ORIGINALLY PUBLISHED ON EAST BAY
BY EMILY WHEELER WEDNESDAY 2/8/2017
Oakland, like several other cities around the country, is currently studying the feasibility of establishing a public bank. This type of banking offers enormous benefits for our local economy. We should move ahead with founding the Public Bank of Oakland as rapidly as possible.
Public banking is not a new idea. North Dakota has operated its own public bank since 1919, and it came through the Great Recession of 2007-08 in much better shape than other states. Communities there did not suffer the budget cuts and reduced services that have been so common elsewhere.
The Public Bank of Oakland will serve the people of Oakland by retaining the bank’s profits as public property to be used for our common good. Through public banking, we can help our own communities thrive rather than enrich the shareholders of Chase, where Oakland’s monies are now deposited, and other private banks.
Currently, Oakland and other municipalities are sending millions of dollars every year to pay the interest on bonds issued for infrastructure. As one example at the state level, California will end up paying $13 billion dollars for the new Bay Bridge span—half of which is interest. These interest payments go to private banks and individual wealthy investors. To pay off these debts, we slash the budgets of beneficial social programs and impoverish our communities.
In contrast, when we finance projects through our own bank, we’ll have more funds available for public projects—whether affordable housing, housing the homeless, caring for the sick, or enriching our children’s education.
Our public bank will also benefit the community by making low-cost loans available to local entrepreneurs. While private banks are committed to maximizing shareholder dividends, our bank will consider the common good as part of the bottom line. We will extend credit to viable enterprises that meet community needs and provide jobs.
We can make the Public Bank of Oakland a reality without raising taxes or cutting expenses. The revenues currently on deposit in the city’s accounts at Chase will be transferred to the new public bank. Oakland has another big source for deposits: the cannabis cash that cannot be kept in private banks due to federal prohibitions.
The new bank will be the City of Oakland doing business as the Public Bank of Oakland. While the city government will set up the institution, the bank itself will make day-to-day decisions according to its charter, free from the influence of city politicians or officials. In contrast to private banks’ high-risk gambling with public money, the public bank’s sound, conservative practices will balance the mandate to lend for the common good, providing both fair return and societal benefit.
A thriving local economy is something we all want to see—no controversy there. But we’ve been too quick to accept the prevailing notion that there is a tradeoff between that and providing ourselves with adequate housing, health care, or education programs. It’s time to align our fiscal practices with our social ideals. It’s time for the Public Bank of Oakland.