We note with sadness the passing of Chuck Turner, a long-time community advocate, organizer, and former Boston City Council member, who joined our advisory board in our early days when our focus was on establishing a public bank for the greater Boston area. He was a source of information, good strategy, and inspiration, and we honor his decades of work to make his city a place of fairness and respect where all its people can thrive. We join with people and organizations, especially in his home neighborhood of Roxbury, in expressing our respect and gratitude for his life and work.
Our group has lost one of its founding members: Joanna Herlihy, of Cambridge, Massachusetts, who passed away at home on November 29. As a public banking advocate she was instrumental in moving us from our early focus on a public bank for Boston to our current statewide legislation. We will miss the precision and determination that she brought to our cause and our thoughts are with her family and her friends.
Joanna was someone who was just as willing to address envelopes as write legislation, and she lent her intelligence, her work ethic and her passion for justice not only to public banking but to many campaigns and causes over her life. She helped pass Cambridge’s rent-control law, joined the 1969 student-led occupation of Harvard’s University Hall to protest the ROTC program, and served as an OAS observer in Haiti’s first modern free election. She was an advocate for climate justice and an active committee member of the Massachusetts Green-Rainbow party. She was also a farmer in Ontario for several years, and served a tour in Jamaica in the Peace Corps. She will be greatly missed.
Couldn’t agree more with this column by Jason Pramas in DigBoston!
Jason quotes our “Clear Case for a Public Infrastructure Bank” document, which lays out some of the documented problems with Massachusetts’s roads, bridges, tunnels and water systems, and gives results of a survey we did of Massachusetts mayors which demonstrated a need and interest in alternatives to current funding sources, including state or federal grants and bonding.
He details California’s adoption of AB 857, which permits the creation of ten public banks over the next twelve years in California, following state review and approval of their business plans. The California bill doesn’t put any restriction on the financing these banks can provide, although they will not be providing retail banking services to individuals. Proponents of AB 857 made a strong case for the bank being able to finance projects that big banks might pass by because of concerns about limited return on investment, such as small business loans and affordable housing. As the LA Times pointed out,
“Proponents say public banks can pursue those projects and support local communities’ needs while being free of the pressure to obtain higher profits and shareholder returns faced by commercial banks. Support for public banks also has grown since the financial crisis a decade ago and since Wells Fargo & Co. was embroiled in a slew of customer-abuse scandals in recent years.”
Jason points out that the California bill gives a boost to public banking efforts nationwide, including our bill, H.935/S.579., noting that a Massachusetts bank could start with infrastructure financing and then evolve and expand its mission to provide the broader range of services that the Bank of North Dakota offers, and that California banks are looking to offer as well. This is something we’ve discussed as well, and the bill as filed does leave broadening the mission open.
One of the outstanding strengths of the California campaign was its outreach to potential organization and political support. In the end, AB 857’s endorsers included the city councils of many of the state’s largest municipalities, unions, citizens groups, and political organizations, representing more than 3 million California voters. Lots of citizen lobbying in Sacramento helped drive the bill to the governor’s desk, where Governor Gavin Newsom was already on record in support of the concept.
Advocates for public banking were also darn near indominable, working on city level campaigns for years preceding the bill’s filing and the subsequent media focus on the issue. They refused to give up, reframing a 56-44% city ballot question defeat in LA as a victory for a very low-budget campaign introducing a new idea to millions of voters on a tight time frame. That dedication paid off.
Jason points out that it was the same kind of grassroots movement that built the Bank of North Dakota a hundred years ago. As for Massachusetts? “With the help of you and few thousand friends, who knows?” We could use a few thousand advocates with our state legislature, and we don’t mind coming out to meet you all a dozen or so at a time. If you’d like to invite us to talk to a group—union meeting, party city or town committee, civic organization, etc,—or just want to know more as an individual voter, please contact us!
This opinion piece, “Myths about Wall Street Banks,” is author and public banking activist Rick Girling’s reply to an article critical of the California public banking movement entitled “Myths about LA’s Public Banks,” by Jack Humphreville.
Both essays are worth reading, as they reiterate and in some cases respond to a lot of the common criticisms lobbed at public banks, including cost, risk, cronyism, and lack of public support.
Girling doesn’t answer every argument Humphreville raises, but easily could. For instance, the idea that Measure B’s defeat last November at the ballot box means that public banks do not enjoy public support is belied by the more than 100 organizations and more than one dozen city councils that have gone on to endorse the current state bill, AB 857. In fact, any campaign that, like Measure B, starts off with no money and very little time to explain a very new and somewhat confusing idea, and then wins 44% of the electorate over, should really look at that election as an outreach opportunity rather than a defeat, which is just what the California Public Banking Alliance has done.
AB 857 is going to return to committee, Assembly, and Senate deliberation later in August, and the expectation is that if it passes in the legislature it will be signed into law by Governor Gavin Newsom. From then it’s up to public banking advocates and city or county government to take the next steps toward devising economically viable plans for public banks. Those of us who are working on public banking across the country are hopeful for the bill, and optimistic that we’ll have some excellent models to work from before too long.
