unduly influenced by politicians. Wrong. Like the BND, public banks in Colorado will be run by experienced professional bankers and will be strictly insulated from political and corporate influence and from conflicts of interest, in contrast to private banks whose goal is to maximize shareholder profit, which often conflicts with the public interest.
IBC asserts that public banks won’t work in Colorado because conditions here are different from North Dakota, a rural state with a small population. Wrong again.
- Alberta, Canada’s 83-year-old public bank, ATB Financial, has helped make Alberta the strongest economy in Canada, like the BND for North Dakota. Alberta’s population is 4.4 million. It has a mixed industrial and rural economy, like Colorado.
- Germany has 1,500 city-owned savings banks (Sparkassen), which have been the backbone of Germany’s economy and have made it the strongest economy in Europe.
The ability of public banks to create a strong, stable economy is unrelated to size or type of economy. They succeed because tax revenue is deposited in the public’s own bank and loaned locally. Public banks operate with very low overhead and make low-risk loans. The major banks prefer risky investments elsewhere to maximize profits for their shareholders, believing they’re “too big to fail.”
Public banks create a major new source of income (interest) and new loans for a state, county, or city, without raising taxes, and as a TABOR enterprise would not be subject to TABOR limits on revenue.
The Public Banking movement is advancing rapidly. (PBI Link here) and should be established in Colorado. People may sign on in support at www.ColoradoPublicBankingCoalition.org.
The IBC article makes additional false claims but limited space requires us to answer them in the Addendum of this complete version of our response.
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Addendum
Add: By contrast, it is clear from the financial history of Colorado that State debt has skyrocketed to over $24 billion, and all other subdivisions of the state have increased their collective debt to nearly $50 billion. These debts are largely owed to the same private banks and other private investors. With public banks, this increase of public debt to private interests would cease, and debt reduction could begin.
Add: Mr. van Norstrand asserts that a handful of public banks failed 200 years ago because of “gross mismanagement,” citing a 2015 CATO Institute article. The CATO article provides no support for that claim. A handful of states did have public banks in the early 1800s, but no systematic analysis was ever published. Some did very well. We don’t know why these banks failed. It could have been due to speculation by “public” banks that had majority private ownership, opposition from big banks, or recurrent recessions that caused many private banks to fail.
Also, Public banks would comply with federal (Fed) regulations to protect banks but for stated reasons should not be required to join the FDIC or to provide 102% collateral for its own deposits.
How Do Green, Postal and Public Banks Intersect?
All three types of banking are public alternatives to the Wall St. style, for-profit, large commercial banks which we are used to providing both retail (taking deposits from individuals and providing personal banking services) as well as commercial services (lending to and working with institutions, governments, and businesses). However, each type of bank is designed for a unique purpose. Read on to learn more.
November 25, 2020
Banking Alternatives and Histories: An Excerpt from the New Book, We Own the Future.
An excerpt of David Dayen’s new book, We Own the Future: Democratic Socialism—American Style, published by The New Press, was reprinted by The American Prospect. It is clear that we don’t need to hold back by the belief that fixing our financial system is too hard, or simply unheard of. On the contrary, there are plenty of ways to fix it, and clear examples to show us how. Read on for a glimpse at why Dayen sees public banking as a sensible and feasible solution to America’s broken banking system. For the full excerpt, visit https://prospect.org/economy/building-the-people’s-banks/.
A more radical solution would be a public bank that does more than take deposits from individuals. The Bank of North Dakota, established in 1919, has only one depositor: the state. Those deposits, mostly tax revenues that have yet to be paid back out in salaries or services, form the base from which the bank makes in-state loans for economic development, including infrastructure projects and a student loan program.
A public bank serves as a substitute not so much for private sector banks as for the $3.8 trillion municipal bond market. When state or local governments fund large-scale projects not covered by taxes, they generally either borrow from the bond market at high interest rates, or enter into a public-private partnership with investors, who often don’t have community needs at heart and slap already beleaguered municipalities with outrageous underwriting fees. A public bank can offer lower interest rates and fees, because it’s not a for-profit business trying to maximize returns. Second, because the bank is publicly owned, any profit flows back to the city or state, virtually eliminating financing costs and providing governments with extra revenue at no cost to taxpayers.
