I will go out on a limb for the rest of this week to talk about public banking. Baltimore is filled with conservatives who might say this is 'socialism' but I am betting those following my posts these several years now know it is the only way for Baltimore to attain financial stability and independence from a criminal Wall Street banking system. This does not harm private community banks as we want to promote community banks over Wall Street banks as we rebuild Baltimore's local, small business economy. A public bank has the capital to fund our small business economy putting money into people's pockets that then may choose to open an account at a private community bank. We know Maryland is not going to do what other states are doing in having a State Bank so Baltimore can be the driver in this in being that platform in what will be the strongest economy in the state.
'As large as California’s liabilities are, they are exceeded by its assets, which are sufficient to capitalize a bank rivaling any in the world'.
What a Public Bank Could Mean for California
The state’s facing big debt, but also big opportunity.
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Ellen Brown posted May 16, 2011California is the eighth largest economy in the world, and it has a debt burden to match. The state has outstanding general obligation bonds and revenue bonds of $158 billion, largely incurred for building infrastructure. Over $7 billion of California’s annual budget goes to pay interest on the state’s debt.
As large as California’s liabilities are, they are exceeded by its assets, which are sufficient to capitalize a bank rivaling any in the world. That’s the idea behind Assembly Bill 750, introduced by Assemblyman Ben Hueso of San Diego, which would establish a blue ribbon task force to consider the viability of creating the California Investment Trust, a state-owned bank receiving deposits of state funds. Instead of relying on Wall Street banks for credit—or allowing a Wall Street bank to enjoy the benefits of lending its capital—California may decide to create its own, publicly owned bank.
What California can do with its own bank, other states can do as well, on a scale proportionate to their populations and economies.On May 2, AB 750 moved out of the Banking and Finance Committee with only one nay vote, and is now on its way to the Appropriations Committee. Three unions—the California Nurses Association, the California Firefighters, and the California Labor Council—submitted their support for the bill. The state bank idea also got a nod from former Secretary of Labor Robert Reich in his speech at the California Democratic Convention in Sacramento the previous day.
Why a State Bank?
California joins eleven other states that have introduced bills to form state-owned banks or to study their feasibility. Eight of these bills were introduced just since January, including in Oregon, Washington State, Massachusetts, Arizona, Maryland, New Mexico, Maine and California. Illinois, Virginia, Hawaii and Louisiana introduced similar bills in 2010. [For more information about these proposals, see here.]
How Banks Make Money
All of these bills were inspired by the Bank of North Dakota (BND), currently the nation’s only state-owned bank. While other states are teetering on the edge of bankruptcy, the state of North Dakota continues to report surpluses. On April 20, the BND reported profits for 2010 of $62 million, setting a record for the seventh straight year. The BND’s profits belong to the citizens and are produced without taxation.
The BND partners with local banks in providing much-needed credit for local businesses and homeowners. It also helps with state and local government funding. When North Dakota went over-budget a few years ago, according to the bank’s president Eric Hardmeyer, the BND acted as a rainy day fund for the state. And when a North Dakota town suffered a massive flood, the BND provided emergency credit lines to the city. Having a cheap and readily available credit line with the state’s own bank reduces the need for massive rainy-day funds (which are largely invested in out-of-state banks at very modest interest).
The Center for State Innovation, based in Madison, Wisconsin, was commissioned to do detailed analyses of the Washington and Oregon bills. Their conclusion was that a state-owned bank on the model of the Bank of North Dakota would have a substantial positive impact in those states, increasing employment, new lending, and government revenue.
What California Could Do with Its Own Bank
Banks create “bank credit” from capital and deposits, as explained here. Under existing regulations, $8 in capital reserves can be leveraged into $100 in loans, drawing on the liquidity provided by the deposits to clear the outgoing checks. Assuming a 10 percent reserve requirement (the amount in deposits normally held in reserve), $8 in capital and $100 in deposits are sufficient to create $90 in loans ($100 less $10 held back for reserves).
In North Dakota (population 647,000), the Bank of North Dakota has $2.7 billion in deposits, or about $4,000 per capita. The majority of these deposits are drawn from the state’s own revenues. The bank has nearly the same sum ($2.6 billion) in outstanding loans.
California has 37 million people. If the California Investment Trust (CIT) performed like the BND, it might amass $148 billion in deposits. With $12 billion in capital, this $148 billion could generate $133 billion in credit for the state (subtracting 10%, or 14.8 billion, to satisfy reserve requirements).
Time for a New Theory of Money
When we recognize that money is simply credit, we can unleash it as a powerful tool for our communities.
There are various ways the state could come up with the capital, but one possibility that would not require new taxes or debt would be to simply draw on the treasurer’s existing pooled money investment account, which currently contains $65 billion in accumulated revenues dispersed to a variety of funds. This money is already invested; a portion could be shifted to the CIT. Since it would be an investment in equity rather than an expenditure, it would not cost the state money. Rather, it would make money for the state. In recent years, the Bank of North Dakota has had a return on equity of 25-26 percent. Compare the 25-30 percent lost in the two years following the 2008 banking crisis by CalPERS, the California Public Employees’ Retirement System, which invested its money on Wall Street.
There are many inviting possibilities for applying the CIT’s $133 billion in credit power, but here is one easy alternative that illustrates the cost-effectiveness of the approach. Assume the bank invested $133 billion in municipal bonds at 5 percent interest. This would give the state close to $7 billion annually in interest income—nearly enough to pay the interest tab on the state’s debt.
Choosing Prosperity
What California can do with its own bank, other states can do as well, on a scale proportionate to their populations and economies. North Dakota has a population that is less than 1/10th the size of Los Angeles; last year, the BND produced $62 million in revenue and $2.2 billion in loans. Larger states could generate much more.
We have been trapped in an austere neo-liberal economic model in which the only alternatives are to slash services, raise taxes, and sell off public assets, all in a futile attempt to “balance the budget” in a shrinking economy. We need to start thinking outside the box. We can choose prosperity, and public banks are a key tool for achieving that end.
Interested?
WALL STREET HAS THESE FEW DECADES MOVED TO CREDIT UNION SUBPRIMING---- YET ANOTHER FINANCIAL AGENCY BUILT TO PROTECT CITIZEN DEPOSITS.
Below you see where Federal laws surrounding what used to be local credit unions now have what was the alternative to Wall Street banking NOW BEING A WALL STREET BANK. Another NEW DEAL program designed for local communities and citizens to fund local business endeavors and especially targeted small farms.
History
As part of the New Deal, President Franklin D. Roosevelt signed the Federal Credit Union Act into law in 1934. The law allowed the chartering of federal credit unions in all states. The federal law sought to make credit available and promote thrift through a national system of nonprofit, cooperative credit.
At first, the newly created Bureau of Federal Credit Unions was housed at the Farm Credit Administration. Regulatory responsibility shifted over the years as the bureau migrated from the Federal Deposit Insurance Corporation to the Federal Security Agency, then to the Department of Health, Education, and Welfare.
In the 1940s and 1950s, credit unions grew steadily, reaching a membership of more than six million people at over 10,000 federal credit unions by 1960.
Tying our public/private sector workers and their unions to Wall Street is what has our public unions often backing Wall Street global corporate neo-liberals for elections because all their assets are tied to Wall Street. Wall Street pols did this on purpose and what should be a financial asset used to support our local Baltimore community development now has a seat on Wall Street Baltimore Development Corporation using public sector employee pensions and savings to fund global corporate campuses and affluent development. So, MECU is all for funding UnderArmour global campus while not connected at all to funding the rebuilding of our communities. What municipal employees don't know but the executives at these MECU do-----is membership assets are always used as fodder by Wall Street and those assets are targeted in this coming economic crash from bond market collapse. Where are MECU funds heavily invested? Want to guess into all that Baltimore bond leverage super-sized to bring Baltimore into bankruptcy with this coming bond market crash?
One thing you will notice about MECU when you see their sign-----notice that MECU is not Maryland only, it is expanding into other states like Illinois. They say this is giving Maryland employees more assets in which to leverage and profit but what it actually does is expose our public sector to huge liability when the economy crashes.
IF ALL THESE MUNICIPAL EMPLOYEE REVENUE WAS PLACED IN A BALTIMORE PUBLIC BANK TO CREATE ASSETS TO LEND FOR EACH COMMUNITY REBUILDING---IT WOULD EARN A STEADY RATE OF RETURN AND HAVE A STABLE INVESTMENT ENVIRONMENT.
