“As things stand, the banks are the permanent government of the country, whichever party is in power.” – Lord Skidelsky, House of Lords, UK Parliament, 31 March 2011
On March 20, 2014, European Union officials reached an historic agreement to create a single agency to handle failing banks. Media attention has focused on the agreement involving the single resolution mechanism (SRM), a uniform system for closing failed banks. But the real story for taxpayers and depositors is the heightened threat to their pocketbooks of a deal that now authorizes both bailouts and “bail-ins” – the confiscation of depositor funds. The deal involves multiple concessions to different countries and may be illegal under the rules of the EU Parliament; but it is being rushed through to lock taxpayer and depositor liability into place before the dire state of Eurozone banks is exposed.
The prospect of starting a county-owned bank generated contentious debate during the Luzerne County Council meeting Tuesday night, with several members of the public questioning its feasibility.
Council Vice Chairman Edd Brominski has suggested creating a public bank to alleviate the county’s massive debt. He hosted a breakfast seminar Monday morning in which Mike Krauss, a director of the Public Banking Institute, said such a facility could help reduce government debt and slash interest rates while keeping county money local.
The bank would assist local banks with capital for loans and would not compete with them, Krauss said. Krauss suggested money that has been “squirreled away,” such as pension funds, could fund the endeavor.
That has been a sticking point.
Kevin O’Brien, a former deputy director of the Luzerne County Emergency Management Agency, questioned Tuesday whether it would be legal to use pension funds in such a manner and whether shareholders would have a say.
“What I’m concerned about is my investment in the pension fund,” O’Brien said. “I worked for this county for 30 years and I enjoy my retirement.”
County solicitor David Pedri noted the concept is in its early stages but said any borrowing from the pension fund would have to be approved by the Luzerne County Retirement Board.
Creating a county-owned bank could reduce government debt, slash interest rates and even be a source for immediate emergency funding during floods, according to the Pennsylvania Public Bank Project.
Mike Krauss, a director of the Public Banking Institute and the project’s chairman, told a group of local leaders, including several Luzerne County Council members, during a breakfast meeting Monday morning that a public bank would be a “banker’s bank” that would not compete with local banks.
“The main function of the kind of bank we’re proposing is to partner with local banks,” Krauss said. “It is not a retail bank. It does not compete with the local banks, and because it doesn’t do that, it has a very low cost overhead.”
Council Vice Chairman Edd Brominski organized the event at the Best Western Genetti Hotel and Conference Center as part of a fact-finding mission to begin a financial recovery for the county, which is more than $400 million in debt.
The Bank of England’s dose of honesty throws the theoretical basis for austerity out the window
Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn’t know how banking really works, because if they did, “there’d be a revolution before tomorrow morning”.
Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called “Money Creation in the Modern Economy“, co-authored by three economists from the Bank’s Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.
Want to end recessions, reduce inequality, prevent fraud and help immigrants? It’s time to install postal banking
Ever since the inspector general of the US Postal Service authored a white paper endorsing the concept of postal banking, more advocates and policymakers have become intrigued. Postal banking is actually an old idea: Dozens of countries offer simple financial services through their posts, and here in America, Postal Savings Accounts served millions of customers from 1911-1967 (the post office still sells money orders today). But it could also fix a number of our current problems simultaneously, even ones you haven’t thought about. Here are 10 different applications of postal banking, in order from most to least obvious:
…Mr. Brasch visited his local bank, Alerus Financial, based in Grand Forks, and came away with a financing package that would be unusual anywhere but North Dakota, which operates the country’s only public bank. The state-owned Bank of North Dakota helped finance the loan — and also used state money to buy down the interest rate, from 5.25 percent to 1 percent.
North Dakota uses the bank to funnel deposits from state agencies back into the state’s economy through a variety of loan and other development programs. Mostly it makes loans, teaming with local private banks that initiate the transactions with borrowers. The state-owned bank typically takes half of a business loan, and the interest rate on the state-lent portion is normally one or two percentage points below the market rate.
On the first Tuesday of March, communities across Vermont hold town meetings at which they elect local officials, approve the coming year’s budget and vote on measures announced in advance.
This week, 19 Vermont cities and towns voted on a measure calling for the Vermont Economic Development Authority, a statewide finance lender created in 1974, to be turned into a public bank. Fifteen approved the notion.
In January, state Sen. Anthony Pollina (D) and five other progressive state lawmakers had introduced legislation to advance the proposal. Senate Bill 204 would direct the state government to deposit 10 percent of its unrestricted funds in a public VEDA bank, which could then leverage the money in the same manner as private banks do.
