Dec 10, 2014. As a direct result of Wall Street mismanagement and federal complacency, communities have lost the ability to finance local, sustainable growth and public services. This is a direct threat to democracy, because the chief conduit of democracy in American society is the ability of cities and towns to facilitate public participation, health, security, and civic life.
There are two main ways in which the city government of Seattle has sought to materialize democracy: (1) a strong, uncompromising minimum wage ordinance; (2) a revolutionary budget plan that emphasizes social services and community revitalization.
But one way the city can finance even more audacious and prosperous democratic participation, housing, social services and mass transit is with a public bank. The Wall Street Journal, the New York Times, Salon, and other national publications have recently touted the benefits of public banking; even the conservative Wall Street Journal admits that the Bank of North Dakota (the nation’s only current public bank) outperforms “too big to fail” Wall Street banks.
That’s why the Washington Public Bank Coalition, the Public Banking Institute, and a host of local Seattle and surrounding organizations are meeting this week. Meetings and discussions about the possibility of a municipal bank in Seattle have been taking place since yesterday (December 9) at City Hall and elsewhere. Members of the Washington Public Bank Coalition, as well as the Executive Director of the national group the Public Banking Institute, will meet with Senator Bob Hasegawa and City Council member Nick Licata. Representatives from King County, the Low Income Housing Institute, the Housing Development Consortium, SEIU 775, Washington Community Action Network, the Tacoma City Council, Seattle Chinatown PDA, the Economic Opportunity Institute, several area credit unions, and others, will also participate.
Highlights include a roundtable at City Hall on municipal banks, and a public forum at University Temple, United Methodist Church. An event emphasizing the impact of a municipal bank on small business lending is also on the agenda.
Forward-thinking councilmember Nick Licata is on board with public banking. Sarah Aitchison of the Puget Sound Business Journal reports in “City Councilmember Nick Licata: Seattle needs a public bank,” “I think what really resonates with people is that these are public funds,” Licata said, “why are we putting them in private banks that don’t necessarily have the public interest in mind? Why don’t we capture them and put them in public banks that have the public interest in mind.”
Licata said the idea for a public bank has been kicked around for a while at the state level, and there is some debate over whether it would be allowed under Washington state’s constitution.
Other media are also picking up the story. Particularly compelling is KIRO Television’s account of Somali immigrant Abdul Yusuf attempting to fund his business.
When Abdul Yusuf started out in business, he struggled to find a bank willing to lend to a Somali immigrant.”All the banks turned me down,” he said.The banks that turned him down are the same national banks, like Bank of America, with branches in the Rainier Valley neighborhood. So Yusuf eventually found his way to the Rainier Valley Community Development Fund and its executive director, Wayne Lau.”We are depositing at the big banks but who knows where all of these deposits are going?” asked Lau. “Where are they being loaned?”Now Lau is helping push the idea of Seattle severing its ties with the big banks and creating a public financial institution for its own banking needs and those of local business owners and other entrepreneurs.”The idea of the public bank is that we can capture some of the deposits, which are very enormous and very vast at the city of Seattle that are now going to large money-centered banks,” said Lau. “And keeping those funds invested and loaned in the Seattle area.” Proponents also argue the city could save taxpayers hefty banking fees and reduce its reliance on expensive private bond insurance.
Meanwhile, Ashley Gross at KPLU 88.5 news asks: “Should Seattle Bypass Big Commercial Banks And Set Up Its Own Public Bank Instead?”
Dennis Ortblad worked for the State Department in Berlin and is now one of the proponents of a public bank in Seattle. He says public banks are widely used in Germany.” Over 400 cities each have their own individual nonprofit, public bank which is there to serve their locality with small business loans and lending, and infrastructure,” Ortblad said.
With campaigns underway in New Mexico, Pennsylvania, Illinois, Vermont, Massachusetts and Washington, among other states, 2015 is looking more and more promising as a year of breakthroughs on implementing this proven tool of financial democracy.