MUNICIPAL EMPLOYEES CREDIT UNION----MECU
MECU of Baltimore, Inc. (Corporate Office)
7 East Redwood Street
Baltimore, MD 21202
410-752-8313 | 800-248-6328
MECU
Federally Insured by NCUA
Routing Number: 271984311 | Copyright © 2016 MECU
Get Social With Us
MECU
Lobby
1205 East Algonquin Road
Schaumburg, IL 60196
Mortgage Loans (15 Yr.)As Low As
Rate3.125 %
APR *3.278 %
Federally insured by NCUA
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If you notice credit unions are not protected under FDIC-----they have this other agency---NCUA----supposedly insuring these funds. As you see below what this Federal agency says will happen and what will happen if push comes to shove---like an economic crash---will end in a state or this NCUA saying SORRY---OUR MUNICIPAL BOND LEVERAGE HAS MADE US INSOLVENT.
Obama and Clinton neo-liberals/Republicans in Congress subprimed US Treasury bond selling them all over the world creating $20 trillion in national debt making the Federal government basically insolvent in any future crash. This means no Federal bailouts of MECU---and Maryland will say the same. Until that occurs the state of Maryland and Illinois is using all these municipal employee assets for corporate campus and affluent Enterprise Zone development as in Baltimore knowing the bond market collapse will take out these MECUs
Maryland Assembly pols passed all this legislation just so Wall Street Baltimore Development could secure another source of main street wealth all knowing it would be used as fodder. I dare say these union leaders know as well there members are going to be taken and why are union leaders tying themselves to Wall Street knowing they are union-busting?
Leveraging our state and national government with so much debt that is will have NO FULL FAITH AND CREDIT.
U.S. NATIONAL DEBT CLOCK
The Outstanding Public Debt as of 13 Apr 2016 at 01:57:02 PM GMT is: $19, 230,307, 274,039.29
Baltimore Development Corporation Board of Directors----Gary Martin, president and CEO, Municipal Employees Credit Union of Baltimore (MECU). On July 1, 2014, MECU welcomed Martin as its new president and CEO.
The National Credit Union Administration (NCUA) is the independent federal agency created by the United States Congress to regulate, charter, and supervise federal credit unions. With the backing of the full faith and credit of the U.S. government, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 100 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. As of March 2015, there were 6,206 federally insured credit unions, with assets totaling more than $1.16 trillion, and net loans of $721.9 billion.
WITH THE BACKING OF FULL FAITH AND CREDIT
The Supreme Court continues to apply its public policy exception differently for state judgments as compared to state laws. In the 2003 case of Franchise Tax Board v. Hyatt, the Court reiterated that, "[o]ur precedent differentiates the credit owed to laws (legislative measures and common law) and to judgments."[1]
If the legal pronouncements of one state conflict with the public policy of another state, federal courts in the past have been reluctant to force a state to enforce the pronouncements of another state in contravention of its own public policy. In cases of out-of-state judgments, the Court has stated that there may be exceptions to the enforcement and jurisdiction of out-of-state judgments, but maintains that there is no public policy exception to the Full Faith and Credit Clause for judgments.[15]
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What these non-profits are doing for communities is not bad----it simply is not community development. It is Baltimore City revenue that funds these kinds of events for the city and MECU should be a source of REAL small business/housing subsidy/loans. What percentage of funding goes to this and what is tied to Enterprise Zone development?
I clicked below to find no page for annual report to check this.
Where can I find an annual report for MECU?
MECU Annual reports (for the previous year) are displayed and available at any of the MECU branches or click here to view it online.
Keep in mind our private unions have credit unions as well all tied to this same system drawing unions to Wall Street while members are seeing their assets fleeced. Sure the boom and bust pushes investment earnings up and then losses are more than gains. This coming economic bust will wipe out credit union assets.
MECU is dedicated to making Baltimore a better place to live.For years, MECU has been demonstrating its commitment to the community by supporting non-profit agencies in their quest to improve the quality of life for residents of our city. MECU team members regularly volunteer their time to work on all sorts of initiatives from fundraising to working with the less fortunate to offering financial education and advice. Read below to see examples of our involvement, or check out our calendar for upcoming events and workshops.
Neighborhood Event Grants (February)
As part of MECU’s continuing commitment to our community, community groups (501c3) in Baltimore City are invited to apply for grants up to $1,000 to help develop events for their organization. Each year, the program awards cash grants to Baltimore neighborhood associations and community-based non-profit organizations for the purpose of producing special events. Please follow this link for more information and to apply.
Kindertime Toy Drive (December)
People brought lots toys by our branches for the Kindertime Toy Drive. Thank you to everyone who stopped by a MECU branch to help fill the boxes! All the toys collected for the Kindertime Toy Drive were delivered by a line of police cars almost a mile long! -
Teachers Are Heroes (December)
MECU sponsors the Teachers are Heroes program with ABC2. In December we recognized Lashon Smiley-Moseley, librarian and media director for Millbrook Elementary School. There were several special guests, including Baltimore County Executive Kevin Kamenetz who presented a citation. - See more at: http://mecu.bluespiremarketing.net/About-MECU/Community-Outreach#sthash.SD9pjWHm.dpuf
Angel Trees (December)
Every year, MECU team members get in the holiday spirit by shopping for presents for Salvation Army Angels and decorating our main branch with all the packages! - See more at: http://mecu.bluespiremarketing.net/About-MECU/Community-Outreach#sthash.SD9pjWHm.dpuf
Giving Thanks (November)
Members of MECU's outreach team spent a morning shopping for Thanksgiving dinner for 10 families that are clients of Villa Maria.
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Maryland has a SECU as well. Of course this too is insured by NCUA-------now, what happens to home and auto loans for example if credit unions fail in a coming economic crash with a bond market collapse creating enormous national, state, and local municipal debt? The first thing Larry Hogan said coming into office----the last thing Rawlings-Blake said in her term======the state and city are in debt. They aren't really but pols have leveraged created hidden debt deals to create this situation.
I am not trying to get folks to run out and close their accounts at credit unions---I am asking you to think to what should these credit unions be tied----A BALTIMORE CITY PUBLIC BANK AND LOTS OF LOCAL COMMUNITY ECONOMIC DEVELOPMENT FUNDING----or leveraged to the gills with Wall Street global corporate campus debt with a national insurance on loans that MAY NOT BE THERE.
It so happens that NC has the same hyper-Wall Street global corporate pols as MD----and pass these same laws with no oversight and accountability for the members depositing in these credit unions.
I looked at an annual report for this NC SECU and they funded the same kinds of non-profit services and not seeing any real community development loans/subsidy.
State Employees Credit Union
From Wikipedia, the free encyclopedia
For the former credit union in Michigan, see Lake Trust Credit Union.
State Employees' Credit Union
State Employees Credit Union, Wade Ave., Raleigh, North Carolina
TypeCredit union
IndustryFinancial services
Founded1937
HeadquartersRaleigh, North Carolina
United States
Key peopleJim Blaine, President & CEO
ProductsSavings; checking; consumer loans; mortgages; credit cards; investments; online banking
Total assets$28.6B USD (May 2014)
Number of employees3,831
Websitencsecu.org
State Employees' Credit Union (SECU) is a state chartered credit union headquartered in Raleigh, North Carolina regulated under the authority of the Credit Union Division of the NC Department of Commerce. SECU member deposits are insured by National Credit Union Administration (NCUA) of the U.S. federal government. SECU is the second largest natural member credit union in the United States, both in asset size and in membership. As of May 2014, SECU has $28.6 billion in assets, 1.9 million members, and 254 branches with locations in all of North Carolina's 100 counties.[1] Membership in the credit union is limited to employees of the state of North Carolina and their families.
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Raise your hand if your know North Dakota is practically owned by the oil/fracking industry? ND is literally a corporate state. Now, does it make sense to have a state bank when the pols are all corporate and we know they will invest and use revenue the same as Wall Street? Of course not. Below you see Campaign for America's Future---this is a Clinton/Obama Wall Street global corporate neo-liberal outlet and as always---they are already posing progressive on this issue of PUBLIC BANKING. A real social Democratic outlet would go to where communities are doing local public banking.