(1) create statutorily the 10 Percent for Vermont Program within the Vermont Economic Development Authority for the purpose of establishing a banking system owned, controlled, and operated by the State of Vermont;
(2) amend the statutory authority of the Vermont Economic Development Authority to permit it to engage in the business of banking; and
(3) direct the State Treasurer to transfer 10 percent of the State government’s cash reserves to the 10 Percent for Vermont Program for initial funding.
The pilot program would partner with local private banks to offer loans and boost economic development “by increasing access to capital for businesses in the State,” according to the legislative text. VEDA is currently financed by legislatively appropriated funding, bonds and other means.
A companion bill, HB 627, has been introduced in the state House.
When the prairie populists of the North Dakota Non-Partisan League swept to power a century ago, with their promise to take on the plutocrats, one of the first orders of business was the establishment of state-run bank.
They did just that. And in just a few years the Bank of North Dakota will celebrate a 100th anniversary of assuring safe stewardship of state funds, providing loans at affordable rates and steering revenues toward the support of public projects.
After the 2008 financial meltdown, and the failure of Congress to regulate “too-big-to-fail” banks, activists and progressive legislators across the country began to explore the idea of replicating—or even expanding upon—the North Dakota model in other states.
By a more than three-to-one margin on Tuesday, communities voting on whether to support the creation of a public bank in Vermont approved the idea, calling for the state legislature to establish such a bank and urging passage of legislation designed to begin its implementation.
In a show of direct democracy that also exposed the citizenry’s desire for a more localized and responsible banking system, fifteen of nineteen towns passed the resolution during ‘Town Meeting Day’— an annual event in which voters choose local officials, approve municipal budgets, and make their voices heard on a number of measures put before local residents for approval.
The specific proposal under consideration, Senate Bill 204, would turn an existing agency, the Vermont Economic Development Authority, into a public bank that would accept deposits and issue loans for in-state projects. Currently, the only state in the U.S. to maintain a public state bank is North Dakota. However, since the financial downturn of 2008, other states have looked into replicating the North Dakota model as a way to buck Wall Street while taking more control of state and local finances.
It seems like an idea whose time has come. With one in four American households partially or entirely excluded from the current banking system, and with the U.S. Post Office in search of additional revenue, why not use the postal system to offer banking services to lower-income households?
In fact, this is an idea whose time has already come, more than once. Many nations — among them Great Britain, Japan, Germany, Israel, and Brazil — provide or have provided some form of postal banking services. So did the United States, until 1966.
It’s hardly a radical idea. The U.S. system was voted into law in 1910, during the presidency of William Howard Taft. In any case, a better way to describe it would be as a beginning.
What better way to start a much-needed transformation of our financial sector than by providing services to those communities the financial industry refers to as the “unbanked”? Right now those communities are routinely victimized by predatory payday lenders. As we first reported in 2010,
“Studies have shown that payday lenders disproportionately exploit minority neighborhoods with loans that are issued at an average annual interest rate of 455%. The average number of loan each borrower takes out is nine per year, according to one study, as these high rates lead to a cycle of indebtedness.”
Sen. Elizabeth Warren has endorsed the postal-banking concept, which David Dayen describes in more detail here. As Sen. Warren wrote recently, “if the Postal Service offered basic banking services — nothing fancy, just basic bill paying, check cashing and small-dollar loans — then it could provide affordable financial services for underserved families, and, at the same time, shore up its own financial footing.”
The report that stimulated all this new discussion was written by the Post Office’s Inspector General, and it makes a compelling case.
Could the legalization of marijuana in Washington create opportunities for small businesses to access a new source of capital investment?
Maybe something like this: Proposed legislation to create a Washington state-run public bank would provide a legal banking alternative for marijuana-related businesses and potentially a new source of credit for small businesses.
While our state voted to legalize marijuana in the past election, possession and distribution remains a federal offense. As a result, many banks will not accept cash deposits from dispensaries or other related businesses for fear of public seizure.
Recently the U.S. Department of Justice announced it was preparing new guidance that would allow state-legalized cannabis businesses to use federal banks. However, without a defined safe harbor or action from Congress, many may feel the risk outweighs the benefit.
A solution may be to create a public bank in the state to handle these deposits and provide banking services.
A public bank is a financial institution in which the state or public actors are owners. Advocates for public banking point to North Dakota as a policy model. As the state receives revenues from taxes and fees, rather than depositing those funds into a commercial bank, they are deposited at the Bank of North Dakota.