The Bank of North Dakota, for example, has earned record profits for fourteen straight years, during both the Great Recession and the state’s more recent downturn from the collapse in oil prices. Over the last decade, hundreds of millions of dollars in bank earnings have been transferred to North Dakota.
The objection that governments have no money to lend is spurious. Banks don’t lend out their deposits, but create new money by extending credit. The deposits simply balance a bank’s books. Public banks, then, expand the local money supply available for economic development.
Public banking and democratized investment vehicles could reimagine the role of finance as more than just blind profit seeking. A bank built to serve the public can channel its resources to actual public needs. It can give the American people a defined voice in the direction of their money. Instead of being at the mercy of financiers, they’d be participating in a fundamentally democratic process.
If you put these ideas together, you end up with something close to what academics Morgan Ricks, Lev Menand, and John Crawford proposed in 2018. They call it the FedAccount. The FedAccount would be a personal account for all individuals and businesses at the Federal Reserve, the same as what financial institutions already have with the nation’s central bank. The FedAccount would supply debit cards, direct deposit, online bill pay, and mobile banking. And post offices could serve as the retail storefront location for the enterprise.
Money that banks stash at the Federal Reserve earns the federal funds rate, not the infinitesimal rates Americans receive on their bank accounts. Banks instantly transfer funds to one another through their FedAccounts, a privilege that would be opened up to the rest of us. Because businesses would also have FedAccounts, that would curtail transaction fees for retailers and create a cheaper substitute for cash, available to all. And while personal bank accounts are only guaranteed through the FDIC up to $250,000, FedAccounts can never default, no matter how large the account balance, because the Federal Reserve prints America’s money.
This would obviously increase financial access and improve the payment system. It would also eat away at the giant deposit bases of the big banks, reducing their size and potentially their risk to the financial system. But most important, it would allow the Fed to more directly influence economic policy.
Rajiv Sethi of Barnard College has explained that profits from the Fed’s balance sheet—and it earned $65 billion in 2018—could be directly transmitted to Americans in times of recession, to create an immediate fiscal boost. The money would go directly to debtors to pay off their bills, instead of creditors who benefit from changes to interest rates, the Fed’s current policy tool. Because millions of people would have FedAccounts, the Fed’s balance sheet would grow even larger, with more profits to channel during economic downturns.
In other words, the people’s money would be put to work for the people. And while the authors of the FedAccount proposal restricted the Fed from direct consumer and business lending, you could envision that being added on. If you believe money is a public resource and not a privately supplied product, government allocation of credit takes on the role of sensible distribution of resources. The FedAccount could tie together all facets of a public bank, built with the public’s well-being at the forefront.
A bank built to serve the public can channel its resources to actual public needs. It can give the American people a defined voice in the direction of their money. Instead of being at the mercy of financiers, they’d be participating in a fundamentally democratic process.
Americans are currently stuck with a decrepit payment system, miscreant banks, interest-bearing bank accounts that bear no interest, and a financial sector that’s thoroughly unconcerned with their lives, as they push past the public to trade their way to fortunes. Cryptocurrencies like Bitcoin inspire such frenzy because people are looking for an alternative to a broken financial system.
The architecture for that alternative already exists. It exists in regulators armed with the power to segregate functions and promote public safety. It exists in enforcement agents who can identify risk and simply eliminate it for the public good. It exists in federal agencies and central banks with missions to facilitate economic activity and prevent public suffering.
It also exists in our history, layered with numerous triumphs by ordinary people over financial greed. Progressive-era activists demanded and brought public banking to North Dakota. After the Depression, a young prosecutor named Ferdinand Pecora used a Senate committee charged with studying the causes of the crisis to lay bare the rank corruption in the banking system, leading to landmark New Deal regulation that kept the country safe from runaway finance for fifty years. Activists reeling from Reverend Martin Luther King’s death fought for the Fair Housing Act and an end to redlining. The Community Reinvestment Act of 1977, another grassroots initiative, strengthened fair lending laws by requiring broad investment across low- and moderate-income communities. The Consumer Financial Protection Bureau began as a proposal in a magazine by a Harvard professor named Elizabeth Warren, and thanks to popular support it became the only agency in the federal government with a core mission to prevent financial scams. As Wells Fargo pursued its rapacious schemes, a group of tellers and line-level employees formed the Committee for Better Banks to expose it, which culminated in the resignation of CEO John Stumpf.
