TIME TO GET OUT FROM UNDER THE ‘TOO BIG TO FAILS’!
By Marc Armstrong, Public Banking Institute
“Washington and the regulators are there to serve the banks.”
So said Rep. Spencer Bachus (R-Ala.), the Wall Street crony who chairs the House Financial Services Committee in charge of banking policy.
If you ever needed justification for exerting a semblance of local control over how credit is issued in the economy of your city, county, or state, this may just be it. Any impartial observer of this summer’s most recent bank scandals knows that Wall Street does not have your interests in mind. Apparently, neither does Congress.
Antidote to the Wall Street casino
This issue of PBI’s monthly newsletter is meant to showcase what some of us are working on at the county level. Public banking is not a difficult concept – it’s just regular depository banking, but with the owner being the people, as represented by city, county and state governments. There are numerous implications, however, which primarily involve governance. And, yes, local governance may be messy, but it is far superior to the existing corporate-controlled governance coming out of D.C., which, instead of issuing debt-free money, has handed to banks the monopolistic power over money creation. At least citizens, using a public bank, have the power to make affordable loans for the benefit of their own city, county, or state.
And a few of us, from Berks County in Pennsylvania to Alameda County, California, are doing just that. In Sonoma County, a small team of us are putting into place the relationships needed to create a county-owned bank. In addition to leverage local tax dollars to support the local economy and infrastructure, county banks hold the promise of being a B2B mutual credit exchange, plus being able to issue local currency, much like Citibank’s frequent flier miles — only to aid local businesses in the circulation of goods and services. But there’s hard work to do: First, get a champion; second, get the local university to commit resources; third, get business associations and a few banks on board; fourth, expand the coaltion; fifth, go for a vote with the county supervisors. In Sonoma County, we’ll get to a vote sometime late winter or spring.
Meanwhile, PBI has added a county bank section to its website. Be sure to check it regularly or, better yet, make the effort yourself to build consensus around your own county bank. If you are interested in developing your own county bank, be sure to join us every Thursday, from now through November 15th. We’ll have a county bank working group conference call at 9am Pacific. You can register for the conference call series here.
The time is now
With the demise of the Glass-Steagall Act, “boring” community banking of the last century was replaced by too-big-to-fail investment banks, armed with nuclear-tipped financial products, sold as fail-safe, that have led directly to a meltdown of our economy and America’s Descent into Poverty. As described by Paul Craig Roberts, former Assistant Secretary of the US Treasury and Associate Editor of the Wall Street Journal, “cities, counties, states, and the federal government (are) without a tax base, resulting in bankruptcies at the state and local level and massive budget deficits at the federal level that threaten the value of the dollar and its role as reserve currency.”
Yet our cities, counties, and states continue to deposit their revenues in this same private well, at virtually no interest, and borrow from the well at much higher interest for bond financing, issuing credit and for our economic livelihood. We are throwing our money away.
Wall Street banks are too big to regulate. Not that it matters — Congress is their servant. Don’t you think it’s time to take matters in your own hands and start a county-owned bank?
Executive Director, Public Banking Institute