BILLINGS – The idea of setting up a state-owned bank in Montana to invest at home and offer low-interest loans to small businesses and farmers was debated last week in Billings.
A bill to set up a Montana bank modeled after the State Bank of North Dakota, set up 85 years ago, was tabled during the 2013 session of the Montana Legislature.
But members of the Montana Organizing Project and other participants informally decided Tuesday night to study the concept to see if it made sense to draft another bill for the 2015 legislative session.
“L.A. relies on these banks,” says The Times, “for long-term financing to build bridges and restore lakes, and for short-term financing to pay the bills.” The editorial noted that a similar proposal brought in the fall of 2011 by then-Councilman Richard Alarcon, backed by Occupy L.A., was abandoned because it would have resulted in termination fees and higher interest payments by the city.
It seems that we must bow to our oppressors because we have no viable alternative – or do we? What if there is an alternative that would not only save the city money but would be a safer place to deposit its funds than in Wall Street banks?
There is a place where they don’t bow. Where they don’t park their assets on Wall Street and play the mega-bank game, and haven’t for almost 100 years. Where they escaped the 2008 banking crisis and have no government debt, the lowest foreclosure rate in the country, the lowest default rate on credit card debt, and the lowest unemployment rate. They also have the only publicly-owned bank.
The place is North Dakota, and their state-owned Bank of North Dakota (BND) is a model for Los Angeles and other cities, counties, and states.
Many countries (including at one point the United States of America) do something called “postal banking” where, essentially, the local postal service offers some simple and basic financial services to the population.
Bringing a postal bank to the United States would basically address two issues. One is that it would create a kind of “public option” for simple banking services and perhaps drive check-cashing and payday-lending joints out of business. The other is that it would create an additional revenue stream for the USPS and specifically a revenue stream that would justify holding on to all its real-estate assets so they could serve as branches.
To me the public option part of the argument has always made more sense than the “Save the Postal Service” part of it. But a new white paper from the USPS inspector general alters that calculus in my view by arguing that the USPS already has statutory authority to do postal banking.
Rudy Avizius & Mike Krauss • Youtube Channel Publicbankingtv • January 29, 2014
Our cities are not broke. They are struggling with onerous interest payments to Wall Street bankers who are nothing but middlemen. These interest payments impoverish your communities, while enriching Wall Street. This video shows how municipalities, counties, universities and states can significantly reduce their interest payments by creating their own public bank. This has already been done and proven, and could cut the costs of public projects by at least half.
One of the key messages of tonight’s State of the Union address will be President Obama’s willingness to bypass Congress to create jobs and reduce inequality. As luck would have it, yesterday a new government report detailed an innovation that would preserve one of the largest job creators in the country, save billions of dollars specifically for the poor, and develop the very ladders of opportunity that Obama has championed as of late. What’s more, this could apparently be accomplished without Congressional action, but merely through existing executive prerogatives.
What’s the policy? Letting the U.S. Postal Service (USPS) offer basic banking services to customers, like savings accounts, debit cards and even simple loans. The idea has been kicked around policy circles for years, but now it has a crucial new adherent: the USPS Inspector General, who endorsed the initiative in a comprehensive white paper.
The poor pay more, and that’s one of the reasons people get trapped at the bottom of the economic ladder.
But it doesn’t have to be this way. In the same remarkable report this week, the OIG explored the possibility of the USPS offering basic banking services — bill paying, check cashing, small loans — to its customers. With post offices and postal workers already on the ground, USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods.
After many months of preparation and peer review, the Vermonters for a New Economy group has finally completed the study of the economic impacts of a public bank in Vermont. Highlights include:
over 2,500 new jobs created
over $190M in new economic value added over $340M in additional gross state product
the existing institutions already have the capital to establish a bank, no new appropriation or bonding needed.
recommendation that VEDA’s authority be expanded to include banking, which is what S. 204 proposes this year.
Council vice president thinks move would be ‘start of a financial recovery’
Will Luzerne County get into the banking business?
Luzerne County Council Vice Chairman Edward Brominski sent an email to his council colleagues this week introducing a potential financial relief concept he is researching: creation of a county-owned bank.
“I believe from first impression that this could be the start of a financial recovery for our county. I will release this to the press in the next few days,” Brominski said in the email.
Allowing the Vermont Economic Development Authority to operate as a state bank would create thousands of jobs, save the state millions in interest costs and add hundred s of millions in value and production, a study released last week says.
The peer-reviewed study, conducted by the Gund Institute at the universities of Vermont and Massachusetts, did not recommend that Vermont start a state bank from scratch, but suggested an expansion of the existing agency, which essentially functions as public bank now.