In short, we know how to fix finance. We have a shelf full of ideas for this purpose, and a demonstrated capacity to leverage people power to make them reality. The only missing ingredient to accomplish this is the political will that a reinvigorated left can generate. The progressive surge onto the House Financial Services Committee provides an opportunity. Now activists and policy makers must work together not to squander it, so finance is finally, permanently, put on a leash. Nothing could be more vital to rendering a more just and prosperous America.
For the full excerpt, visit https://prospect.org/economy/building-the-people’s-banks/.
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November 13, 2020
A New Federal Bill Proposed: The Public Banking Act
A public option, but for banking. That’s what Reps. Rashida Tlaib and Alexandria Ocasio-Cortez are proposing in a new bill unveiled in late October, 2020.
At the federal level, a new bill was introduced at the end of October by Reps. Rashida Tlaib and Alexandrai Ocasio-Cortez, proposing a public option for banking. The Public Banking Act would foster the creation of public banks across the country by providing them a pathway to getting started, establishing an infrastructure for liquidity and credit facilities for them via the Federal Reserve, and setting up federal guidelines for them to be regulated. This is an essential first step in making it easier for public banks to exist and would also give grant money for public banks to get started.
You can read the full article in Vox here: https://www.vox.com/policy-and-politics/21541113/rashida-tlaib-aoc-public-banking-act
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September 11, 2020
How Public Banks Fight Redlining: A Video from Public Banking Institute
Thanks to Public Banking Institute for this excellent recent video about how public banks can fight and work against redlining.
Thanks to Public Banking Institute for this excellent recent video about how public banks can fight and work against redlining. Guests this round are Brian Rice, engineer / entrepreneur who was denied financing to upgrade his properties in his hometown, PBI Advisory Board member Dr. Amara Enyia, and PBI Board Member Carlos Marroquin. You can watch the video by clicking below or at this link here: https://www.youtube.com/watch?v=CcKeT2ymmM4&feature=youtu.bePBI%E2%80%99s&fbclid=IwAR08d73UrGaEEfLF-jB1D7HP4YcWhku0dYosgTsCNJDkSo2wrTRJNpRJXUU
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August 19, 2020
How Would a Public Bank Be Structured?
Self-regulation by statue and by-laws, a public bank as an LLC, the banking corporation model doesn’t fit, public banks for non-home rule communities, public banks as public benefit corporations and cooperatives
A variety of different methods and models could be used in Colorado including
Self-regulation by statute and by-laws: The Bank of North Dakota model has worked very well for 101 years. The BND was established by making the governor, the attorney general and the commissioner of agriculture the board of directors of the bank. The board then appointed an experienced banker to manage the bank, In 1969 they added an advisory board that reviews policies annually and makes written recommendations for any changes to the executive committee and board. State legislation and the bank’s by-laws established the rules governing the bank. The BND is managed directly by its own executive committee and board rather than by the banking board that oversees private banks licensed in the state. That model would be the simplest and least costly for a public bank for the state of Colorado and has been very successful for the BND. A state public bank (i) can and should operate with very low overhead, (ii) would make loans in partnership with local private community banks which would serve as the state bank’s front office, with the state bank providing a second tier review of the soundness of the loan, (iii) would avoid speculative and risky loans, (iv) would not pay commissions or fees for making loans, and (v) would invest in new goods and services rather than existing assets or commodities, and by following these practices would not create bubbles. We believe the better policy would be to follow the BND model. Thus, the bank would not be regulated by the state banking board, which is geared to regulate private banks, but by its own board and its organizing documents, and, once local public banks are formed, they would be licensed and regulated by a separate division of the banking board devoted solely to licensing and regulating public banks, based upon their very different mission and methods of operation.