All of what they say is true of public banking----if a Mayor of Baltimore could encourage credit unions like SECU and MECU to move to safety and reliability in financial dealings while helping the communities-----add to that all Baltimore City revenues-----city pension funds----and you have a strong, stable, and safe place for community lending and citizens have the choice to bank there. It is the low-income and working class we want to target for help in escaping predatory banking and check cashing as that eats away what should be money spent in the community. Protect citizens' wealth and you build the platform for consumption to fuel each community's economies.
I am seeing professional institutes popping up all promoting the idea of public banking and using this ND model . Remember, if Baltimore City moves forward to become an US International Economic Zone filled with global corporate campuses----would any 'PUBLIC BANK' it started really be a public bank? That is what ND looks like today.
the Institute for Local Self-Reliance, and directs its Community-Scaled Economy Initiative, which produces research and analysis, and partners with a range of allies to design and implement policies that curb economic consolidation and strengthen community-rooted enterprise. She is the author of Big-Box Swindle and also produces a popular monthly newsletter, the Hometown Advantage Bulletin. Connect with her on twitter and catch her TEDx Talk: Why We Can’t Shop Our Way to a Better Economy. More
PLEASE CONSIDER THE FACT THAT A VERY, VERY CORPORATE STATE WILL NOT BE CREATING WHAT IS REAL PUBLIC BANKING.
Public Banking: Yes, We Can Have Banks That Work For the People
March 28, 2013 Richard Eskow Campaign for America's Future
We all know the banking system is broken. It’s easy to become pessimistic in the face of corporate and political corruption, but the system can be changed. We’ve done it before, and we can do it again.
One pathway to genuine reform is “public banking”: the establishment of banks that are owned at operated by the government, and which serve people and small businesses directly. Here’s why public banking should be included in the agenda for deep and genuine financial reform.
There’s a working model for state banking.
Reform groups like the Public Banking Institute often cite the state-owned Bank of North Dakota as a model worth emulating. The Bank was created in 1919 to “promote agriculture, commerce, and industry” and to be “be helpful to and assist in the development of… financial institutions… within the State.”
The Bank of North Dakota operates a little bit like the Federal Reserve. It’s primarily a “bank for bankers,” rather than an institution that serves customers. It does provides student loans, and individuals can deposit money, but it doesn’t have ATMs or other customer service amenities. (Individual deposits make up less than 2 percent of its assets.)
The Bank of North Dakota has established relationships with all 94 of the state’s community banks and has helped increase their lending ability in a targeted way that supports economic growth.
Local banking is desirable for many reasons, including the lenders’ familiarity with their community. (For an idealized version, think of Jimmy Stewart in It’s a Wonderful Life.) The presence of thriving local banks also helps fight the over-centralization of the banking system.
Public banking works.
In North Dakota, community banking has also meant community lending. A meaningful economic recovery can’t take place until banks stop exploiting low-interest Federal Reserve loans and start lending responsibly, with well-underwritten loans to both consumers and the small-to-medium sized businesses that are the engines of economic growth.
A 2011 report from the Institute for Local Self-Reliance shows how well North Dakota’s banks did in the aftermath of the financial crisis, when compared to those of neighboring states and the nation as a whole:
A joint paper from the Service Employees International Union and the Center for State Innovation called “Building State Development Banks” summarizes the argument for exporting North Dakota’s model to other states.
There are many kinds of public banks.
State banks aren’t the only public banking model worth exploring. The Public Banking Institute is also promoting the concept of county banks.
Proposals for a “National Infrastructure Reinvestment Bank” have been put forward in Washington, from President Obama and others, since 2007. These proposals have merit, but have tended to follow the Federal Deposit Insurance Corporation model for housing loans.
These infrastructure proposals would need firm safeguards to ensure that private banks don’t exploit them. Or, alternatively, they could provide loans directly, since an infrastructure lending program is urgently needed and major Wall Street institutions have not proven to be trustworthy stewards of public funds like these.
“Public option” banks could help rein in runaway greed.
These public banking proposals rely on a public/private partnership. Should public banks be established which directly compete with private institutions on a full-service basis? There may be merit in the idea of a “public option” bank which is available to people who feel they’re being misused or ill-served by the private banking system.
If private banks are sure they can do a better job than the government can, this would be their opportunity to prove it to the nation. If they’re mistreating or overcharging their customers, this would create competition that could curb their excesses.
Public banking can help strengthen cooperative banks, credit unions, and other nonprofit institutions.
Public banks would provide another avenue for strengthening and expanding the non-profit banking system of cooperatives and credit unions, too. Public banking, together with other state and national initiatives, can be directed toward increasing these institutions’ role in the financial sector.
We’re already in the “public banking” business. Now we need to get it right.
Our country already has a public bank – of sorts – in the Federal Reserve. OH, REALLY???? The Fed was created by Congress and derives its power from the people. But the Fed is enmeshed with private banking interests, so it tends to serve them at the public’s expense – and is egregiously mismanaged, too.
THIS IS HOW YOU KNOW THIS ARTICLE WAS WRITTEN BY A WALL STREET NEO-LIBERAL OUTLET----CAMPAIGN FOR AMERICA'S FUTURE-----THE FED HAS NEVER BEEN A PUBLIC BANK.
We need a sound monetary and financial system. Central banks like the Fed stabilize the economy and ensure the soundness of currency.
THE FED CREATED THE INSECURITY AND PARTNERED WITH WALL STREET IN THE FRAUDS.
Other government banking initiatives include Fannie Mae and Freddie Mac for housing; the Federal Deposit Insurance Corporation (FDIC), which insures most bank deposits; and Sallie Mae for student loans. Despite the privatized abuses in some bank-related government programs, the services they provide are valuable and remain popular among voters.
We urgently need to reform the Fed. (William Greider lays out some of those reforms here). We also need to protect other government banking program from private-sector greed and abuse.
We need public banking – but we need to do it right.
Public banks are no more “socialistic” than schools, police, fire departments, or the military.
People have been trained to believe that anything publicly-owned is “socialistic.” Yet they don’t feel that way about police forces, the military, the water utility, public schools, or even Medicare. Public banking’s no more “socialistic” than these institutions. And public ownership’s every bit as justified in banking as it is in any of these ventures. Money is a public utility, created and maintained for the common good.
Come to think of it, the Federal Reserve is one more example of “socialism for the rich, ‘free enterprise’ for you and me.” That needs to change.
Public banks would not form a cartel.
There’s no reason to believe that public banks would collude against the public interest. States compete with one another all the time. The real abuses in our financial system have occurred when public institutions like Fannie and Freddie or Sallie Mae were privatized, not in the days when they were public.
If you want to see a real cartel in action, check out the way private banks colluded with one another on the LIBOR scandal.
Public banking could reduce corruption.
People sometimes express the fear that public officials would be corrupted in their management of public banks. They should take another look at Wall Street’s rap sheet: Investor fraud. Stock fraud. Perjury. Forgery. And that all-time favorite: Laundering money for the drug cartels that have murdered tens of thousands, sometimes by chopping their heads off.
A public banking system which lent funds to private banks would also have investigative abilities that could help reduce epidemic of corruption in our banking system.
The politics depends on us.
Wall Street interests will oppose public banking, of course, and their lobby is overwhelmingly powerful. But banking lobbies have been defeated before. Let’s hope it doesn’t take another crisis – or worse – to create the political will to fight them.
Public banking isn’t complicated.
Fundamentally, this isn’t a complicated idea. It boils down to a very simple principle: We control our currency, and for too long we’ve ceded that control to corruptible private parties.
Private-sector bankers should run banks, not the economy. Public banking can help to reinvigorate economic growth while restoring balance to our financial system.
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People may think I go to Vermont for social Democratic issues because of Bernie Sanders but I go there because Vermont is still largely a small business economy with local towns operating independent from great wealth and corporate power. This does not mean I do not watch with weary eyes what they install----Bernie needs to be pushed to follow his social Democratic stance on all these issues and not simply have voters assume he will. We do that by GETTING RID OF WALL STREET GLOBAL CORPORATE NEO-LIBERALS AT STATE AND LOCAL LEVELS SO WE CAN BUILD LOCALLY.
In this case we see a state bank funded by a level of total state revenue----a city public bank may want all city revenue deposited. Each time you see the people pushing these public banking policies demanding the revenue be used to fund LOCAL SMALL BUSINESS AND COMMUNITY DEVELOPMENT ONLY. This is of course what credit unions did decades ago when created-----
15 Vermont Towns Say Yes To Creating A Public State Bank
03/06/2014 08:28 pm ET | Updated Mar 07, 2014
ASSOCIATED PRESS
On the first Tuesday of March, communities across Vermont hold town meetings at which they elect local officials, approve the coming year’s budget and vote on measures announced in advance.