Interest in establishing public banks has been growing nationwide in the wake of the 2008 banking crisis. North Dakota has the only state bank in the country, and during the last legislative session, Vermont lawmakers considered, but didn’t pass, bills to study the impact of a state bank based on the North Dakota model.
A coalition of organizations, individuals and businesses, called Vermonters for a New Economy, commissioned this study with funding from the Donella Meadows Institute of Norwich.
Proponents believe Vermont could save hundreds of millions of dollars, stimulate business and create jobs with a state bank, and the study’s findings support that view.
Advocates for the formation of a Vermont Public Bank are bringing the issue before local town officials across the state. The group Vermonters for a New Economy is organizing the effort, which it’s calling its Town Meeting campaign.
California cannot solve its budget problems by slashing services that have already been cut to the bone or raising sales taxes that hurt the poor far more than the rich. We are fighting over a pie that remains too small. The pie itself needs to be expanded – and it can be.
How? By reclaiming that portion that is now siphoned off in interest and bank fees. When tallied up at every stage of production, interest has been calculated to claim one-third of everything we buy.
How can that money be recaptured? By owning the bank.
Five Economic Reforms Millennials Should Be Fighting For Guaranteed jobs, universal basic incomes, public finance and more
It’s a new year, but one thing hasn’t changed: The economy still blows. Five years after Wall Street crashed, America’s banker-gamblers have only gotten richer, while huge swaths of the country are still drowning in personal debt, tens of millions of Americans remain unemployed – and the new jobs being created are largely low-wage, sub-contracted, part-time grunt work.
Millennials have been especially hard-hit by the downturn, which is probably why so many people in this generation (like myself) regard capitalism with a level of suspicion that would have been unthinkable a decade ago. But that egalitarian impulse isn’t often accompanied by concrete proposals about how to get out of this catastrophe. Here are a few things we might want to start fighting for, pronto, if we want to grow old in a just, fair society, rather than the economic hellhole our parents have handed us…
5. A Public Bank in Every State
You know what else really blows? Wall Street. The whole point of a finance sector is supposed to be collecting the surplus that the whole economy has worked to produce, and channeling that surplus wealth toward its most socially valuable uses. It is difficult to overstate how completely awful our finance sector has been at accomplishing that basic goal. Let’s try to change that by allowing state governments into the banking game.
There is only one state that currently has a public option for banking: North Dakota. When North Dakotans pay state taxes, the money gets deposited in the state’s bank, which in turn offers cheap loans to farmers, students and businesses. The Bank of North Dakota doesn’t make seedy, destined-to-default loans, slice them up inscrutably and sell them on a secondary market. It doesn’t play around with incomprehensible derivatives and allow its executives to extract billions of dollars. It just makes loans and works with debtors to pay them off.
…Speculators at megabanks or investment firms such as Goldman Sachs are not, in a strict sense, capitalists. They do not make money from the means of production. Rather, they ignore or rewrite the law—ostensibly put in place to protect the vulnerable from the powerful—to steal from everyone, including their shareholders. They are parasites. They feed off the carcass of industrial capitalism. They produce nothing. They make nothing. They just manipulate money. Speculation in the 17th century was a crime. Speculators were hanged.
We can wrest back control of our economy, and finally our political system, from corporate speculators only by building local movements that decentralize economic power through the creation of hundreds of publicly owned state, county and city banks.
The establishment of city, regional and state banks, such as the state public bank in North Dakota, permits localities to invest money in community projects rather than hand it to speculators. It keeps property and sales taxes, along with payrolls for public employees and pension funds, from lining the pockets of speculators such as Jamie Dimon and Lloyd Blankfein. Money, instead of engorging the bank accounts of the few, is leveraged to fund schools, restore infrastructure, sustain systems of mass transit and develop energy self-reliance.
The United States today finds itself in the midst of a crisis which exists on a multitude of different levels. From the establishment of a culture of constant warfare, increasing environmental degradation, and the devolution into an outright police state, the perils of the current system are easily visible to those with eyes to see.
Nowhere, however, is the crisis more visible than in the manifestations of the world economic depression.
From mass unemployment (estimated at approximately 25% when all factors are considered) and a growing national debt to a ballooning trade deficit and the loss of purchasing power of the dollar as well as decrepit and crumbling national infrastructure, the United States today faces a crisis of epic proportions.
