The Vision for a Public Bank
Public perception of public banking can skew many directions. The idea of banking being run by anything outside of private corporations has raised concerns of government abuse or mismanagement. Since the financial collapse of 2008, however, people have wondered if our current system's own record of abuse and mismanagement requires us to look for other options. And so public banking has gained attention.
Ideas for a public bank in Seattle would include ownership by the people of Seattle. Its board of directors would be city-wide elected officials beholden to the public. However, the day-to-day managers would be competent, experienced bankers who would not be paid on fees and commissions but instead have civil service salaries .
In order to maintain accountability and transparency, the public bank would have an advisory board of Seattle citizens. There would also be built-in safeguards to prevent it from being used for political purposes, or as the bank of last resort for loans. The bank’s mission, written into the law, would be to explicitly serve the public interest of the citizens of Seattle.
Its earnings could be used to increase the capital of the bank, thus increasing its capacity to loan out money. Those earnings could also be returned to the city as a new, non-tax source of revenue. Eventually, a Seattle public bank could retire the city's debt, the servicing of which takes about 9% of Seattle’s annual budget ($360 million out of the 2013-2014 city budget).
A Seattle public bank would loan money out locally for productive projects in the real economy, and would not compete with local banks or credit unions. It would not be a retail bank, and so would not take deposits from people or hold their checking accounts. Its deposits would be the taxes and fees Seattle’s citizens pay to the city. It would be a banker’s bank, partnering with community banks and credit unions who would originate the loans.
The public bank could also finance infrastructure projects for city agencies or local jurisdictions like school districts, at low interest rates and with small upfront fees. Both these ways of creating new credit in our city could be a source of long term, sustainable job creation.
The privilege of banks to loan and charge interest has been abused by the big Wall Street Banks for decades. when they loan money to traders (speculators in the world’s markets), some of whom work for the Wall Street banks themselves (“trading on their own accounts”). One of those Wall Street banks is Wells Fargo, which is currently the city of Seattle’s banker. This is the big picture situation that has called forth the demand for public banking as a step away from the current financial system which arguably is inherently costly and risky, as we witnessed in the 2008 financial collapse.
Ideas for a public bank in Seattle would include ownership by the people of Seattle. Its board of directors would be city-wide elected officials beholden to the public. However, the day-to-day managers would be competent, experienced bankers who would not be paid on fees and commissions but instead have civil service salaries .
In order to maintain accountability and transparency, the public bank would have an advisory board of Seattle citizens. There would also be built-in safeguards to prevent it from being used for political purposes, or as the bank of last resort for loans. The bank’s mission, written into the law, would be to explicitly serve the public interest of the citizens of Seattle.
Its earnings could be used to increase the capital of the bank, thus increasing its capacity to loan out money. Those earnings could also be returned to the city as a new, non-tax source of revenue. Eventually, a Seattle public bank could retire the city's debt, the servicing of which takes about 9% of Seattle’s annual budget ($360 million out of the 2013-2014 city budget).
A Seattle public bank would loan money out locally for productive projects in the real economy, and would not compete with local banks or credit unions. It would not be a retail bank, and so would not take deposits from people or hold their checking accounts. Its deposits would be the taxes and fees Seattle’s citizens pay to the city. It would be a banker’s bank, partnering with community banks and credit unions who would originate the loans.
The public bank could also finance infrastructure projects for city agencies or local jurisdictions like school districts, at low interest rates and with small upfront fees. Both these ways of creating new credit in our city could be a source of long term, sustainable job creation.
The privilege of banks to loan and charge interest has been abused by the big Wall Street Banks for decades. when they loan money to traders (speculators in the world’s markets), some of whom work for the Wall Street banks themselves (“trading on their own accounts”). One of those Wall Street banks is Wells Fargo, which is currently the city of Seattle’s banker. This is the big picture situation that has called forth the demand for public banking as a step away from the current financial system which arguably is inherently costly and risky, as we witnessed in the 2008 financial collapse.