This week, 19 Vermont cities and towns voted on a measure calling for the Vermont Economic Development Authority, a statewide finance lender created in 1974, to be turned into a public bank. Fifteen approved the notion.
In January, state Sen. Anthony Pollina (D) and five other progressive state lawmakers had introduced legislation to advance the proposal. Senate Bill 204 would direct the state government to deposit 10 percent of its unrestricted funds in a public VEDA bank, which could then leverage the money in the same manner as private banks do.
The Senate legislation would:
(1) create statutorily the 10 Percent for Vermont Program within the Vermont Economic Development Authority for the purpose of establishing a banking system owned, controlled, and operated by the State of Vermont;
(2) amend the statutory authority of the Vermont Economic Development Authority to permit it to engage in the business of banking; and
(3) direct the State Treasurer to transfer 10 percent of the State government’s cash reserves to the 10 Percent for Vermont Program for initial funding.
The pilot program would partner with local private banks to offer loans and boost economic development “by increasing access to capital for businesses in the State,” according to the legislative text. VEDA is currently financed by legislatively appropriated funding, bonds and other means.
A companion bill, HB 627, has been introduced in the state House.
Also in January, a report by Vermonters for a New Economy — a coalition of state groups, businesses and individuals backing the initiative — concluded that the creation of a public bank could create 2,535 new jobs in Vermont, $192 million in Gross State Product and $342 million in increased state output.
According to Vermont Public Radio, the following towns voted for the proposal: Bakersfield, Craftsbury, Enosburg, Marshfield, Montgomery, Montpelier, Plainfield, Putney, Randolph, Rochester, Royalton, Ryegate, Tunbridge, Warren and Waitsfield. The communities of Marlboro, Barnet, Fayston and Greensboro rejected the measure.
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The other issue is this-----Baltimore should pass laws like this that require all Wall Street deals to meet REAL PUBLIC INTEREST TERMS. Right now Baltimore Development and pols write Wall Street financial deals in ways that always end costing the city hundreds of millions of dollars each year. From fraud to fees to deliberate real estate losses----
If Baltimore wants to move to more and more community banking for community development we still need policy as to how we deal with Wall Street banks and here are good issues to consider. Will all Wall Street banks leave Baltimore with these kinds of policies? We could hope-----but more importantly it is critical to believe that Baltimore has enough revenue if SECURED WITH OVERSIGHT AND ACCOUNTABILITY to fuel much of its own development if it is small business and small factory.
Cities Using Deposits to Gain Leverage Over Banks
Cities are pursuing "responsible banking ordinances" that encourage banks to lend more in order to compete for contracts.
by Ryan Holeywell | May 2, 2012
Cities across the country are trying to send a message to financial institutions: If you want our business, you’ve got to play ball.
Since 2010, Boston, Los Angeles, New York, Philadelphia, and Pittsburgh, among others, have all considered or passed laws known as “responsible banking ordinances” designed to encourage banks to increase their lending and other services to the city's residents, particularly those in low-income communities.
The laws work like this: in order to be considered for a city contract, banks must submit detailed plans outlining their goals that address the volume of home loans and small business loans they'll make in the city, particularly in low- and moderate-income areas that historically haven’t been targeted for investment. They also must describe what they're doing to address the credit needs of low- and moderate-income residents.
The banks would then be required to report their actual performance to the cities. City staff would evaluate each bank's goals against its track record, make the information public, and take it into account when deciding which financial institutions are awarded city business.
“[I]f they do not reach their goals, there should be some type of repercussion for that,” says Tony Young, president of the San Diego City Council, who intends to introduce a responsible banking ordinance within about six weeks.
City leaders who advocate for the ordinances say they're trying to build upon the Community Reinvestment Act (CRA), a 1977 law that ended that was designed to encourage banks to address the banking needs of low- and moderate-income Americans and reduce the practice of redlining.
Banks report lending data to federal regulators, who take a bank's CRA record into consideration when deciding whether to approve a bank's plans for expansion.
But that law examines banks from a national perspective. City leaders want to make sure banks are serving their residents and they think creating their own laws is a way to do that. Since governments make billions of dollars in deposits at banks, they believe they have some leverage. They hope banks will compete to have the best community reinvestment record in order to get those depository contracts.
The movement has gained steam in part due to Occupy Wall Street protests, says Rose Zitiello, manager of banking relations for the city of Cleveland, which is believed to be the first major American city to craft a responsible banking ordinance. The city’s 1991 law is the basis of many of the ordinances being considered by cities today.
In Cleveland, a bank isn't eligible for a contract unless its four-year responsible banking plan is approved by the city's director of community development. When bidding on a contract, the bank's record is taken into consideration. Banks are awarded points based on factors like how close they came to meeting various lending and investing goals, how many branches they opened in low- and moderate-income neighborhoods, and how many minorities and women they employ in executive positions.
Zitiello says the ordinance has been around so long that it’s become a collaborative process between the city and the private sector after some pushback from the banking community at the onset. “Any time you introduce something that goes against the status quo, it gets resistance," she says. “At this point, we’re not experiencing that.”
But the banking community is resisting some of the changes being proposed in cities nationwide. David Floreen, senior vice president at the Massachusetts Bankers Association, said at a 2010 hearing that Boston’s proposed responsible banking ordinance is “a solution looking for a problem.”
At the hearing, he said small and large banks alike believed it would be too costly to implement the new reporting requirements. He said most banks “would probably take a pass” and give up on city business altogether rather than comply with the new rules.
Young, of San Diego, says he’s meeting with local banking officials before introducing his legislation. He believes doing so will help set the proper tone for the forthcoming debate about the legislation. But he believes it is indeed appropriate for the city to use its leverage to try to force certain actions by the banks. If they don’t agree, Young says, they “can conduct their business elsewhere.”
Some industry officials say that’s exactly what they intend to do.
The California Bankers Association is opposing the ordinance making its way through Los Angeles. The city council recently voted unanimously to have the city staff draft the language for a responsible banking ordinance.
Leland Chan, general counsel for the California Bankers Association, said in a recent letter to city officials that the type of granular information the city is seeking “may raise privacy concerns.” Like Floreen, Chan also suggested that burdensome rules could reduce the number of financial institution interested in doing business with the city.
Los Angeles City Councilmember Richard Alarcón, who's behind his city's ordinance, calls that argument "hogwash."
"We have $30 billion in assets," he says. The city has about 40 to 50 contracts with financial institutions that involve everything from deposits to bond deals to letters of credit. That, he believes, gives the city leverage. "I doubt financial institutions are going to turn their backs on those assets."
The deals also could represent something of a power shift for municipalities, who in recent years, have been duped by financial institutions like UBS, Wachovia, and subsidiaries of Bank of America and JPMorgan Chase, all of whom faced federal charges in connection to various bid rigging schemes involving municipal security deals.
"It boils down to caveat emptor," Alarcón continues. "A purchaser of services and goods should be well-informed about who they're doing business with. If banks have a problem with that, I think we as a society should be scrutinizing them very closely."
Boston City Councilmember Felix Arroyo, who's leading the effort for a responsible banking ordinance in his city, notes that banks aren't being told how much they should invest and lend; rather, they're being compared against one another. "This is not anti-capitalist," says Arroyo. "As a consumer, I'm going to compare the products, and I'm going to pick the product that's best for the city."
In Pittsburgh, Boston and elsewhere, lawmakers have met early on with financial institutions to get feedback in order to avoid crafting a law so onerous that banks would avoid city business altogether.
One of the biggest challenging in crafting the law was to convince banks to give up some data that they may consider to be a trade secret, says Matthew Barron, policy director for Councilman William Peduto, the original sponsor of a responsible banking ordinance ultimately approved by Pittsburgh this spring. But he says the city isn’t asking for anything that banks don’t already report to federal regulators; rather, it’s only seeking the same data for the local level.
He says lawmakers' ultimate goal was to work with banks to crate low-cost financial products for residents who currently don’t use banks, and to ensure that those products would be tailored to people who don't have high levels of financial literacy.
Meanwhile, Cleveland's ordinance appears to be showing results 20 years after it was passed.
The city’s percentage of under-banked and un-banked residents is less than the national average, and even though banks have been closing across the country in recent years, the number of branches among the seven banks that have depository contracts with Cleveland has remained stable.
