The Alliance’s Julian LaRosa’s latest piece in Jacobin. Silicon Valley Bank’s collapse was no aberration: hundreds of private banks in the US have failed since the Great Recession. For a more stable financial system that actually meets ordinary people’s needs, we need to expand public banking.

One of the great philosopher-artists of the 2000s and 2010s (though maybe not so much in recent years) once said, “No one man should have all that power,” and this nugget of wisdom has been ringing in my head over the past two weeks. In a Slack chat among prominent VCs and startup execs, Silicon Valley venture capitalist Peter Thiel orchestrated the beginnings of a bank run against one of the most influential banks and the financial backbone of the Bay Area tech scene, Silicon Valley Bank (SVB), ultimately bringing the bank to its knees within days.

What happened with Silicon Valley Bank? Because banks don’t keep all their deposits on hand — deposits are used to provide loans or to buy various securities like bonds — they rely on depositors not all coming for their bags at once. But occasionally, a wave of withdrawals leads to banks panicking and liquidating their assets to cover newly withdrawn deposits — sparking further hysteria as everyone races to get their money out. Then down goes the bank, sending shockwaves across the economy.

This is more or less what happened to Silicon Valley Bank after Thiel advised his portfolio companies to pull their deposits out of SVB. Over the weekend, the Federal Deposit Insurance Corporation (FDIC) intervened, closing the nation’s sixteenth-largest bank and forcing it to liquidate its assets and make depositors whole. In a couple days, we saw the largest bank failure since the Great Recession and the collapse of Washington Mutual.

Following the collapse of SVB, spooked depositors at Signature Bank rushed to withdraw $10 billion, triggering a federal closure of both banks to contain the potential contagion. Stocks across the financial sector then plummeted throughout the United States and across the pond. The year had already been a rough one for Credit Suisse, its stock price slumping even before the SVB-induced crash. But once the heat turned up and depositors started fleeing, the Swiss Central Bank stepped in to provide a $54 billion bailout to keep Switzerland’s largest bank afloat.

In the subsequent days, the press watched the situation like a hawk. Who would be next? Were we in for another Great Recession? Would workers be able to get their next paychecks?

Yet the corporate media missed a key point: banks, when left to their own devices, will fail. SVB certainly wasn’t the first, and it won’t be the last. Since the Great Recession over 560 banks have failed in the United States, often followed by Wall Street titans swallowing up their assets. Banks that were too big to fail in 2008 have grown still larger as the financial sector becomes more and more concentrated. Regulations meant to constrain financial chicanery have proven too weak to the task.

So the question is, what do we do moving forward? Do we continue to let the vultures prey on their dying competitors? Will the government keep having to bail out reckless banks?

Continue reading in Jacobin.

March 18, 2023. Trinity Tran, Truthout.

We have a pivotal opportunity to reshape our financial system for the benefit of all.

The recent collapse of Silicon Valley Bank (SVB) and Signature Bank — the second and third largest bank failures in U.S. history respectively — has laid bare the vulnerability of the private banking sector.

With over 563 federally insured banks toppling between 2001 and 2023, it’s impossible to ignore: The status quo is unsustainable. Amid this financial turbulence, the need for public banking has never been more pressing. It’s high time we seriously consider public banking as a stable, transparent, and accountable alternative that would firmly anchor public interest at the heart of the financial system. After all, banking should be a public utility that benefits everyone, not a high-risk game played by bankers trying to score big profits.

The failures of SVB, Signature and Silvergate banks can be traced back to poor management decisions and high-risk strategies. SVB invested in long-term government securities amid concerns about rising interest rates as well as the volatile venture capital industry, while Signature and Silvergate banks ventured into speculative cryptocurrencies. All three banks shared one common problem: massive uninsured deposits from a handful of ultra-wealthy customers.

When the banks teetered on the edge of collapse, the Biden administration, FDIC, and Treasury swooped in with a bold bailout. They created a “systemic risk exception” to protect all deposits, even those beyond the $250,000 threshold. Ironically, all depositors were “made whole” from the Deposit Insurance Fund — the very fund that Silicon Valley Bank had previously lobbied against, arguing that increased contributions would hurt their bottom line.

This intervention raises a crucial question: If the government is ultimately responsible for ensuring the banking system’s stability, why not opt for public banks designed to serve the public interest from the outset?

Continue reading on Truthout.

In California, 81% of unbanked individuals earn less than $15/hr, hitting low-income families and people of color the hardest.

“We can’t create a stable economy when financially underserved households spend an average of 10% of their take-home pay in fees and interest, just to access their own money and pay bills,” Assemblymember Miguel Santiago said. “Creating a public option for banking and closing the racial wealth gap isn’t only a moral imperative, but it also creates greater financial security for all of our communities.”

This is where our CalAccount bill AB 1177, the CA Public Banking Option Act passed by the legislature in 2021, comes into play. By Summer 2024, a market analysis for the program will be completed, paving the way for a universal debit account for all Californians with zero fees or penalties.

Read the article on CalMatters.

The public banking movement is gaining momentum in the United States as more people seek alternatives to traditional banking institutions. Unlike traditional banks that prioritize profit above all else, public banks aim to promote community development and social justice. Piper French, a journalist with Noema Magazine, recently spoke with Trinity Tran, George Syrop, and other organizers across the country to discuss the movement and its goals.

The rise of public banking is a response to the growing discontent with the banking industry’s practices, particularly in the wake of the 2008 financial crisis. Many people see public banking as a way to reestablish trust and accountability in the financial system. Public banks can prioritize the needs of local residents and businesses by focusing on community investment rather than profits for shareholders.

Read the article in Noema Magazine.

San Francisco is taking bold steps towards establishing a Municipal Finance Corporation that is set to become a public bank within the next three to five years. The city aims to launch the $50 million Municipal Finance Corporation, with a focus on financing infrastructure projects, affordable housing initiatives, and small businesses.

The establishment of a public bank in San Francisco has been a long-awaited goal for many activists and community leaders. Public Bank SF is expected to bring more transparency and accountability to the banking industry, putting the needs of the community first instead of prioritizing profits for shareholders.

The city’s decision to create a Municipal Finance Corporation is a crucial step in achieving this goal. The corporation will act as a bridge between the city and its residents, providing access to low-cost credit and financial services that are tailored to the community’s needs.

Read the article on SF Chronicle.