Most of the blame for this economic calamity, of course, can be directly traced back to the treachery of private bankers, Wall Street, and the practice of usury combined the acts of the agents of these financiers in the halls of government at some point or other. Ever since the Federal Reserve was solidified as the perceived national bank of the United States, the most powerful nation on the face of the earth and, thus, its people, were placed under the rule and at the mercy of private bankers. The economic health and future of the United States was placed in the hands of the very elitists and financiers from which the American people should have been protected. As a result of the Federal Reserve Act of 1913 and subsequent policy, the power of issuing currency and credit, the ability to cause mass inflation or deflation, and the opportunity to orchestrate booms and busts, productivity and depression, was placed in the hands of private bankers who were granted the authority to act completely independent of the authority of the United States Federal government. Thus, the U.S. Federal government has now been reduced to reacting to the decisions made by the private Federal Reserve instead of the Federal Reserve acting as a truly national central bank and reacting to the decisions made by the Federal government.
Banks have a great privilege. They create debt/money with a few strokes on a computer keyboard. Then they charge interest on this newly created “money.” It’s called Fractional Reserve Banking. All banks, but one, are privately owned. By law, these private banks have one objective, making profits for their shareholders. It is all about profits for the private banks.
It is a failed system. Booms and busts are created by the improper use of this newly created money. We could change the Federal Reserve Banking system. However, Washington D.C. has lost its way and we are foolish believing things are ever going to improve at the federal level. The cabal of private Wall Street banks run the show and must make profit for the few.
PUBLIC BANKING FORUM OF IRELAND: PRESS RELEASE. 2 Dec.2013
The PBFI was set up to bring knowledge and information about public banking to the Irish people. Education is key.
Mostly, Irish people think that all banks are the same. However, there is an enormous difference between publicly owned and privately owned banks. The Credit Unions, which are not banks, are the closest thing we have in Ireland to public banks. These same credit unions are now being scuppered under the government REBO plan, to reduce the numbers to about 150/200, from 420. The process is well underway, courtesy of the CBOI and other external financial dictators.
Public Banking is playing a key role in the sustained growth of many countries across the world, primarily in the BRICS countries, but also closer to home in Germany. The German public banking model is very relevant to Ireland, and offers us a significant alternative to what is on offer to the Irish people and Irish businesses as we approach 2014. Our private banks have not alone failed Ireland, but have caused endless and indescribable damage to this economy, and to the lives of Irish people. Official Ireland is happy to support this TBTF system at the expense of Irish people, to the tune of up to 12 suicides per week, and one person emigrating every 6 minutes. Restoring these pillar banks to any form of solvency is a crime against the Irish people, only matched by their bailout initiated in Sept 2008. The TOO BIG TO FAIL MODEL cannot and must not be restored to its former glory. Ireland must seek a new form of banking which services the Irish people, and not private bankers.
The PBFI challenges the Irish government, Irish industry, the Irish people, the Irish credit union movement, to examine in detail the GERMAN SPARKASSEN MODEL OF PUBLIC BANKING, with a view to implementing a full and comprehensive public banking model throughout Ireland, based on that German Sparkassen model. The PBFI challenges in particular, the Credit union movement to study this model of public banking so as to fully appreciate how the movement could be so powerful and instrumental in changing forever, how banking is done in Ireland. Irish SMEs and middle Ireland in general are starved of money and credit in recent times. Austerity is the only thought process being worked by official Ireland. During this current crisis in Germany, the Sparkassen banks increased lending by 17%, while the private banks cut lending by 10%. The TBTF model is not a factor in Germany where there are more than 2,000 individual banks servicing its population, while next door in England there are just 5 big banks servicing its 55 million people. In Ireland , now, we have just two, which need the CU movement’s cash to help them be ready for the next stress test, and that’s before the imminent bail-in to fill their black holes.
Ireland needs banks which service the Irish people: Ireland needs a comprehensive public banking service. Irish people must realise the potential which PUBLIC BANKING offers. Irish people must demand:
Stability over the boom bust model: an end to TOO BIG TO FAIL BANKS: Comprehensive Public Banking services.
Join the PBFI and make public banking a reality in this country. http://www.republicirelandbank.com
Co-ops, renewable energy, sustainable agriculture. . . all of these efforts to create a better society run counter to the values of Wall Street.
Wall Street speculators have badly distorted our economy and our communities by maximizing short-term profits at the expense of the public’s long-term interests.
And then, with their chokehold on Washington, they have managed to hold us up for trillions of dollars in bailout funds after gambling our money away.
Meanwhile, these same financial institutions use predatory lending practices to steal money from the poor. And when it comes time to financing public-works projects, we lose billions by paying their inflated interest rates.
Money and access to credit determine what kind of a society we live in, what our priorities are, and what our future looks like.