“Everybody is putting in a good faith effort to do the best they can,” Zitiello says. “Their goal is obviously to be profitable. Our goal is to maximize their lending and investing.”
'As large as California’s liabilities are, they are exceeded by its assets, which are sufficient to capitalize a bank rivaling any in the world'.
What a Public Bank Could Mean for California
The state’s facing big debt, but also big opportunity.
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Ellen Brown posted May 16, 2011California is the eighth largest economy in the world, and it has a debt burden to match. The state has outstanding general obligation bonds and revenue bonds of $158 billion, largely incurred for building infrastructure. Over $7 billion of California’s annual budget goes to pay interest on the state’s debt.
As large as California’s liabilities are, they are exceeded by its assets, which are sufficient to capitalize a bank rivaling any in the world. That’s the idea behind Assembly Bill 750, introduced by Assemblyman Ben Hueso of San Diego, which would establish a blue ribbon task force to consider the viability of creating the California Investment Trust, a state-owned bank receiving deposits of state funds. Instead of relying on Wall Street banks for credit—or allowing a Wall Street bank to enjoy the benefits of lending its capital—California may decide to create its own, publicly owned bank.
What California can do with its own bank, other states can do as well, on a scale proportionate to their populations and economies.On May 2, AB 750 moved out of the Banking and Finance Committee with only one nay vote, and is now on its way to the Appropriations Committee. Three unions—the California Nurses Association, the California Firefighters, and the California Labor Council—submitted their support for the bill. The state bank idea also got a nod from former Secretary of Labor Robert Reich in his speech at the California Democratic Convention in Sacramento the previous day.
Why a State Bank?
California joins eleven other states that have introduced bills to form state-owned banks or to study their feasibility. Eight of these bills were introduced just since January, including in Oregon, Washington State, Massachusetts, Arizona, Maryland, New Mexico, Maine and California. Illinois, Virginia, Hawaii and Louisiana introduced similar bills in 2010. [For more information about these proposals, see here.]
How Banks Make Money
All of these bills were inspired by the Bank of North Dakota (BND), currently the nation’s only state-owned bank. While other states are teetering on the edge of bankruptcy, the state of North Dakota continues to report surpluses. On April 20, the BND reported profits for 2010 of $62 million, setting a record for the seventh straight year. The BND’s profits belong to the citizens and are produced without taxation.
The BND partners with local banks in providing much-needed credit for local businesses and homeowners. It also helps with state and local government funding. When North Dakota went over-budget a few years ago, according to the bank’s president Eric Hardmeyer, the BND acted as a rainy day fund for the state. And when a North Dakota town suffered a massive flood, the BND provided emergency credit lines to the city. Having a cheap and readily available credit line with the state’s own bank reduces the need for massive rainy-day funds (which are largely invested in out-of-state banks at very modest interest).
The Center for State Innovation, based in Madison, Wisconsin, was commissioned to do detailed analyses of the Washington and Oregon bills. Their conclusion was that a state-owned bank on the model of the Bank of North Dakota would have a substantial positive impact in those states, increasing employment, new lending, and government revenue.
What California Could Do with Its Own Bank
Banks create “bank credit” from capital and deposits, as explained here. Under existing regulations, $8 in capital reserves can be leveraged into $100 in loans, drawing on the liquidity provided by the deposits to clear the outgoing checks. Assuming a 10 percent reserve requirement (the amount in deposits normally held in reserve), $8 in capital and $100 in deposits are sufficient to create $90 in loans ($100 less $10 held back for reserves).
In North Dakota (population 647,000), the Bank of North Dakota has $2.7 billion in deposits, or about $4,000 per capita. The majority of these deposits are drawn from the state’s own revenues. The bank has nearly the same sum ($2.6 billion) in outstanding loans.
California has 37 million people. If the California Investment Trust (CIT) performed like the BND, it might amass $148 billion in deposits. With $12 billion in capital, this $148 billion could generate $133 billion in credit for the state (subtracting 10%, or 14.8 billion, to satisfy reserve requirements).
Time for a New Theory of Money
When we recognize that money is simply credit, we can unleash it as a powerful tool for our communities.
There are various ways the state could come up with the capital, but one possibility that would not require new taxes or debt would be to simply draw on the treasurer’s existing pooled money investment account, which currently contains $65 billion in accumulated revenues dispersed to a variety of funds. This money is already invested; a portion could be shifted to the CIT. Since it would be an investment in equity rather than an expenditure, it would not cost the state money. Rather, it would make money for the state. In recent years, the Bank of North Dakota has had a return on equity of 25-26 percent. Compare the 25-30 percent lost in the two years following the 2008 banking crisis by CalPERS, the California Public Employees’ Retirement System, which invested its money on Wall Street.
There are many inviting possibilities for applying the CIT’s $133 billion in credit power, but here is one easy alternative that illustrates the cost-effectiveness of the approach. Assume the bank invested $133 billion in municipal bonds at 5 percent interest. This would give the state close to $7 billion annually in interest income—nearly enough to pay the interest tab on the state’s debt.
Choosing Prosperity
What California can do with its own bank, other states can do as well, on a scale proportionate to their populations and economies. North Dakota has a population that is less than 1/10th the size of Los Angeles; last year, the BND produced $62 million in revenue and $2.2 billion in loans. Larger states could generate much more.
We have been trapped in an austere neo-liberal economic model in which the only alternatives are to slash services, raise taxes, and sell off public assets, all in a futile attempt to “balance the budget” in a shrinking economy. We need to start thinking outside the box. We can choose prosperity, and public banks are a key tool for achieving that end.
Interested?
Each of us can help build a resilient financial system that will serve real people in real communities.
How businesses are turning to their neighbors for funding.
More local, durable economies are already taking root. We can help them along by changing the way we regulate businesses, plan cities, and finance the communities we want.
WALL STREET HAS THESE FEW DECADES MOVED TO CREDIT UNION SUBPRIMING---- YET ANOTHER FINANCIAL AGENCY BUILT TO PROTECT CITIZEN DEPOSITS.
Below you see where Federal laws surrounding what used to be local credit unions now have what was the alternative to Wall Street banking NOW BEING A WALL STREET BANK. Another NEW DEAL program designed for local communities and citizens to fund local business endeavors and especially targeted small farms.
History
As part of the New Deal, President Franklin D. Roosevelt signed the Federal Credit Union Act into law in 1934. The law allowed the chartering of federal credit unions in all states. The federal law sought to make credit available and promote thrift through a national system of nonprofit, cooperative credit.
At first, the newly created Bureau of Federal Credit Unions was housed at the Farm Credit Administration. Regulatory responsibility shifted over the years as the bureau migrated from the Federal Deposit Insurance Corporation to the Federal Security Agency, then to the Department of Health, Education, and Welfare.
In the 1940s and 1950s, credit unions grew steadily, reaching a membership of more than six million people at over 10,000 federal credit unions by 1960.
Tying our public/private sector workers and their unions to Wall Street is what has our public unions often backing Wall Street global corporate neo-liberals for elections because all their assets are tied to Wall Street. Wall Street pols did this on purpose and what should be a financial asset used to support our local Baltimore community development now has a seat on Wall Street Baltimore Development Corporation using public sector employee pensions and savings to fund global corporate campuses and affluent development. So, MECU is all for funding UnderArmour global campus while not connected at all to funding the rebuilding of our communities. What municipal employees don't know but the executives at these MECU do-----is membership assets are always used as fodder by Wall Street and those assets are targeted in this coming economic crash from bond market collapse. Where are MECU funds heavily invested? Want to guess into all that Baltimore bond leverage super-sized to bring Baltimore into bankruptcy with this coming bond market crash?
One thing you will notice about MECU when you see their sign-----notice that MECU is not Maryland only, it is expanding into other states like Illinois. They say this is giving Maryland employees more assets in which to leverage and profit but what it actually does is expose our public sector to huge liability when the economy crashes.
IF ALL THESE MUNICIPAL EMPLOYEE REVENUE WAS PLACED IN A BALTIMORE PUBLIC BANK TO CREATE ASSETS TO LEND FOR EACH COMMUNITY REBUILDING---IT WOULD EARN A STEADY RATE OF RETURN AND HAVE A STABLE INVESTMENT ENVIRONMENT.
