The return of Public Banking
On July 28, one hundred years ago, the Bank of North Dakota opened it's doors for the first time. It was the nation's last public bank for nearly a century.
While some private banks in North Dakota got bailed out by taxpayers in the 2008 crash, the public Bank of North Dakota was not one of them.
The BND currently has $8 billion in assets and had net earnings of $159 million in 2018. It's profits do NOT go to huge CEO salaries, share buy-backs, or shareholder dividends, nor do the profits leave the state for Panama or the Caymans.
In 2012 the Bank of Hawaii announced that it was leaving the territory of American Samoa. With no private bank they decided to make their own public bank.
They didn't get any help.
Three and a half years of work brought about a triumph on Oct 3, 2016, when the Territorial Bank of American Samoa opened its doors for business. But the Federal Reserve put the bank in limbo for almost 2 years before they provided the new Public Bank a routing number allowing them access to the U.S payment system — a step that usually takes a couple of weeks according to a new article in the Washington Post.
Because American Samoa is poor, private banks didn't care all that much.
However, what happened three weeks ago is a game changer.
The California governor, Gavin Newsom, on Wednesday signed the Public Banking Act, or AB 857, which will allow city and county governments to create, or sponsor, public banks. Those banks will in turn provide public agencies access to loans at interest rates much lower than they could find at private banks.Supporters say the change sets the stage for funding infrastructure demands or providing loans to developers to help meet affordable housing needs.
I have to say that this is surprising for the corporate Dems that run the state. It just shows that every once in a while the Dems can do something right.
That being said, they did put some restrictions on this bill.
As the bill has passed through various committees, additional requirements — like federal liability insurance and a limit to 10 banks total — have been added to rebuff objectors, concerned about the stability of future public banks. “We’ve likely made it very difficult to establish a public bank,” he said.
This is in addition to doing a feasibility study and develop a business plan, in addition to obtaining collateral. Plus, the law requires voter approval before it can apply to the Department of Business Oversight to start a public bank.
So it'll be years before we see any public banks in California.
The California Bankers Association said in statement, “[We] hope that community leaders and elected officials will take note of the risks associated with establishing a municipal bank, before opting to explore this unnecessary and unwanted public option.”
The "risks" that these private bankers are warning us about is "self-dealing". To which I say, "Ha! You bastards got a lot of nerve."
Comments
I know it seems counterintuitive --
but the possessive of "it" is "its," and not "it's." Please change "it's" in the first sentence to "its."
"there's something so especially sadistic about waving the flag of a country that you're actively destroying" -- Aaron Mate
The knights who say Ni!!
The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.
Suffice to say...
...is one of the words the Knights of Ni can not hear.
" In the beginning, the universe was created. This has made a lot of people very angry, and is generally considered to have been a bad move. -- Douglas Adams, The Hitch Hiker's Guide to the Galaxy "
Agree, jarring. Doesn’t do justice to excellence of content. n/t
Interesting . . .
Gavin Newsom proves himself once again.
Maybe he won't be a bad choice for prez in 4 or 8 years.
So, can I open an account
at BND while living in Wash. State?
Asking for a friend.
Neither Russia nor China is our enemy.
Neither Iran nor Venezuela are threatening America.
Cuba is a dead horse, stop beating it.
@earthling1 NO
NO
Ellen Brown has been on top of this issue for years.
Very irritating that Germany had a postal bank and privatized it
Of course everything then went downhill. Merger after merger, now Postbank is part of a “group” that includes Commerzbank and Deutsche Bank.
This year the post office that also had banking service and was within easy walking distance from my apartment block was closed down. Now the nearest post office is just a counter inside some retail store and offers zero banking support.
Privatization messed up the national railway system too — don’t get me started . . .
Yes it is
but the UK still has banking at the Post Office. Does anyone know how well it works these days?
Let us not get ahead of ourselves here
Although I have been intensely curious about the accomplishments of North Dakota's state bank and the Non-Partisan League responsible for its creation, I do NOT consider myself to be an "expert" on the subject. My main qualification is the I spent some of my high school years living in NW North Dakota.
