Article updated 5/19/2019
Public banking is not a new concept. Countries across the world have used public banking to finance and power their economies for decades. Economic powerhouses like Germany continue to feature public banking as a cornerstone of their economy. Public banking exists even here in the United States with the 100 year-old Bank of North Dakota, a bank more profitable than Goldman Sachs and with a better credit rating than JPMorgan Chase.
Historically, the public banking movement has expanded significantly during times of financial crisis, including a massive surge in popularity after the economic destruction from the Great Recession. However the idea of public banking is still relatively unknown by the general populace, especially outside of financial and political circles. That is quickly changing.
Even as the global economy is recovering from financial crisis, the people and the planet continue to suffer. Wealth is being heavily concentrated in the top 1%, who own more wealth than the bottom 99%. Runaway inequality is rampant, with poverty, homelessness, hunger, lack of healthcare and toxic environments harming our communities. Extractive industries continue to damage our lands, air and water, with front-line communities taking the brunt of the pollution and associated health issues.
Wall Street banks like Wells Fargo are directly harming our communities through predatory lending, fraud and greed. They are investing in and financing destructive industries like private prisons, immigrant detention and deportation, fossil fuel extraction, big tobacco, and weapons manufacturers. The big banks do not care about the health of the people or the planet. Maximizing profits to benefit elite shareholders and executives is the sole focus.
When we bank with Wall Street, whether individually or as cities, our taxpayer dollars are being used to support this harm. Our money is invested in extraction and destruction to create profits. Those profits are used to line the pockets of obscenely rich CEOs, executives and investors. Stock buybacks, investor dividends and other financial instruments are used to inflate the wealth of the ultra-rich, at the expense of our communities and the environment.
The divestment movement was a direct response to the exploitation and oppression of our brothers and sisters, and mother earth. Individuals, organizations, cities, states and nations across the globe rose up against this unjust system, selling off unethical investments and pulling money out of banks. Trillions of dollars have been divested from the fossil fuel industry alone, sending a clear signal to the world that the people will no longer accept economic slavery. Enough is enough.
However divestment alone cannot be the end goal. What comes after divestment is just as important. When fossil fuel investments are sold off, we need to reinvest those funds in renewable energy and a just transition to a fossil-free world. When individuals divest from Wall Street banks, we need to reinvest their dollars in ethical, responsible community banks and credit unions. But what options do we have for massive divestments, like the City of Los Angeles divesting from Wells Fargo bank as a result of the powerful grassroots movement in LA?
Unfortunately there are few options when it comes to financial institutions capable of handling large cities like Los Angeles. Seattle experienced this after voting to divest from Wells Fargo, only to find themselves in the unfortunate position of going back to the bank. Los Angeles will likely end up giving some banking contracts to Wall Street banks, as smaller banks are not capable of handling its financial and structural requirements. Moving money from a bad bank to a slightly less bad bank isn’t divestment, it is a shell game.
In order to end this cycle of extraction and greed, we must create alternative systems capable of solving the fundamental, underlying structural problems in our society. Systems must be built that are focused on healing, renewing and regenerating our communities and our environment. The people and planet must be prioritized over corporate profits.
Thankfully, the solution already exists in public banking. This is a truly revolutionary alternative to the profit-driven systems that are destroying the world around us. With public banks, we can retake control of our money and our power. We can cut out the Wall Street middleman, and stop banks from siphoning wealth from our communities. We can end the practice of our money being used to finance social and environmental harm, and reinvest in rebuilding and regenerating our cities.
Public banking will not only allow us to fully divest from Wall Street banks and their unethical investments, it will provide us with the power to create money through lending. Why do we allow Wall Street banks the near monopoly on money creation, when the power should be in the hands of the people? There is no justification for the stranglehold big banks have over our economies.
Through the power of lending, public banks can finance the needs of our communities. The just transition from a toxic fossil fuel driven economy to a clean, renewable future can be facilitated through public finance. Urgent needs for infrastructure can be addressed, fixing crumbling roads and bridges, water infrastructure, and climate change resilience projects. Affordable public housing can be built, helping to solve the urgent homelessness crisis. Schools, health care, firefighting, small business loans, low interest student loans… the possibilities with public banking are vast and capable of potent positive transformation.
Rebuilding our cities — neighborhood by neighborhood — will drive local economies. Public banking will unleash the power of lending, creating well-paying jobs as we build the just cities of tomorrow. Labor unions will be empowered, with memberships swelling and political power growing for the workers. People power won’t be a campaign slogan or a faraway dream, it will become a reality.
The public banking movement is marching forward, but opposition from Wall Street banks will be fierce. In order for our vision of economically, socially and environmentally responsible banks to transform into reality, the people must rise up, stand together and demand a future of renewal, rebuilding and regeneration. Communities must demand banking that prioritizes the well-being of the people and the planet, not corporate profits. The people must demand a public banking revolution. Nothing less will do.
The fight for public banking is happening around the world, with movements growing in cities and states across the US. In California, the public banking movement is reaching a critical moment. AB 857, the Public Banking Act, is being considered by the California State Legislature. This bill would allow the cities across the state to explore the creation of a socially, economically and environmentally responsible public banks. It will be up for a vote in the Assembly before May 31st 2019, and would then move onto the State Senate. Visit www.californiapublicbankingalliance.org/ to take action and claim victory for Main Street over Wall Street.