It’s time to take back this critical part of our infrastructure from the financial industry.
The little-known Costa Rican banking system involves a mixture of public-and-private banks. Out of 29 licensed banks, mutual associations, and credit unions in Costa Rica, four are publicly owned. Erin speaks with Ellen Brown, author of “The Public Banking Solution.”
The Irish have a long history of being tyrannized, exploited, and oppressed—from the forced conversion to Christianity in the Dark Ages, to slave trading of the natives in the 15th and 16th centuries, to the mid-nineteenth century “potato famine” that was really a holocaust. The British got Ireland’s food exports, while at least one million Irish died from starvation and related diseases, and another million or more emigrated.
Today, Ireland is under a different sort of tyranny, one imposed by the banks and the troika—the EU, ECB and IMF. The oppressors have demanded austerity and more austerity, forcing the public to pick up the tab for bills incurred by profligate private bankers…
Ireland was the first European country to watch its entire banking system fail. Unlike the Icelanders, who refused to bail out their bankrupt banks, in September 2008 the Irish government gave a blanket guarantee to all Irish banks, covering all their loans, deposits, bonds and other liabilities.
At the time, no one was aware of the huge scale of the banks’ liabilities, or just how far the Irish property market would fall.
Within two years, the state bank guarantee had bankrupted Ireland. The international money markets would no longer lend to the Irish government.
Fixing the broken banking system is one major challenge to create a thriving country. Public banking is one of several alternatives. Thanks to the Public Banking Forum Ireland for bringing Dr. Ellen Brown to Ireland and thanks to her for sharing her knowledge with us.
Read the entire article here. Watch the video here. See the presentation here.
Jekyll Island, The Federal Reserve Act of 1913, J. P. Morgan, the Rockefellers, the Rothschilds, Warburgs, Lazards, Schiffs, Lehmans, Goldman Sachs, privately-owned international central bank cartels, boom and bust, fractional reserve counterfeiting, etc., etc., etc. Deregulation, Glass-Steagall repeal, offshoring of jobs, Wall Street casino, insider trading, Brooksley Born, Greenspan, Summers, Bernanke, fraudulent derivatives, too-big-too-fail/jail, world economic crisis 2008-present, Arab Spring/Occupy, bail-outs/bail-ins, austerity, protest, unemployment, suicide, foreclosure, sequester…
As a result of humanity’s going along with a situation where the most wealthy banking families on Earth have gained control of the quantities and creation of money, the transfers of tremendous amounts of money have occurred from the 99.9% to the .1% – the owners of the largest banks in the world. It is time for this unequal distribution of wealth to become reversed. It is time for humanity to begin the new chapter.
Advocates of public banking, so far unsuccessful in their quest to get the Vermont Legislature to study the possibility of setting up a state-owned bank, have taken the task upon themselves. At a news conference Tuesday in the Cedar Creek Room of the Statehouse, Sen. Anthony Pollina, P/D-Washington, and others presented research commissioned by the group Vermonters for a New Economy.
The research was conducted by the Political Economy Research Institute at the University of Massachusetts-Amherst and prepared by Gary Flomenhoft, fellow at the Gund Institute for Ecological Economics at the University of Vermont. It was paid for by the Donella Meadows Institute of Norwich.
Flomenhoft said about $236.2 million of new credit could be created in the state, as well as 1,000 jobs and $100 million in savings. For the full report, see the document link below.
Proponents of a state-owned “public bank” want policymakers to consider alternatives to depositing taxpayer funds with out-of-state shareholders. The renewed call coincides with a $53 million civil penalty settlement by TD Bank, the state’s primary depository.
The state of Vermont kept an average end-of-day balance upwards of $236 million with TD Bank in fiscal year 2013. The American subsidiary of Canadian banking giant Toronto-Dominion Bank held about two-thirds of all the state’s unrestricted funds and earned about $787,000 for its services, according to a July memo from State Treasurer Beth Pearce to state Sen. Anthony Pollina, P-Middlesex.
Pollina, who is co-chair of the Senate Government Operations Committee, asked how much TD Bank held because he wants to know what would happen if that money never left Vermont…
“Right now, we pay our taxes, the money’s deposited primarily into TD Bank, they take our money, and they lend it out any way they want, not necessarily prioritizing Vermont,” Pollina said. “They lend from to New Jersey to China. They make a profit off our money and that goes into the pockets of shareholders.”
Pollina argues that state government could save on the interest and fees if, instead of depositing money with and then borrowing from corporate banks, “we had the potential to use our own money and essentially borrow from ourselves.”
