Public Banking Institute News: May 3, 2018
The long wait is over! The U.S. has another Public Bank! And the winner is … American Samoa
The race to create the next Public Bank in the United States has been won by far flung American Samoa! In early April, the Federal Reserve — after two years of delay — allowed the Territorial Bank of American Samoa access to the U.S. payments system.
An article in American Banker by editor-in-chief Rob Blackwell quotes PBI Chair Ellen Brown:
“It does set a precedent. … It definitely will add impetus.”
The article continues:
“It’s a huge deal for the people of American Samoa,” Phil Ware, president of the Territorial Bank, said in an interview. …
“There hasn’t been a commercial loan made on the island in five years or more,” he said. “So one of the first things we want to start doing is extend credit to the small-business community. That is a necessary part of the economy.”
Public-bank supporters, meanwhile, see the Fed approval as a sign that there won’t be regulatory hurdles to the creation of additional public banks in the U.S.
News of the postal banking bill spurs several reports
The step taken by Sen. Kirsten Gillibrand last week to introduce new legislation that would require every Post Office in the country to provide basic banking services has generated quite a few articles.
The Hill published an excellent opinion article by two economists articulating just how expensive it is to be poor in this country without any banking access: “The average payday loan charges the equivalent of nearly a 400 annual percentage rate (APR).” The authors describe the “banking deserts” that exist in many poor communities and praise the Public Bank model:
“To fully participate in the modern economy, people need access to financial infrastructure — the ability to cash and write checks, send money, pay bills, have access to credit, etc. A public bank, if done well, could address these glaring problems in the current financial services landscape.”
Another article in ThinkProgress makes the point that Gillibrand’s bill ups the stakes while riding on the coat tails of tireless work done for many years by behind-the-scenes advocates such as law professor Mehrsa Baradaran and Katherine Isaac of the Campaign for Postal Banking. Isaac said in response:
“We’re happy to have Sen. Gillibrand’s enthusiasm added to the chorus, but we’re still pushing for the things the postal service can do now.”
David Dayen: The ultimate cash crop: How a pot crisis restarted a conversation about Public Banking in America
David Dayen has written an insightful article in The New Republic on the serious problems legal cannabis raises when there’s no banking services to be had for the industry, and how these real issues are jumpstarting renewed serious interest in Public Banking. But, as Dayen points out:
“Public banking can do more than just warehouse pot dollars. The model is fairly simple: A public bank takes deposits from city and state tax revenues, giving it a capital base of potentially tens of billions of dollars. Then it could leverage those deposits to make loans for local public works projects, small businesses, affordable housing, or student loans. … But more than anything, public banking is about regaining democratic control. America is the richest country in the world; public banking advocates want to put that wealth to work on behalf of the people who created it.”
The more often the details of what a Public Bank can do are in public conversation, the more widespread the understanding becomes.[read more]