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Will Public Banking Bring More Clean Energy Programs to California?

By Nithin Coca - Sharable, September 28, 2017

At a recent forum at Oakland City Hall, experts from the public banking and community energy sectors explored how the creation of a public bank could help communities transition to clean energy while creating economic opportunities.

"We need to build a more sustainable world, we need to be using energy that is positive for the environment and community, and we need to do it a way that support local jobs," said Rebecca Kaplan, Oakland City Councilmember Rebecca Kaplan who is leading the public bank creation efforts.

The forum took place in Oakland, California, just days after the approval of a resolution to fund a feasibility study by the City Council, with support from neighboring cities. The first and only public bank in the U.S. is the Bank of North Dakota.

"A public bank can really create community wealth in ways other institutions are not capable off," said Gregory Rosen, the founder of High Noon Advisors, a local consulting firm with experience in clean energy investing. "It can help people of different backgrounds and income levels come together, for the good of the community."

A Bank Even a Socialist Could Love

By David Dayen - In These Times, April 17, 2017

“Money is a utility that belongs to all of us,” says Walt McRee. McRee is a velvety-voiced former broadcaster now plotting an audacious challenge to the financial system. He’s leading a monthly conference call as chair of the Public Banking Institute (PBI), an educational and advocacy force formed seven years ago to break Wall Street’s stranglehold on state and municipal finance. 

“This is one of the biggest eye-openers of my life,” says Rebecca Burke, a New Jersey activist on the call. “Once you see it, you can’t look back.” 

This ragtag group—former teachers, small business owners, social workers— wants to charter state and local banks across the country. These banks would leverage tax revenue to make low-interest loans for local public works projects, small businesses, affordable housing and student loans, spurring economic growth while saving people—and the government—money. 

At the heart of the public banking concept is a theory about the best way to put America’s abundance of wealth to use. Cities and states typically keep their cash reserves either in Wall Street banks or in low-risk investments. This money tends not to go very far. In California, for example, the Pooled Money Investment Account, an agglomeration of $69.5 billion in state and local revenues, has a modest monthly yield of around three-quarters of a percent. 

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. 

Wall Street banks have used shady financial instruments to extract billions from unsuspecting localities, helping devastate places like Jefferson County, Ala. Making the wrong bet with debt, like the Kentucky county that built a jail but couldn’t fill it with prisoners, can cripple communities. 

Even under the best conditions, municipal bonds—an enormous, $3.8 trillion market—can cost taxpayers. According to Ellen Brown, the intellectual godmother of the public banking movement, debt-based financing often accounts for around half the total cost of an infrastructure project. For example, the eastern span of the San Francisco-Oakland Bay Bridge cost $6.3 billion to build, but paying off the bonds will bring the price tag closer to $13 billion, according to a 2014 report from the California legislature. 

Public banks reduce costs in two ways. First, they can offer lower interest rates and fees because they’re not for-profit businesses trying to maximize returns. Second, because the banks are 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. 

North Dakota's Public Bank Was Built for the People: Now It's Financing Police at Standing Rock

By Matt Stannard, YES! Magazine - December 14, 2016

In 1918 in Bismarck, North Dakota, populist socialism won big: The Nonpartisan League, a political party founded by poor farmers and former labor organizers, captured both houses of the North Dakota Legislature. Farmers had been badly hurt by big banks charging double-digit interest rates and by grain companies that operated every elevator along the railroad route, underpaying and cheating the farmers. In response, the new government created the publicly owned Bank of North Dakota (BND) and the North Dakota Mill and Elevator. Both institutions epitomize American public cooperativism, creating democratic checks on private interests' ability to manipulate financial and agricultural markets. The Bank of North Dakota, in particular, created a firewall against the destructive practices of Wall Street banks, a firewall that went on to protect the state from the worst effects of the financial downturns of the next hundred years.

Nearly a century later, in 2016, that same bank lent nearly $10 million to local law enforcement to fund their response to protests near the Standing Rock Indian Reservation and Cannon Ball, North Dakota. The millions in loans provided by BND allowed the police to double down on suppression of the Standing Rock Sioux's resistance to construction of the Dakota Access pipeline. They have used harsh detention measures, injury-causing rubber bullets, and water cannons in freezing weather in an effort to demoralize and disperse water protectors, whose chief political actions were praying and nonviolent civil disobedience.

North Dakota's leadership has bound the state's economy up so tightly in fossil fuels that it has forced itself to subsidize the security costs of energy companies. In fact, the energy industry has come to expect subsidization for its costs and easy externalization of its negative impacts.

A public bank created to empower small farmers and protect common people from outside interests was used to silence indigenous and environmental opposition to outside interests. How did this happen? And what's the takeaway for those who point to public banking as a key solution to breaking the power of Wall Street?