A little-known fact, especially in the US: a quarter of all banks are state-owned public banks. Yet not all of them operate effectively, equitably, or in response to the needs of the people they ostensibly serve.
The potential of public banks to work for the benefit of cooperatives, small business, equitable economic development, and fair trade is not always realized, says Thomas Marois, Senior Lecturer in Development Studies at University of London, in this video.
We need to build and maintain a popular movement to keep the public in public banking and forestall problems with corruption and bad management. That way we can have a banking system that can support businesses and farmers during down times as well as good, lend for socially progressive and environmental purposes, and privilege the common good over simply focusing on profit.
Marois is right to point out that access to money and credit can’t be left to the private sector, and that civil society has to push for public banks that are small d-democratic and committed to working for the common good. That means that organizers have to overcome the public’s gut-level cynicism about the competence and honesty of government and possible reluctance to expend the time and energy to play even a small role in ensuring that public banks function properly. It’s therefore exciting to see how California activists have been bringing local campaigns and different groups on board to endorse state bill AB 857, which would allow cities and counties to set up their own public banks. We hope that broad support helps ensure favorable reports out from Assembly committees this week!
Washington State Senator Bob Hasegawa, a long-time advocate for public banking, has filed a bill, SB 5949, that would create a public state investment trust and a commission to oversee it. He filed a similar bill in the last session. The bill’s focus on a public-bank-style mechanism for funding infrastructure is similar to our own Massachusetts bill, filed in the House as HD426 by Rep. Mike Connolly , and in the Senate as SD861 by Sen. Jamie Eldridge.
The bill text notes that there are “significant public infrastructure and program needs…that are unmet” in the state, and that the cost of bonded debt is roughly twice as much as the amount borrowed. A public lending institution would allow those interest payments to come back to the state, producing sustainable and lower cost revenue for the state without a tax increase, and expanding financing capacity for needed projects.
The bill is bolstered by a positive report issued in December by University of Washington’s Evans School of Public Policy and Governance, which concluded that: “Improvements can be achieved by creating a state-chartered public cooperative bank.”
The Evans School is working on a business plan for the bank as well, which will be out later this year.
You can watch the bill’s hearing before the Washington state Senate Financial Institutions committee here; the testimony starts about 6 minutes in with an explanation of the trust’s structure, deposits, and oversight. Sen. Hasagawa, in his remarks, notes that the support for the bill so far ha s been driven by the need to address infrastructure, and its cooperative nature, and while the public bank concept is still new for some people, it’s a strategy used around the world. “It’s a true game changer for the state to get something like this going…If we can retain control over our own tax dollars and decide how we want to spend it for economic development purposes within our own state and make money in the process… man, I don’t really see a downside to it.”
The comments against the bill, by the Washington Bankers Association and representatives of the state community bankers association, the county treasurer’s association, and the pension fund, highlight concerns—it’s no surprise they testified against a public bank, but it’s important for pro-public bank advocates to address these concerns, as some are also concerns for taxpayers and voters:
- Will there be political influence over the bank?
- Will this bank represent a real savings for the state once start-up and operational costs are factored in?
- What about risk?
- What if state agencies do not want to deposit funds in the bank? (Note that while this is required in the Washington legislation, it is not part of the Massachusetts bill.)
Clearly we’ll be working to answer these questions in Massachusetts too. (Of course, political influence on a public bank begs the question of how much influence the banking industry has over government, via lobbying, campaign donations, and the revolving door.) We are confident that a no-executive bonuses, no-advertising for commercial business public bank can be run economically. As for risk, we’ve found that municipal bond defaults here are extremely rare.
David Art, publisher of MASSterList, an extremely useful daily digest of Massachusetts political and policy news, events, and jobs, recently sent out a survey to readers, and among the questions was one on priorities for the Baker administration. Art notes…
“We thought it interesting that nearly 70 percent of our respondents put Infrastructure investment at the top of the issues the Governor should focus on in 2019, but the Governor’s recent inaugural address only references an $8 billion investment in MBTA infrastructure – not roads and bridges. Other issues you rated highly were healthcare cost (60%); The MBTA (54%); the Opioid epidemic (30%); legalized marijuana (30%) and our “Other” (26%) – (which had many write-ins for Education)… We took note of your suggestions for future MASSterList events with Infrastructure at the top at 60% followed by Education (54%), Marijuana (28%), and Gambling (17%).”
Bold-type emphases are the author’s.
Maybe we shouldn’t be surprised at the response. Infrastructure relates to concerns about growth and congestion, private and public transportation, and climate resilience, as well as overall quality of life and growing income inequality, especially for those who are squeezed out of the market for walkable, high-service urban and suburban neighborhoods. We’ll be on the watch for the infrastructure-related events Art refers to as well.