MUNICIPAL EMPLOYEES CREDIT UNION----MECU
MECU of Baltimore, Inc. (Corporate Office)
7 East Redwood Street
Baltimore, MD 21202
410-752-8313 | 800-248-6328
MECU
Federally Insured by NCUA
Routing Number: 271984311 | Copyright © 2016 MECU
Get Social With Us
MECU
Lobby
1205 East Algonquin Road
Schaumburg, IL 60196
Mortgage Loans (15 Yr.)As Low As
Rate3.125 %
APR *3.278 %
Federally insured by NCUA
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If you notice credit unions are not protected under FDIC-----they have this other agency---NCUA----supposedly insuring these funds. As you see below what this Federal agency says will happen and what will happen if push comes to shove---like an economic crash---will end in a state or this NCUA saying SORRY---OUR MUNICIPAL BOND LEVERAGE HAS MADE US INSOLVENT.
Obama and Clinton neo-liberals/Republicans in Congress subprimed US Treasury bond selling them all over the world creating $20 trillion in national debt making the Federal government basically insolvent in any future crash. This means no Federal bailouts of MECU---and Maryland will say the same. Until that occurs the state of Maryland and Illinois is using all these municipal employee assets for corporate campus and affluent Enterprise Zone development as in Baltimore knowing the bond market collapse will take out these MECUs
Maryland Assembly pols passed all this legislation just so Wall Street Baltimore Development could secure another source of main street wealth all knowing it would be used as fodder. I dare say these union leaders know as well there members are going to be taken and why are union leaders tying themselves to Wall Street knowing they are union-busting?
Leveraging our state and national government with so much debt that is will have NO FULL FAITH AND CREDIT.
U.S. NATIONAL DEBT CLOCK
The Outstanding Public Debt as of 13 Apr 2016 at 01:57:02 PM GMT is: $19, 230,307, 274,039.29
Baltimore Development Corporation Board of Directors----Gary Martin, president and CEO, Municipal Employees Credit Union of Baltimore (MECU). On July 1, 2014, MECU welcomed Martin as its new president and CEO.
The National Credit Union Administration (NCUA) is the independent federal agency created by the United States Congress to regulate, charter, and supervise federal credit unions. With the backing of the full faith and credit of the U.S. government, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 100 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. As of March 2015, there were 6,206 federally insured credit unions, with assets totaling more than $1.16 trillion, and net loans of $721.9 billion.
WITH THE BACKING OF FULL FAITH AND CREDIT
The Supreme Court continues to apply its public policy exception differently for state judgments as compared to state laws. In the 2003 case of Franchise Tax Board v. Hyatt, the Court reiterated that, "[o]ur precedent differentiates the credit owed to laws (legislative measures and common law) and to judgments."[1]
If the legal pronouncements of one state conflict with the public policy of another state, federal courts in the past have been reluctant to force a state to enforce the pronouncements of another state in contravention of its own public policy. In cases of out-of-state judgments, the Court has stated that there may be exceptions to the enforcement and jurisdiction of out-of-state judgments, but maintains that there is no public policy exception to the Full Faith and Credit Clause for judgments.[15]
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What these non-profits are doing for communities is not bad----it simply is not community development. It is Baltimore City revenue that funds these kinds of events for the city and MECU should be a source of REAL small business/housing subsidy/loans. What percentage of funding goes to this and what is tied to Enterprise Zone development?
I clicked below to find no page for annual report to check this.
Where can I find an annual report for MECU?
MECU Annual reports (for the previous year) are displayed and available at any of the MECU branches or click here to view it online.
Keep in mind our private unions have credit unions as well all tied to this same system drawing unions to Wall Street while members are seeing their assets fleeced. Sure the boom and bust pushes investment earnings up and then losses are more than gains. This coming economic bust will wipe out credit union assets.
MECU is dedicated to making Baltimore a better place to live.For years, MECU has been demonstrating its commitment to the community by supporting non-profit agencies in their quest to improve the quality of life for residents of our city. MECU team members regularly volunteer their time to work on all sorts of initiatives from fundraising to working with the less fortunate to offering financial education and advice. Read below to see examples of our involvement, or check out our calendar for upcoming events and workshops.
Neighborhood Event Grants (February)
As part of MECU’s continuing commitment to our community, community groups (501c3) in Baltimore City are invited to apply for grants up to $1,000 to help develop events for their organization. Each year, the program awards cash grants to Baltimore neighborhood associations and community-based non-profit organizations for the purpose of producing special events. Please follow this link for more information and to apply.
Kindertime Toy Drive (December)
People brought lots toys by our branches for the Kindertime Toy Drive. Thank you to everyone who stopped by a MECU branch to help fill the boxes! All the toys collected for the Kindertime Toy Drive were delivered by a line of police cars almost a mile long! -
Teachers Are Heroes (December)
MECU sponsors the Teachers are Heroes program with ABC2. In December we recognized Lashon Smiley-Moseley, librarian and media director for Millbrook Elementary School. There were several special guests, including Baltimore County Executive Kevin Kamenetz who presented a citation. - See more at: http://mecu.bluespiremarketing.net/About-MECU/Community-Outreach#sthash.SD9pjWHm.dpuf
Angel Trees (December)
Every year, MECU team members get in the holiday spirit by shopping for presents for Salvation Army Angels and decorating our main branch with all the packages! - See more at: http://mecu.bluespiremarketing.net/About-MECU/Community-Outreach#sthash.SD9pjWHm.dpuf
Giving Thanks (November)
Members of MECU's outreach team spent a morning shopping for Thanksgiving dinner for 10 families that are clients of Villa Maria.
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Maryland has a SECU as well. Of course this too is insured by NCUA-------now, what happens to home and auto loans for example if credit unions fail in a coming economic crash with a bond market collapse creating enormous national, state, and local municipal debt? The first thing Larry Hogan said coming into office----the last thing Rawlings-Blake said in her term======the state and city are in debt. They aren't really but pols have leveraged created hidden debt deals to create this situation.
I am not trying to get folks to run out and close their accounts at credit unions---I am asking you to think to what should these credit unions be tied----A BALTIMORE CITY PUBLIC BANK AND LOTS OF LOCAL COMMUNITY ECONOMIC DEVELOPMENT FUNDING----or leveraged to the gills with Wall Street global corporate campus debt with a national insurance on loans that MAY NOT BE THERE.
It so happens that NC has the same hyper-Wall Street global corporate pols as MD----and pass these same laws with no oversight and accountability for the members depositing in these credit unions.
I looked at an annual report for this NC SECU and they funded the same kinds of non-profit services and not seeing any real community development loans/subsidy.
State Employees Credit Union
From Wikipedia, the free encyclopedia
For the former credit union in Michigan, see Lake Trust Credit Union.
State Employees' Credit Union
State Employees Credit Union, Wade Ave., Raleigh, North Carolina
TypeCredit union
IndustryFinancial services
Founded1937
HeadquartersRaleigh, North Carolina
United States
Key peopleJim Blaine, President & CEO
ProductsSavings; checking; consumer loans; mortgages; credit cards; investments; online banking
Total assets$28.6B USD (May 2014)
Number of employees3,831
Websitencsecu.org
State Employees' Credit Union (SECU) is a state chartered credit union headquartered in Raleigh, North Carolina regulated under the authority of the Credit Union Division of the NC Department of Commerce. SECU member deposits are insured by National Credit Union Administration (NCUA) of the U.S. federal government. SECU is the second largest natural member credit union in the United States, both in asset size and in membership. As of May 2014, SECU has $28.6 billion in assets, 1.9 million members, and 254 branches with locations in all of North Carolina's 100 counties.[1] Membership in the credit union is limited to employees of the state of North Carolina and their families.
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Raise your hand if your know North Dakota is practically owned by the oil/fracking industry? ND is literally a corporate state. Now, does it make sense to have a state bank when the pols are all corporate and we know they will invest and use revenue the same as Wall Street? Of course not. Below you see Campaign for America's Future---this is a Clinton/Obama Wall Street global corporate neo-liberal outlet and as always---they are already posing progressive on this issue of PUBLIC BANKING. A real social Democratic outlet would go to where communities are doing local public banking.
All of what they say is true of public banking----if a Mayor of Baltimore could encourage credit unions like SECU and MECU to move to safety and reliability in financial dealings while helping the communities-----add to that all Baltimore City revenues-----city pension funds----and you have a strong, stable, and safe place for community lending and citizens have the choice to bank there. It is the low-income and working class we want to target for help in escaping predatory banking and check cashing as that eats away what should be money spent in the community. Protect citizens' wealth and you build the platform for consumption to fuel each community's economies.
