Money, economics, and cannabis are all pretty far from Body Impolitic’s general fare, but when I’m not blogging here, I also work with Strike Debt Bay Area and right now, a related group which I also work with, Friends of the Public Bank of Oakland, is making some serious strides toward creating a public bank in my home town of Oakland, California.
Right now, cities and counties of any substantial size, and all states, can’t bank with anyone except the Wall Street banks, because the volume they generate is too much for local banks (when there are any), community banks and credit unions to handle. That means that almost all your tax dollars flow through Citibank, Chase, Wells Fargo, and Bank of America. Let’s be clear, each of these banks is a self-confessed felon, and all of them have paid millions of dollars in fines to the Federal Government for these felonies. All of them also rake in exorbitant profits at the expense of all of their customers — including the governments who bank with them.
Needless to say, this is only going to get worse under the current administration. Cities are looking for alternatives. Just today, Seattle, Washington’s City Council voted unanimously to divest from Wells Fargo, a particularly egregious offender, and is looking for a socially responsible solution. Fortunately, solutions do exist. Public banks are one of them.
Most people don’t understand what a “public bank” is. I certainly didn’t before I got involved in this work. The only public bank in the U.S. is the Bank of North Dakota, a conservative institution which is over a century old. The BND is almost certainly the reason that North Dakota was spared the ravages of the 2008 recession.
A public bank won’t take your deposits, or corporate deposits. Rather, a public bank manages public money for a city, a region, or a state: tax revenues, grants, fees. A public bank is an institution that it will be difficult, if not impossible, for the federal government to touch. Public banks can pay fair but not astronomical salaries, hire local people, fund infrastructure and public housing projects, fund workers’ cooperatives, and keep the money flowing in the cities/regions/states they represent.
So what’s happening in Oakland? Three City Council members sponsored a resolution asking the City Manager and the City Attorney to scope out a preliminary report on the feasibility of public banking. In a city where many City Council requests languish for months or years, the staff has already produced a Request for Qualifications to identify the right people to create that preliminary report. Responses to that RFQ are due in a little over two weeks. If you’re not familiar with the ways city governments work, just believe me, that’s fast!
California, like a few other states, has an important untapped resource that makes new public banks more feasible than they have been until now. Up until recently, cities that looked into public banks had to look into using reserve funds such as pension monies to capitalize the bank. That’s probably safe, and it’s probably worth doing, but there is a risk, and cities are (or should be!) understandably cautious about putting that money anywhere untried. But now there’s a source of money that several states generate and the federal government obstructs: cannabis money. Conservatively, tens of millions of cannabis dollars are sitting in cash in locked vaults, because commercial banks won’t take money from cannabis dispensaries. Our legal and financial experts believe that a public bank could handle this money safely and well, to good purpose.
The City Council members and our group are also sponsoring a public forum on Thursday at Oakland’s City Hall. If you’re local, please come!