By Cindy Cole and John Repp
For five years, a group of concerned citizens has been working with Representative and now Senator Hasegawa to establish a public bank in Washington State. We have worked the “outside game” helping him drum up popular support for the five bills he sponsored. Because of the gridlock in Olympia, we are turning our attention to the city of Seattle. (Senator Hasegawa will continue to sponsor a public banking bill in Olympia.)
Seattle presently banks with Wells Fargo, one of the largest Wall Street banks. The taxes and fees owed our city are deposited directly in Wells Fargo which also cuts the city’s checks. They are a private multinational corporation with a legal mandate to maximize profits for the benefit of their stockholders. In today’s global markets, the highest profits are made in the emerging economies and in the speculative trading of financial paper. Locally, maximizing profits means a preference for investing in office buildings and luxury condos rather than affordable housing.
A Seattle Public Bank would be established to serve the public interest. When fully up and running, it would hold the taxes and fees Seattle collects. It would be able to finance infrastructure projects that the city now funds by selling municipal bonds, i.e., borrowing the money at interest, often from the same Wall Street Banks. A Seattle Public Bank could partner with community banks and credit unions, expanding local credit resources for small business, creating new jobs. The bank would create a new revenue stream for Seattle.
Because Washington State is a home-rule state, the Seattle City Council has the power to establish a public bank.
All over the world, much of the banking is done by public banks. Many central banks are public. Ours, the Federal Reserve, is private. A Federal Reserve Bank of Boston paper said the accepted position in the United States is for banks to be private “unless there is a market failure.” We think the crash of 2008 caused by Wall Street was a massive market failure.
In Germany, 40 percent of the deposits in banks are held by locally owned savings banks. Public banking has played a large role in the transition to wind and solar in Germany. In the United States, the Bank of North Dakota (BND) is a successful model of public banking. It is a banker’s bank. For 90 years it has been standing behind and has preserved the most robust community banking network in the country. BND kept the community banks in the traditional business of home mortgages, farm loans and small business loans, and away from the high profit financial instruments Wall Street was selling. Thus, North Dakota escaped the effects of the crash.
We need to look ahead and see the public bank as a long-term project. Eventually, it could liquidate Seattle’s $4 billion debt. It could create the funding for a transition to renewable energy, for affordable housing, and the creation of thousands of good jobs. It could start a process of financial independence from Wall Street for our cities, counties, and states, and eventually the nation. It is something we can do despite the political gridlock in Washington D.C. and in Olympia. Like the $15 Now campaign, Seattle could lead the nation.
There will be a public forum on a Seattle Public Bank on December 10, 2014, at University Temple, United Methodist Church, 1415 NE 43rd, Seattle, at 7 p.m. with Nick Licata (Seattle City Council), Dr. Thomas Keidel (German Public Savings Banks), Dr. Karl Beitel (UC Davis), and Gwendolyn Hallsmith (Public Banking Institute).
Cindy Cole and John Repp lead the Seattle Public Bank Coalition and are PSARA members.