I am seeing professional institutes popping up all promoting the idea of public banking and using this ND model . Remember, if Baltimore City moves forward to become an US International Economic Zone filled with global corporate campuses----would any 'PUBLIC BANK' it started really be a public bank? That is what ND looks like today.
the Institute for Local Self-Reliance, and directs its Community-Scaled Economy Initiative, which produces research and analysis, and partners with a range of allies to design and implement policies that curb economic consolidation and strengthen community-rooted enterprise. She is the author of Big-Box Swindle and also produces a popular monthly newsletter, the Hometown Advantage Bulletin. Connect with her on twitter and catch her TEDx Talk: Why We Can’t Shop Our Way to a Better Economy. More
PLEASE CONSIDER THE FACT THAT A VERY, VERY CORPORATE STATE WILL NOT BE CREATING WHAT IS REAL PUBLIC BANKING.
Public Banking: Yes, We Can Have Banks That Work For the People
March 28, 2013 Richard Eskow Campaign for America's Future
We all know the banking system is broken. It’s easy to become pessimistic in the face of corporate and political corruption, but the system can be changed. We’ve done it before, and we can do it again.
One pathway to genuine reform is “public banking”: the establishment of banks that are owned at operated by the government, and which serve people and small businesses directly. Here’s why public banking should be included in the agenda for deep and genuine financial reform.
There’s a working model for state banking.
Reform groups like the Public Banking Institute often cite the state-owned Bank of North Dakota as a model worth emulating. The Bank was created in 1919 to “promote agriculture, commerce, and industry” and to be “be helpful to and assist in the development of… financial institutions… within the State.”
The Bank of North Dakota operates a little bit like the Federal Reserve. It’s primarily a “bank for bankers,” rather than an institution that serves customers. It does provides student loans, and individuals can deposit money, but it doesn’t have ATMs or other customer service amenities. (Individual deposits make up less than 2 percent of its assets.)
The Bank of North Dakota has established relationships with all 94 of the state’s community banks and has helped increase their lending ability in a targeted way that supports economic growth.
Local banking is desirable for many reasons, including the lenders’ familiarity with their community. (For an idealized version, think of Jimmy Stewart in It’s a Wonderful Life.) The presence of thriving local banks also helps fight the over-centralization of the banking system.
Public banking works.
In North Dakota, community banking has also meant community lending. A meaningful economic recovery can’t take place until banks stop exploiting low-interest Federal Reserve loans and start lending responsibly, with well-underwritten loans to both consumers and the small-to-medium sized businesses that are the engines of economic growth.
A 2011 report from the Institute for Local Self-Reliance shows how well North Dakota’s banks did in the aftermath of the financial crisis, when compared to those of neighboring states and the nation as a whole:
A joint paper from the Service Employees International Union and the Center for State Innovation called “Building State Development Banks” summarizes the argument for exporting North Dakota’s model to other states.
There are many kinds of public banks.
State banks aren’t the only public banking model worth exploring. The Public Banking Institute is also promoting the concept of county banks.
Proposals for a “National Infrastructure Reinvestment Bank” have been put forward in Washington, from President Obama and others, since 2007. These proposals have merit, but have tended to follow the Federal Deposit Insurance Corporation model for housing loans.
These infrastructure proposals would need firm safeguards to ensure that private banks don’t exploit them. Or, alternatively, they could provide loans directly, since an infrastructure lending program is urgently needed and major Wall Street institutions have not proven to be trustworthy stewards of public funds like these.
“Public option” banks could help rein in runaway greed.
These public banking proposals rely on a public/private partnership. Should public banks be established which directly compete with private institutions on a full-service basis? There may be merit in the idea of a “public option” bank which is available to people who feel they’re being misused or ill-served by the private banking system.
If private banks are sure they can do a better job than the government can, this would be their opportunity to prove it to the nation. If they’re mistreating or overcharging their customers, this would create competition that could curb their excesses.
Public banking can help strengthen cooperative banks, credit unions, and other nonprofit institutions.
Public banks would provide another avenue for strengthening and expanding the non-profit banking system of cooperatives and credit unions, too. Public banking, together with other state and national initiatives, can be directed toward increasing these institutions’ role in the financial sector.
We’re already in the “public banking” business. Now we need to get it right.
Our country already has a public bank – of sorts – in the Federal Reserve. OH, REALLY???? The Fed was created by Congress and derives its power from the people. But the Fed is enmeshed with private banking interests, so it tends to serve them at the public’s expense – and is egregiously mismanaged, too.
THIS IS HOW YOU KNOW THIS ARTICLE WAS WRITTEN BY A WALL STREET NEO-LIBERAL OUTLET----CAMPAIGN FOR AMERICA'S FUTURE-----THE FED HAS NEVER BEEN A PUBLIC BANK.
We need a sound monetary and financial system. Central banks like the Fed stabilize the economy and ensure the soundness of currency.
THE FED CREATED THE INSECURITY AND PARTNERED WITH WALL STREET IN THE FRAUDS.
Other government banking initiatives include Fannie Mae and Freddie Mac for housing; the Federal Deposit Insurance Corporation (FDIC), which insures most bank deposits; and Sallie Mae for student loans. Despite the privatized abuses in some bank-related government programs, the services they provide are valuable and remain popular among voters.
We urgently need to reform the Fed. (William Greider lays out some of those reforms here). We also need to protect other government banking program from private-sector greed and abuse.
We need public banking – but we need to do it right.
Public banks are no more “socialistic” than schools, police, fire departments, or the military.
People have been trained to believe that anything publicly-owned is “socialistic.” Yet they don’t feel that way about police forces, the military, the water utility, public schools, or even Medicare. Public banking’s no more “socialistic” than these institutions. And public ownership’s every bit as justified in banking as it is in any of these ventures. Money is a public utility, created and maintained for the common good.
Come to think of it, the Federal Reserve is one more example of “socialism for the rich, ‘free enterprise’ for you and me.” That needs to change.
Public banks would not form a cartel.
There’s no reason to believe that public banks would collude against the public interest. States compete with one another all the time. The real abuses in our financial system have occurred when public institutions like Fannie and Freddie or Sallie Mae were privatized, not in the days when they were public.
If you want to see a real cartel in action, check out the way private banks colluded with one another on the LIBOR scandal.
Public banking could reduce corruption.
People sometimes express the fear that public officials would be corrupted in their management of public banks. They should take another look at Wall Street’s rap sheet: Investor fraud. Stock fraud. Perjury. Forgery. And that all-time favorite: Laundering money for the drug cartels that have murdered tens of thousands, sometimes by chopping their heads off.
A public banking system which lent funds to private banks would also have investigative abilities that could help reduce epidemic of corruption in our banking system.
The politics depends on us.
Wall Street interests will oppose public banking, of course, and their lobby is overwhelmingly powerful. But banking lobbies have been defeated before. Let’s hope it doesn’t take another crisis – or worse – to create the political will to fight them.
Public banking isn’t complicated.
Fundamentally, this isn’t a complicated idea. It boils down to a very simple principle: We control our currency, and for too long we’ve ceded that control to corruptible private parties.
Private-sector bankers should run banks, not the economy. Public banking can help to reinvigorate economic growth while restoring balance to our financial system.
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People may think I go to Vermont for social Democratic issues because of Bernie Sanders but I go there because Vermont is still largely a small business economy with local towns operating independent from great wealth and corporate power. This does not mean I do not watch with weary eyes what they install----Bernie needs to be pushed to follow his social Democratic stance on all these issues and not simply have voters assume he will. We do that by GETTING RID OF WALL STREET GLOBAL CORPORATE NEO-LIBERALS AT STATE AND LOCAL LEVELS SO WE CAN BUILD LOCALLY.
In this case we see a state bank funded by a level of total state revenue----a city public bank may want all city revenue deposited. Each time you see the people pushing these public banking policies demanding the revenue be used to fund LOCAL SMALL BUSINESS AND COMMUNITY DEVELOPMENT ONLY. This is of course what credit unions did decades ago when created-----
15 Vermont Towns Say Yes To Creating A Public State Bank
03/06/2014 08:28 pm ET | Updated Mar 07, 2014
- Shadee Ashtari Associate Politics Editor, The Huffington Post
ASSOCIATED PRESS
On the first Tuesday of March, communities across Vermont hold town meetings at which they elect local officials, approve the coming year’s budget and vote on measures announced in advance.