A public bank as an LLC: Colorado banking statutes allow an LLC (limited liability company) to apply for a bank charter. Colorado’s LLC statutes allow a non-human entity to own an LLC, and allow an LLC to have only one owner. Under the Colorado constitution, a home rule city or home rule county can generally do anything as long as it’s not prohibited by the constitution or statute. There do not appear to be any constitutional or statutory provisions that would prohibit a home rule city or county from owning and operating a public bank. (see OLLS Legal Opinions referred to above). Therefore, OLLS concluded that a home rule city or county could probably operate a public bank without the need for state legislation if it limited its operations to its own jurisdiction. For these reasons we believe a home rule city or county could form an LLC to apply for a bank charter. That could work quite well as long as the bank’s enacting legislation incorporates all the necessary governance measures necessary to ensure that the bank serves the public interest, is professionally managed, and is fully protected from political and corporate interference and from conflicts of interest in its governance and operations.
The banking corporation model doesn’t fit: Colorado banking statutes also authorize a banking corporation to apply for a charter. This requires five individuals to apply for the charter, each of whom has paid for 1% of the capital stock of the bank. This model could theoretically be used if the individuals were all pledged to solely serve the public interest, but it is such an awkward fit for a public bank that we strongly recommend against it.
Public banks for non-home rule communities: Only two of the 64 counties in Colorado (Weld and Pitkin) have home rule so the above opportunity for home rule counties will not be available in most counties unless they adopt home rule by charter amendment. Therefore, it would make sense to pass state legislation to authorize cities and counties to have publicly owned banks even if they don’t have home rule and to authorize cities, towns, and counties to pool their resources to create a public bank. California’s statute AB-857 signed into law October 2019 included these measures.
Public banks as public benefit corporations and cooperatives: We also propose legislation authorizing public banks to be formed as public benefit corporations and/or as cooperatives, which California’s enacted statute AB-857 also provides. A public benefit corporation is required to serve public purposes and is thus more suitable for a public bank than an LLC form of organization.
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August 7, 2020
Where Does the Money Come From?
Where does a state get the money for public banking? What options do we have?
Although some legislators and public officials say the state does not have any money lying around that it could use to create a public bank, the state and local governments actually have a number of sources they could use to create public banks.
Transfer deposits. Colorado currently keeps its money and liquid assets in JP Morgan Chase, Wells Fargo and other banks. These would be transferred to a public bank and could furnish some of the necessary capital and deposits. That is how the Bank of North Dakota started in 1919, in addition to issuing $2 million in bonds. .
Revenue bonds. The state or local government could issue revenue bonds to start a public bank. Unlike general obligation bonds, revenue bonds do not create a general obligation of the government. By definition, the revenue to pay the bondholders comes solely from the interest and other income of the public bank or other entity. No vote of the people is required. The bank can and should be made large enough to fully restore the economy. If its management and lending operations were properly planned and in line with the very low overhead of the Bank of North Dakota, it would be highly profitable every year, starting the very first year.
Transfer existing loan funds. The state and local governments have established loan funds for essential purposes, such as the Colorado Housing and Finance Authority (CHFA). These are revolving loan funds. They could be transferred to a public bank as capital and generate 10 times as much money through loans. California and Washington state have pending legislation to do the equivalent.
Investment pools. The state could authorize existing government investment pools to be used as capital and/or deposits for a state public bank or local public banks.
Pension funds. Pension funds are a significant potential source of funds to start a public bank. Much of the pension funds in Colorado are currently invested in risky enterprises producing low returns and sometimes big losses. It is recommended that pension boards such as PERA authorize the investment of up to 5% or 10% of pensions as capital for a state or local public bank. PERA now has $49.3 billion in pension assets. If just 5% of that or $2.45 billion were used as capital to start a public bank, it would be put to much better use. The bank would create a stronger and more stable economy and thus protect jobs and pension, and would pay a higher and steadier return to PERA than it has been getting from its current investment in volatile stocks and hedge funds. If Colorado had a public bank proportional in size to the public bank of Alberta province in Canada, for our population, the bank would have $60 billion in loans, enough to overcome our $3 billion deficit.
Cares Act Funds. It might be possible that some of the federal Cares Act funds could be used for capital for a public bank. The U.S. Treasury Department’s guidelines for Cares Acts funds allow them to be used to make grants to businesses that lost income due to the shut down orders and encourages states and local communities to use their reasonable judgment in using the funds. A public bank could enable such funds to go much farther by making loans to businesses harmed by the shutdown orders.
Any combination of the above. If enough money were put into one or more public banks, we could rapidly restore our entire economy.