We feature an article about the campaign to establish a State public bank in New Jersey (our future once Susana is gone), as the effort to create a public bank in Santa Fe moves forward, passing unanimously in the City’s Finance Committee last night. A public bank could be an important tool for creating economic justice in Santa Fe & New Mexico. Read on.
Breaking News! Last night, the Santa Fe City Council Finance Committee voted unanimously to advance Public Banking Task Force.
For details on a myriad of coming events, please click here to go to our Events & Opportunities page. Lots going on over the next two weeks. We close with an invitation to a Story Circle training. On Thursday we will present a profile of North Korea: its people, culture, history, and the underlying factors contributing to the current conflict.
As was evident from the last two posts, Santa Fe and all cities face the challenge of revitalizing depressed neighborhoods without displacing the historic residents. We need all the tools we can get to meet this challenge, and in the last two posts we described the platform developed by Chainbreaker, which includes ten policy initiatives that could be used to help bridge Santa Fe’s stark wealth gap and to create a smart, sustainable city. We also described how the use of Community Land Trusts can serve to inoculate neighborhoods at risk of gentrification by putting community land in a trust to be managed by the community, protecting the community from speculation and boom and bust cycles that destroy the culture of a community. If you missed these two posts, I highly recommend reviewing them as I have gotten feedback from several folks with extensive backgrounds in community development and they also recommend these summaries. Click here for Saturday’s introduction to gentrification in Santa Fe and click here to review how CLTs could help Santa Fe revitalize its low-income communities without displacing its residents.
Today, we take a look at another strategy that could become part of Santa Fe’s toolkit in sustaining a commitment to revitalizing our low-income neighborhoods, a public bank. Before we delve into this extraordinarily promising strategy, I’d like to first encourage those of you who enjoy digging in to issues, to consider attending our Research Meeting this Thurs, 5:30-7pm at the Center for Progress & Justice. As we send this post, we have a dispiriting number of RSVPs and we need many more volunteers to take on researching a wide range of policies, strategies, countries, and cultures. The research shared in the two posts this weekend took hours to produce. If we want to present an ongoing array of information, we need some of you to step forward. While we have identified some priority areas of research, we welcome research into almost any aspect of public policy. But a particularly exciting research opportunity is to help us identify and develop a wider range of innovative community development and progressive tax and revenue strategies to help The City Different address its significant wealth inequities. If we want to address economic injustice, we need to research what works in this effort. So click here for information about the meeting and to RSVP.
Why a Public Bank for Santa Fe and for New Mexico?
One of the ten strategies for which Chainbreaker advocates is a public bank. To review their complete platform to create a more just Santa Fe, click here. Some weeks ago, we published a post on the public banking concept and that post also included a very clear explanation of how a public bank can function. Click here if you want some background info. An article from Truthout published yesterday presented the case in favor of developing a state public bank in New Jersey. Truthout concisely captures one of the most important benefits of establishing a public bank, the ability to cut infrastructure costs in half. “By funding infrastructure through its own bank, the state can cut infrastructure costs roughly in half, since 50 percent of the cost of infrastructure, on average, is financing. Again, a state-owned bank can do this by leveraging its capital, with any shortfall covered very cheaply in the wholesale markets. In effect, the state can borrow at bankers’ rates of 1 percent or less, rather than at market rates of 4 to 6 percent for taxable infrastructure bonds (not to mention the roughly 12 percent return expected by private equity investors).”
The article also examines how the one existing state public bank, the Bank of North Dakota (BND) operates. Through a review of how BND operates, the article disputes a major criticism laid by opponents ( mega banks): that a public bank would compete with and ultimately displace local banks. In North Dakota, the public bank and local banks work together: “The local bank acts as the front office dealing directly with customers. The BND acts more like a “bankers’ bank,” helping with liquidity and capital requirements. By partnering with the BND, local banks can take on projects in which Wall Street has no interest, projects that might otherwise go unfunded, including loans for local infrastructure.” Truthout goes on to provide further evidence of public bank and local bank cooperation. “Due to this amicable relationship, the North Dakota Bankers’ Association endorses the BND as a partner rather than a competitor of the state’s private banks. Indeed, it may be the BND that ultimately saves local North Dakota banks from extinction as the number of banks in the US steadily shrinks.”
The other fear that the mega banks play upon is that a public bank is not as sophisticated and can’t be trusted to manage the public’s funds. “In November 2014, The Wall Street Journal reported that the BND was actually more profitable than the largest Wall Street banks, with a return on equity that was 70 percent greater than for JPMorgan Chase and Goldman Sachs. This remarkable performance was attributed to the state’s oil boom; but the boom has now become an oil bust, yet the BND’s profits continue to climb. In its latest annual report, published in April 2016, the bank boasted its most profitable year ever. The BND has had record profits for the last 12 years, each year outperforming the last.” For the full Truthout report, click here.
Besides, we all remember 2007 and how sanguine the mega banks were with our deposits. And with Trump dismantling bank regulations, we also know how safe our funds are in the mega banks’ hands. If a repeat collapse occurs, only $250,000 of Santa Fe’s deposits are insured. In this context, millions of dollars of public money could be jeopardized by another banking collapse. But during the last collapse, BND barely blinked.
Public banking is inevitable, if not in Santa Fe, in other communities throughout the nation. Establishing a public bank is a wise policy decision at the city, state or national levels because public banks:
- reduce bank fees and charges, saving government a significant amount of money,
- facilitate far greater investment in infrastructure and other development, by leveraging its deposits, saving up to 50% on infrastructure costs; and
- provides a far safer place to put our money.
As the public banking initiative advances, we will continue to provide updates and articles providing analysis of the extraordinary benefit achievable through the establishment of a public bank in Santa Fe. We will also press candidates for Governor as to their position on public banking to ensure it is part of the campaign debate. For more on the public banking concept in Santa Fe, click here.
Learning to Listen
Story Circle Practice session, Sun Apr 23, 4:30-5:55 and/or 6-7:30 La Montanita Community Room, 913 W Alameda St, Santa Fe, NM 87501. FREE. Registration space is 1st come/1st accepted. You must register: max = 20 LNBROSEN@GMAIL.COM, Lynn Rosen. In each session we’ll be working in two groups: half will be story tellers/listeners while the other half observes the event, the process, and their own experiencing of all of that. Followed by Whole Group discussion, then switching groups. Lynn Rosen will facilitate the 4:30-5:55 session, Debra Oliver the 6-7:30 session. If you decide to participate in both sessions you’ll be able to see how different facilitators and different participants bring something fresh to any Story Circle. This session available to:
- those who participated in the initial Story Circle session
- those who want to initiate their own Story Circle/ Living Room/ Kitchen Table events
- ward canvassers/community conversationers
- Open-house Activism groups
- those who were interested in the initial Story Circle session but weren’t available