NextCity – Twice a year, when property owners pay their local property tax bills, Alameda County Treasurer Hank Levy sees a huge influx of cash into county coffers. After paying off the county’s own bills and other expenses, there’s always some cash left over that doesn’t need to be spent right away — though it’s all earmarked for salaries, programs, projects and other costs that come up later. As do most local or state treasurers, Levy’s office invests whatever he doesn’t need to spend right away, earning some interest for the county in the meantime.

Right now, Levy’s office holds an investment portfolio of around $7 billion. About half of that is invested in U.S. Treasury Bonds or other securities backed by the Federal Government — assets that don’t earn very much interest right now but they are considered “highly liquid,” meaning Levy can sell them easily to other investors when the county needs the cash. Another 20% of the portfolio is invested in certificates of deposit at banks, which Levy can schedule out to mature on a fixed timeline that matches up with the county’s cash flow needs. Levy recently moved $200 million into certificates of deposit at 10 local banks that committed to lend at least the same amount to Alameda County residents and businesses.

A group of local activists want to give Levy a new option for the county’s portfolio — depositing some of that $7 billion in a public bank, meaning a bank that’s owned by a unit of government, holds cash from those governments, and whose lending policies and priorities are set democratically by constituents.

Friends of a Public Bank East Bay formed in 2017 to push for such a bank. It released a blueprint in March for a bank that would be jointly owned by Alameda County as well as the Cities of Oakland, Berkeley and Richmond. The blueprint envisions the bank would make loans to support more deeply and permanently affordable housing, for small businesses owned by Black, indigenous and other people of color, and potentially even do some infrastructure lending for municipalities. It would be modeled in part on the Bank of North Dakota, established in 1919 and until recently the only state-owned bank in the country. Nearly all of the Bank of North Dakota’s deposits come from the state government, which is required by law to deposit all of its revenues in the state-owned bank.

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People’s World – For too long a handful of corporate banks have controlled the financial destiny of the overwhelming majority of Americans. Throughout American history, a commercial oligarchy was responsible for feeding corporate greed and when markets collapsed from too much debt and not enough resources to adequately fund it, countless millions of workers and their families paid the price for other people’s folly and suffered disastrous consequences.

In recent years there have been severe recessions, collapsing financial markets, and subsequent government bailouts of corporate banks, protecting the interests of stockholders at the expense of depositors and helpless debtors.

There are alternatives to corporate banking though there are very few available to consumers.

The traditional savings, or building and loans, prominently featured in the Christmas classic “It’s A Wonderful Life,” are being swallowed up and taken over by larger corporate banks as a direct result of banking deregulation in the 1980s.

Recently there have been proposals in various states to authorize the creation of state-owned banks. There is already one state-owned bank in North Dakota that has been in existence for nearly a century and has been very successful in providing loans and other means of financial support to small farmers and business owners, as well as consumers.

The Governor of New Jersey, Phil Murphy, has also proposed a state-owned bank and made it part of his campaign platform when he ran for governor in 2017. In 2018 a bill to establish such a bank was introduced in the state legislature, and in 2019 Murphy signed an executive order creating a commission, known as the Public Bank Implementation Board, to provide exact details on how the bank would be established.

That same year California Governor Gavin Newsom signed into law the Public Banking Act which empowers county and municipal governments to establish their own community owned banks, and last year the New York Public Banking Act was introduced in the New York State Assembly, and the State Senate. Unfortunately, the recent pandemic, and fierce opposition from corporate banking and business interests, have delayed and frustrated attempts to proceed with successfully establishing publicly owned banks.

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Public banking is on a roll! On Wednesday March 30, 2022, over 170 community members joined the California Public Banking Alliance (CPBA) Town Hall featuring elected officials from cities and regions actively working to form public banks. People across the nation are turning out to learn more about public banking — and Californians are at the forefront of making public banks a reality for the first time in generations.

Public banking activists, politicians and financial experts are busy producing viability studies and business plans so that public banks can come online in the near future. Public banks are a powerful tool to keep taxpayer dollars reinvested in local communities. We’re grateful for the leadership provided by legislators from five cities (Los Angeles, San Francisco, Long Beach, Richmond, and Santa Cruz) joining us to discuss their commitment to making public funds work for the public by their courageous efforts to establish local public banks.

If you missed last week’s town hall, tune in to the replay.

Thank you to all participants for joining in a robust town hall chat. We’ve added answers to your questions and comments in this document.

Read our event wrap-up on the CPBA Medium page.

Dollars and Sense features Rick Girling’s article in the September/October issue. Read his follow-up piece  “Corporate Bankers Wary of Public Banking” on Page 8 of the November/December Issue.

Ever-growing inequality has helped consolidate and concentrate corporate control over the U.S. economy. The financial sector is a prime example. This issue’s third feature article, by public banking activist Rick Girling, describes an alternative approach to banking that can “challenge unelected and unaccountable corporate bank executives’ control over the nation’s financial system.

AN HISTORIC HEARING TOOK PLACE ON JULY 21 WHEN THE House Committee on Financial Services for the first time in recent history discussed public bank- ing. Deyanira Del Rio from the New Economy Project, along with other panelists, presented proposals for revamping the American financial system to rebuild the economy and reach the one-fifth of Americans who are either unbanked or underbanked—those lacking bank accounts, and those who have bank accounts yet rely on payday lenders and other predatory financial services.

In her remarks to the committee, Del Rio explained the importance of public banks in this historical moment:

“Public banking would serve as an especially powerful tool as cities and states throughout our country work to advance a just recovery from the pandemic and to withstand future crises. We’ve seen that countries that have public banks are significantly more resilient in the face of crises than those without them and that’s precisely because local public banks invest in sectors that provide direct economic, social, and environ- mental benefits.”

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