1) The Bank of North Dakota (BND) took several decades getting off the ground. Lots of steps and many setbacks and near-death experiences between good intentions and the current institution that is easily the most popular of all the public bodies in the state.
2) There are many social factors operating in ND that contributed to the eventual success of BND. They include: a) an incredibly harsh climate that demands support for collective action—North Dakotans may be the most self-reliant people in the country but they are also the most certain of the need to be good neighbors; b) the largest ethnic subgroup in the state consists of Scandinavian Lutherans—folks who imbibe the lessons of honesty, trustworthiness, and a hatred of public corruption in their mother's milk; c) ND became a state in 1889—the same year Otto von Bismarck introduced the main elements of the social-welfare state to Germany (old-age pensions, not--for-profit health care, worker's compensation, etc.) He had been encouraged to take this course of action by the devout Lutheran steelmaker Krupp of Essen who argued that the social-welfare state was NECESSARY for the PREVENTION of socialist error. North Dakota would name its new state capital Bismarck.
While I certainly applaud California for legalizing the concept of public banks, I look at their primitive political culture, their tolerance for corruption, their superficial concepts of what constitutes a public good, and their glorification of individualism and wonder just how likely they are to make their public banks actually work. Too bad because public, democratically-controlled, state banks are easily the best idea in history.
California is a one-party state. Ripe for corruption—see CalPERS
the California Public Employees’ Retirement System.
https://www.nakedcapitalism.com/category/calpers
Re Bismarck: surprisingly, ND wasn’t forced to rename their capital “Liberty City” during the World War I anti-German hysteria.
https://language.mki.wisc.edu/essays/sauerkraut-by-any-other-name/
Not kidding — a German family in Honolulu had their store expropriated and renamed Liberty House.
https://en.wikipedia.org/wiki/Liberty_House_%28department_store%29
Might as well not try then
It's too risky.
Private bank corruption is safer and more acceptable.
I know you weren't saying that, but someone reading it could come to that conclusion.
@gjohnsit
Go ahead and try. I just hate to see the reputation of a great idea like public banking destroyed by crooks and clowns. In my book, the last California politician who wasn't a total embarrassment to the profession was probably Upton Sinclair.
@lotlizard
I know you are not kidding.
After the successful demonstration of the Non-Partisan techniques in North Dakota, a branch was formed in Minnesota. All the leadership of the Minnesota NPL was arrested during the Citizen League crackdown on anything that resembled dissent during the war hysteria after USA entered WW I. Schools were prohibited from teaching German. Folks with German surnames changed them. German cultural celebrations disappeared. Etc. It was ghastly. My grandfather's neighbor—a immigrant German world class machinist—woke up one morning to discover that his 8 prize oaks had been girdled.
Hate crimes / hate speech against Germans
In the mid-1970s I was working at a big multinational company alongside a bunch of Germans on temporary assignment to the U.S. — family men with kids in school as exchange students.
One day, suddenly a whole raft of these colleagues and their families were gone.
What was the circumstance that had forced them to break off their assignment so abruptly and return home?
The “Holocaust” mini-series had premiered on TV.
People had watched it with their kids, who had then decided the thing to do was to exact revenge for the Nazi era on innocent Germans their own age — who, up to that point, had been getting along fine but overnight became the target of shocking levels of hostiity and bullying.
Thus did I learn the lesson that efforts supposedly meant to educate and inoculate against hate can very well end up directly fomenting more hate.
Thanks for the history, Jonathan
I did know ND had an anti-monopolist streak running through it. But the history of the BND and the name of the state capital I found very interesting.
If I remember right, ND has a strong union presence.
Neither Russia nor China is our enemy.
Neither Iran nor Venezuela are threatening America.
Cuba is a dead horse, stop beating it.
Radical Element
That part of the country contains many small groups of very progressive individuals. The unicameral, public power, and certain other aspects of Nebraska's society are a legacy of past progressive's efforts. It is a very interesting part of the world.
RIP
We have a group here.
We have a Public Banking discussion group associated with an OLLI program here in the Bear Creek Valley of southern Oregon. If any of you are similarly connected I would like to talk …
RIP