To help test the theory, Pollina also asked Pearce about 10 years’ worth of bonding the state had sold (almost $300 million in new general obligations), projected bonding in the coming years (more than $80 million annually through fiscal year 2015), the amount of interest paid on said bonds (close to $225 million in the last 10 years) and the cost of bonding through management fees, commissions and other related costs (about $4 million since 2004).
“Preliminary Review of Issues in Adopting a Bank of North Dakota (BND) Model in VT” can be read here.
Memo from VT State Treasurer Pearce can be read here.
A flap over free speech, employee performance and banking policy has erupted at Montpelier City Hall.
City Planning and Community Development Director Gwen Hallsmith took vacation time in October to help coordinate a statewide series of events dubbed New Economy Week. The sponsoring group’s centerpiece grassroots action was to mobilize popular support for placing a discussion of “public banking” on town meeting agendas.
Public banking refers to the concept of a state managing its own money in its own bank, rather than keeping deposits in private financial institutions. Hallsmith is an ardent advocate of public banking, as well as a published author on topics related to sustainability and local economies.
Formation of a state bank could consolidate several Vermont state agencies, including the Vermont Economic Development Authority and the Vermont Housing Finance Agency, both of which have offices in Montpelier.
Montpelier Mayor John Hollar and City Manager Bill Fraser have been uneasy about Hallsmith’s public stance on the state bank proposal for several months. Matters came to a head in September. Hollar questions why Hallsmith, who he says serves as the city economic development officer, would advocate for a plan that could result in a loss of jobs in the city.
Cheers to the recently-formed Public Banking Forum of Ireland! Here is the power point version of several presentations done at their events this week –
The debt ceiling crisis can be averted by enforcing the Fourteenth Amendment, which mandates the government to pay its debts already incurred, including pensions. That means Social Security, which IS an “entitlement,” in the original sense of the word. We’re entitled to it because we’ve paid for it with taxes.
The game of Russian roulette being played with the U.S. federal debt has been called a “grotesque political carnival” and political blackmail. The uproar stems from a statute that is unique to the United States and never did make much sense. First passed in 1917 and revised multiple times since, it imposes a dollar limit on the federal debt. What doesn’t make sense is that the same Congress that voted on the statute votes on the budget, which periodically exceeds the limit, requiring the statute to be revised. The debt ceiling has been raised 74 times since 1962, 10 of them since 2001. The most recent increase, to $14.294 trillion by H.J.Res. 45, was signed into law on February 12, 2010.
Taxes aren’t collected until after the annual budget is passed, so Congress can’t know in advance whether or how much additional borrowing will be required. Inevitably, there will be some years that the budget pushes the debt over the limit, requiring new legislation. And inevitably, now that this tactic has been discovered, there will be a costly battle over the increase, wasting congressional time, destabilizing markets, and rattling faith in the American financial and political systems. There will be continual blackmail, arm-twisting and concessions. The situation is untenable and cries out for a definitive resolution.
Reports are that the Department of Homeland Security (DHS) is engaged in a massive, covert military buildup. An article in the Associated Press in February confirmed an open purchase order by DHS for 1.6 billion rounds of ammunition. According to an op-ed in Forbes, that’s enough to sustain an Iraq-sized war for over twenty years. DHS has also acquired heavily armored tanks, which have been seen roaming the streets. Evidently somebody in government is expecting some serious civil unrest. The question is, why?…
The Looming Debt Ceiling Crisis
The next crisis on the agenda appears to be the October 17th deadline for agreeing on a federal budget or risking default on the government’s loans. It may only be a coincidence, but two large-scale drills are scheduled to take place the same day, the “Great ShakeOut Earthquake Drill” and the “Quantum Dawn 2 Cyber Attack Bank Drill.” According to a Bloomberg news clip on the bank drill, the attacks being prepared for are from hackers, state-sponsored espionage, and organized crime (financial fraud). One interviewee stated, “You might experience that your online banking is down . . . . You might experience that you can’t log in.” It sounds like a dress rehearsal for the Great American Bail-in.
Increased regulation and low interest rates are driving lending from the regulated commercial banking system into the unregulated shadow banking system. The shadow banks, although free of government regulation, are propped up by a hidden government guarantee in the form of safe harbor status under the 2005 Bankruptcy Reform Act pushed through by Wall Street. The result is to create perverse incentives for the financial system to self-destruct.
