I try not to ride my public banking hobbyhorse in this space too often (Laurie thinks I should do it more). However, this op-ed was just published in the Post News Group papers, though it was really a group effort by Friends of Public Bank East Bay, an activist group I am part of.
… only banks can multiply their impact by leveraging their capital: if our bank has $10 million in equity, it can loan up to $100 million to small businesses and others suffering from the economic fallout from COVID-19.
All banks do this, but private banks are legally bound to maximize profits for their shareholders, most of whom are already wealthy. Public banks will be bound by their missions and their charters, and overseen by their community-based boards of directors, to maximize recovery for the people and businesses who have been longest overlooked.
In case you haven’t been counting (they have!), the Wall Street banks have so far made $10 billion in windfall profits from processing just the clusterfuck that is the small business stimulus payments. They are also permitted to deduct any money owed to them from your stimulus checks — the bills passed and signed in March very carefully make sure that any money you owe government at any level can’t be hijacked from this payment, but the same protection wasn’t made from loans to (or through) the banks. Some banks are taking “their share,” some are letting the money through, and some are blaming Congress for “forcing” them to deduct debts.
Public banks will also be in a position to accept the zero-interest loans now made available only to banks from the Federal Reserve.
Cities and counties with public banks will be able to deploy economic recovery efforts quickly and efficiently, because they know their communities intimately. In partnership with community banks and credit unions, these banks can prioritize loans to individuals, and to small- and medium-sized businesses owned and run by people of color and other vulnerable groups.
If this makes sense to you, you can check out California Public Banking Alliance, soon to be a member of the National Public Banking Alliance (in formation). And you can sign our petition to lawmakers. (Hey, I warned you this was my cause.)
The day we get the first California public bank up and running, we will have a ready source of funds to help people and businesses sustain and rebuild themselves through these hard times, without repeating the mistakes of the last 40 years. It will multiply its capital and equity up to 10 times, while multiplying its positive impact on people of color and others who have been systematically marginalized, because — unlike Wall Street banks — prioritizing those who need it most will be built into its DNA.
COVID-19 is doing great harm. At the same time, it is pointing the way to a more equitable world and a regenerative economy. The time for public banking is now.