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At Year’s End, Public Banking Steers Economic Justice Conversation

Originally published at the Public Banking Institute Blog.

The movement for public banking, democratically-run public banks that avoid high interest rates and make financing accountable to the public good, ended a solid building year on a several high notes, including a column of support from Chris Hedges, analysis of a volatile struggle in Vermont, and signs of determination to carry its momentum into 2014.

It’s a movement that has the ear of Rolling Stone economic muckraker Matt Taibbi, who spoke at the Public Banking Institute’s well-attended June 2013 conference in California. In 2013, public banking’s leading adherents published a definitive book, participated in a debate in the New York Times, made the lead editorial of The Progressive, were featured in Occupy.com, and produced powerful videos. Americans increasingly see in public banking a way of bypassing Wall Street and the artificial scarcity imposed by crony capitalism.

Chris Hedges is a leading journalistic voice in the search for economic alternatives, so his December 30 piece “Overthrow the Speculators” will generate further interest in public banking, a solution he believes will “wrest back control of our economy, and finally our political system, from corporate speculators . . .  by building local movements that decentralize economic power through the creation of hundreds of publicly owned state, county and city banks.” Hedges provides both context and data in the piece, referencing the scandalous pillaging of Napa Valley Unified School District through capital appreciation bonds, the speculators who exploited victims of Hurricane Katrina, and the contrasting low-interest loans and mortgage reworking provided by the Bank of North Dakota in the wake of the Grand Forks floods of 1997.

Hedges even mentions the growing voices in support of a postal service bank. “The plan,” he writes,  “which I doubt the banking lobbyists and their lackeys in Congress will ever permit, would in addition to saving the Postal Service itself provide access to banking for the one in four households that cannot get such services.”

Hedges’ prediction of bankster backlash may already have come to pass in a different context. In 2013, the movement for public banking in Vermont gained momentum and incurred the disapproval of big bank lobbyists. Vermonters for a New Economy commissioned and released a study showing that a publicly-owned bank in Vermont could yield over 2,500 jobs in the state,  add almost $200 million to the Gross State Product and over $300 million in state output, and save the state “close to $100 million in interest costs.” But John Hollar, the Mayor of Montpelier and a registered lobbyist who represents Bank of America and Wells Fargo in Vermont, took particular exception to the activities of outspoken VNE member Gwendolyn Hallsmith, who in late November was fired from her job as Planning and Community Development Director for the City of Montpelier, after seven years of service. The City says it was because of her job performance, and the Mayor and other Montpelier officials deny an ideological motive. However, an email from Hollar to Fraser on March 19, 2013 reads: “To repeat myself ad nauseum, I still don’t see how our city’s chief economic development officer can hold and promote views that are fundamentally anti-capitalist in nature”—suggesting that, at the very least, the Mayor believed Hallsmith’s search for sustainable municipal financing was the wrong way to do her job.

So William Boardman’s December 29 piece in Reader Supported News on Vermont, Hollar, and Hallsmith, entitled “Do Bank of America and Wells Fargo Run Vermont’s Capitol City?” is especially timely.  Boardman’s piece goes beyond the surface of the dispute between Hollar and Hallsmith, tracing the trajectory from a Montpelier government once at the cusp of the new economy movement, and ending with the Mayor red-baiting a city employee. Boardman calls the Montpelier City Council’s assertion that Mayor Hollar had no role in firing Hallsmith “fundamentally dishonest.” Boardman’s rhetoric is strong: a heading reads “Maintaining a collective fiction may require heads to roll,” suggesting the kind of struggles that ensue when a revolutionary idea encounters institutional and elite resistance. Boardman captures the energy and momentum of the public banking movement in Vermont, and reminds readers that big banks and large economic players might push back when public banking initiatives develop—a lesson the entire country should heed, given the widespread new interest in public banks as a mode of economic democracy.

PBI’s 2014 conference in Detroit—a city badly damaged both by big banks and the ideological myths that justify their dominance of municipal financing—will carry this momentum. Initiatives are taking shape in several states (Ray Southwell’s “Alaska should establish its own public bank,” published in the Peninsula Clarion on December 13 is a good end-of-year example of the local appeal of public banking) and advocates have been interviewed throughout December in major media markets.  PBI President Ellen Brown ended the year by noting that December 23rd was the 100th anniversary of the Federal Reserve, and suggesting that it “may be time for a new populist movement, one that demands that the power to issue money be returned to the government and the people it represents.” At the end of 2013, public banking appears to be becoming just that.

Matt Stannard is Director of Media and Communication at the Public Banking Institute.

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About Matt J. Stannard

Policy Director for Commonomics USA, longtime writer, speaker, and legal & policy consultant on economic justice and public deliberation.