This week, 19 Vermont cities and towns voted on a measure calling for the Vermont Economic Development Authority, a statewide finance lender created in 1974, to be turned into a public bank. Fifteen approved the notion.
In January, state Sen. Anthony Pollina (D) and five other progressive state lawmakers had introduced legislation to advance the proposal. Senate Bill 204 would direct the state government to deposit 10 percent of its unrestricted funds in a public VEDA bank, which could then leverage the money in the same manner as private banks do.
The Senate legislation would:
(1) create statutorily the 10 Percent for Vermont Program within the Vermont Economic Development Authority for the purpose of establishing a banking system owned, controlled, and operated by the State of Vermont;
(2) amend the statutory authority of the Vermont Economic Development Authority to permit it to engage in the business of banking; and
(3) direct the State Treasurer to transfer 10 percent of the State government’s cash reserves to the 10 Percent for Vermont Program for initial funding.
The pilot program would partner with local private banks to offer loans and boost economic development “by increasing access to capital for businesses in the State,” according to the legislative text. VEDA is currently financed by legislatively appropriated funding, bonds and other means.
A companion bill, HB 627, has been introduced in the state House.
Also in January, a report by Vermonters for a New Economy — a coalition of state groups, businesses and individuals backing the initiative — concluded that the creation of a public bank could create 2,535 new jobs in Vermont, $192 million in Gross State Product and $342 million in increased state output.
According to Vermont Public Radio, the following towns voted for the proposal: Bakersfield, Craftsbury, Enosburg, Marshfield, Montgomery, Montpelier, Plainfield, Putney, Randolph, Rochester, Royalton, Ryegate, Tunbridge, Warren and Waitsfield. The communities of Marlboro, Barnet, Fayston and Greensboro rejected the measure.
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The other issue is this-----Baltimore should pass laws like this that require all Wall Street deals to meet REAL PUBLIC INTEREST TERMS. Right now Baltimore Development and pols write Wall Street financial deals in ways that always end costing the city hundreds of millions of dollars each year. From fraud to fees to deliberate real estate losses----
If Baltimore wants to move to more and more community banking for community development we still need policy as to how we deal with Wall Street banks and here are good issues to consider. Will all Wall Street banks leave Baltimore with these kinds of policies? We could hope-----but more importantly it is critical to believe that Baltimore has enough revenue if SECURED WITH OVERSIGHT AND ACCOUNTABILITY to fuel much of its own development if it is small business and small factory.
Cities Using Deposits to Gain Leverage Over Banks
Cities are pursuing "responsible banking ordinances" that encourage banks to lend more in order to compete for contracts.
by Ryan Holeywell | May 2, 2012
Cities across the country are trying to send a message to financial institutions: If you want our business, you’ve got to play ball.
Since 2010, Boston, Los Angeles, New York, Philadelphia, and Pittsburgh, among others, have all considered or passed laws known as “responsible banking ordinances” designed to encourage banks to increase their lending and other services to the city's residents, particularly those in low-income communities.
The laws work like this: in order to be considered for a city contract, banks must submit detailed plans outlining their goals that address the volume of home loans and small business loans they'll make in the city, particularly in low- and moderate-income areas that historically haven’t been targeted for investment. They also must describe what they're doing to address the credit needs of low- and moderate-income residents.
The banks would then be required to report their actual performance to the cities. City staff would evaluate each bank's goals against its track record, make the information public, and take it into account when deciding which financial institutions are awarded city business.
“[I]f they do not reach their goals, there should be some type of repercussion for that,” says Tony Young, president of the San Diego City Council, who intends to introduce a responsible banking ordinance within about six weeks.
City leaders who advocate for the ordinances say they're trying to build upon the Community Reinvestment Act (CRA), a 1977 law that ended that was designed to encourage banks to address the banking needs of low- and moderate-income Americans and reduce the practice of redlining.
Banks report lending data to federal regulators, who take a bank's CRA record into consideration when deciding whether to approve a bank's plans for expansion.
But that law examines banks from a national perspective. City leaders want to make sure banks are serving their residents and they think creating their own laws is a way to do that. Since governments make billions of dollars in deposits at banks, they believe they have some leverage. They hope banks will compete to have the best community reinvestment record in order to get those depository contracts.
The movement has gained steam in part due to Occupy Wall Street protests, says Rose Zitiello, manager of banking relations for the city of Cleveland, which is believed to be the first major American city to craft a responsible banking ordinance. The city’s 1991 law is the basis of many of the ordinances being considered by cities today.
In Cleveland, a bank isn't eligible for a contract unless its four-year responsible banking plan is approved by the city's director of community development. When bidding on a contract, the bank's record is taken into consideration. Banks are awarded points based on factors like how close they came to meeting various lending and investing goals, how many branches they opened in low- and moderate-income neighborhoods, and how many minorities and women they employ in executive positions.
Zitiello says the ordinance has been around so long that it’s become a collaborative process between the city and the private sector after some pushback from the banking community at the onset. “Any time you introduce something that goes against the status quo, it gets resistance," she says. “At this point, we’re not experiencing that.”
But the banking community is resisting some of the changes being proposed in cities nationwide. David Floreen, senior vice president at the Massachusetts Bankers Association, said at a 2010 hearing that Boston’s proposed responsible banking ordinance is “a solution looking for a problem.”
At the hearing, he said small and large banks alike believed it would be too costly to implement the new reporting requirements. He said most banks “would probably take a pass” and give up on city business altogether rather than comply with the new rules.
Young, of San Diego, says he’s meeting with local banking officials before introducing his legislation. He believes doing so will help set the proper tone for the forthcoming debate about the legislation. But he believes it is indeed appropriate for the city to use its leverage to try to force certain actions by the banks. If they don’t agree, Young says, they “can conduct their business elsewhere.”
Some industry officials say that’s exactly what they intend to do.
The California Bankers Association is opposing the ordinance making its way through Los Angeles. The city council recently voted unanimously to have the city staff draft the language for a responsible banking ordinance.
Leland Chan, general counsel for the California Bankers Association, said in a recent letter to city officials that the type of granular information the city is seeking “may raise privacy concerns.” Like Floreen, Chan also suggested that burdensome rules could reduce the number of financial institution interested in doing business with the city.
Los Angeles City Councilmember Richard Alarcón, who's behind his city's ordinance, calls that argument "hogwash."
"We have $30 billion in assets," he says. The city has about 40 to 50 contracts with financial institutions that involve everything from deposits to bond deals to letters of credit. That, he believes, gives the city leverage. "I doubt financial institutions are going to turn their backs on those assets."
The deals also could represent something of a power shift for municipalities, who in recent years, have been duped by financial institutions like UBS, Wachovia, and subsidiaries of Bank of America and JPMorgan Chase, all of whom faced federal charges in connection to various bid rigging schemes involving municipal security deals.
"It boils down to caveat emptor," Alarcón continues. "A purchaser of services and goods should be well-informed about who they're doing business with. If banks have a problem with that, I think we as a society should be scrutinizing them very closely."
Boston City Councilmember Felix Arroyo, who's leading the effort for a responsible banking ordinance in his city, notes that banks aren't being told how much they should invest and lend; rather, they're being compared against one another. "This is not anti-capitalist," says Arroyo. "As a consumer, I'm going to compare the products, and I'm going to pick the product that's best for the city."
In Pittsburgh, Boston and elsewhere, lawmakers have met early on with financial institutions to get feedback in order to avoid crafting a law so onerous that banks would avoid city business altogether.
One of the biggest challenging in crafting the law was to convince banks to give up some data that they may consider to be a trade secret, says Matthew Barron, policy director for Councilman William Peduto, the original sponsor of a responsible banking ordinance ultimately approved by Pittsburgh this spring. But he says the city isn’t asking for anything that banks don’t already report to federal regulators; rather, it’s only seeking the same data for the local level.
He says lawmakers' ultimate goal was to work with banks to crate low-cost financial products for residents who currently don’t use banks, and to ensure that those products would be tailored to people who don't have high levels of financial literacy.
Meanwhile, Cleveland's ordinance appears to be showing results 20 years after it was passed.
The city’s percentage of under-banked and un-banked residents is less than the national average, and even though banks have been closing across the country in recent years, the number of branches among the seven banks that have depository contracts with Cleveland has remained stable.
“Everybody is putting in a good faith effort to do the best they can,” Zitiello says. “Their goal is obviously to be profitable. Our goal is to maximize their lending and investing.”
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