Five years after the financial collapse precipitated by the Lehman Brothers bankruptcy on September 15, 2008, the risk of another full-blown financial panic is still looming large, despite the Dodd-Frank legislation designed to contain it. As noted in a recent Reuters article, the risk has just moved into the shadows:
[B]anks are pulling back their balance sheets from the fringes of the credit markets, with more and more risk being driven to unregulated lenders that comprise the $60 trillion “shadow-banking” sector.
When states and municipalities set up public banks, money and hence energy is withdrawn from Wall Street creating the perfect revolution with the result that the husk of Wall Street shrivels up and dies like a plant deprived of nutrients … without a shot being fired.
Nothing could be less radical than a public bank because the state of North Dakota already has one and it has been working successfully for the citizens of North Dakota. No one would accuse North Dakotans of being socialists or would they? No new ground to break here!
Instead of money leaving the state and going to Wall Street, money stays in the state where it is lent out in the form of student and business loans with the profits being shared by the citizens of North Dakota instead of going into the pockets of private bankers in New York.
California Could Solve Its Budget Problems by Starting a Public Bank Like North Dakota Did
The most solvent state in the US is North Dakota which has low unemployment, no budget deficit and a burgeoning economy. The main reason is that the state has a public bank (BND) in which state revenues and pension funds can be invested making it unnecessary to send the money out of the state to Wall Street. All state revenues are deposited in the BND by law. Instead of Wall Street making the profits on North Dakota’s money, North Dakota is making the profits.
Instead of paying interest on debt bonds, North Dakota is reinvesting the interest its public bank makes on infrastructure improvements and lowering state income taxes among other things.
States, Cities and Pension Funds Have Gone into Debt to Wall Street When They Could Have Started a Public Bank and Paid Interest to Themselves
Public banks plow their revenues back into community needs like infrastructure, education, health facilities, local enterprises and other public banks. When municipalities, cities, states, countries and even smaller jurisdictions like school districts fund their deficits with Wall Street, the profits go into the pockets of executives and investors.
Currently, only the state of North Dakota has a public bank. As a consequence North Dakota suffered very little from the Great Recession of 2008, has a robust economy and no budget deficit. California on the other hand struggles every year with its budget because it pays a lot of interest on its loans to Wall Street. If California had a public bank similar to North Dakota’s, it would have no budget deficit at all and could fund its infrastructure needs out of its own revenues.
The Public Banking Institute has released a new video making serious claims, backed by graphs and government documents, that the largest Wall Street banks are an unsafe choice for the savings of moms, pops and public payrolls. Citing a December 10, 2012 jointly approved plan between the U.S. Federal Deposit Insurance Corporation (FDIC) and the Bank of England, which resides on the FDIC’s federal web site, the organization says depositors in the U.S. could see portions of their deposits confiscated, similar to what happened in Cyprus, should there be another Wall Street collapse as occurred in 2008.
Within the European Union, a profound awakening of public consciousness is taking place as organizers seek to obtain one million signatures on a petition in favor of a basic income guarantee for all citizens. Under the EU constitution, this number of signatures is required for the proposal to undergo formal study and debate by the European parliament.
In Switzerland, however, voters have seized the initiative through their own petition to have the Swiss government vote on a basic income guarantee of $2,500 Swiss francs per month, equivalent to $2,800 U.S. dollars.
A basic income guarantee is the only economic measure sufficient to resolve the growing worldwide discrepancy of income between those who have and those who don’t. The fact is that the tremendous productivity of modern industry should mean that fewer people should have to work to produce the goods and services everyone needs to survive and even prosper. This is the fabled “leisure dividend” that economists promised long ago as the potential of modern industrial methods but that no nation on earth has ever delivered. The reason is that the fruits of the productivity miracle have been stolen by the kingpins of high finance who assure that all profits eventually flow into their own hands rather than the world’s populace.
Only one U.S. state, North Dakota, owns a bank. But that bank has been so successful – and the financial systems elsewhere have been so problematic – that 22 other legislatures have considered starting similar state banks.
Would government-owned banks distort the free market, or complement private lending? If states or the federal government set up banks, should they lend directly to consumers and businesses?
Some books are truly seminal, timely, and a must read. This great new work by Ellen Brown is definitely in that category.
The banking question is surely the biggest issues of our time, and of the ages. That is why everyone should read this book, and especially our representatives who will be called upon to lead us out of the monetary prison in which we find ourselves. I encourage you to buy a copy for yourself and an extra copy to send to your representative.
The time for “our” state and national legislators to act on this issue is now, and to do that they must have a complete, and un-dogmatic, understanding of the current reality and our alternatives. Ellen Brown lays out the reality of the current corrupt system and the public banking solution — a vital perspective.
Public Banking 