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DECEMBER 10 FORUM: POSSIBILITIES FOR A PUBLIC BANK IN SEATTLE

On December 10 I’ll be participating in a public forum hosted by the Seattle Public Bank Coalition, “The Possibilities for a Public Bank in Seattle.” The forum takes place at 7 p.m. at the University Methodist Church at 1415 NE 43rd in the University District. Other panelists include Gwendolyn Hallsmith of the Public Banking Institute, Dr. Thomas Keidel, of the Federation of German Banks, and Political Economist Dr. Karl Bietel, UC Davis. Wayne Lau, Executive Director of the Rainier Valley Community Development Fund will be the moderator.

PUBLIC BANKING

In the wake of the Wall Street financial crisis of 2007-8, advocacy for public banking has increased. Locally, Senator Bob Hasegawa has introduced bills in the legislature to create a public bank, or state investment trust, at the state level.

image from seattlepublicbankcoalition dot orgProponents of public banking focus on how banks designed to serve a public purpose could benefit communities: local governments can pursue innovative policy initiatives to increase public sector investments in areas such as affordable housing, infrastructure, and targeted economic development within low-income neighborhoods and communities. They cite potential benefits include reducing the cost of capital projects through elimination of interest charges for loans, preserving affordable housing, and improving access to credit. Profits can be invested back in the community.

They contrast this public purpose this with Wall Street banks, which can act in the interest of short-term profits, which, as we saw with the crash, can have negative consequences for average Americans at a variety of levels.

North Dakota is the clearest example of a public bank in the United States.

NORTH DAKOTA

The Bank of North Dakota was established by the state legislature in 1919. It remains the only state-owned bank in the United States.

It provides commercial, agricultural, residential, and student loans, and offers checking and savings accounts to residents and state agencies and cities within the state. Its policy is to not compete with the private sector for retail deposits, and thus it does not offer debit or credit cards or ATM machines. It offers direct lending, and works in partnership with over 100 other financial institutions for participation loans. It is authorized to assist other financial institutions to help stimulate economic development.

SANTA FE/SAN FRANCISCO

Santa Fe, New Mexico, is currently exploring public banking under the leadership of Mayor Javier Gonzales. A citizen group, Banking on New Mexico, held a symposium on public banking in September that I attended.

On October 29 the Santa Fe City Council passed a resolution to analyze public banking as a method for leveraging city goals, such as business development, infrastructure, enhancing affordable housing, water and energy conservation, and other goals. The resolution further directed city staff to develop recommendations on the process, feasibility and cost for establishing a public bank, potential partnerships with community banks, and additional options for achieving the goals of public banking and optimizing financial management.

San Francisco has been exploring this idea for the last few years; even the Wall Street Journal has taken notice.

PUBLIC BANKING IN SEATTLE?

Could the model from North Dakota be workable in Seattle? The Washington State constitution provision regarding the lending of credit presents a clear but not insurmountable obstacle.

Are there other options short of a full public bank that could meet some of the goals? Could some elements be transferred? We’ll be examining these questions at the December 10 forum. I encourage you to attend.

 

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