Public Banking Institute News: February 27, 2018
City of Seattle releases RFP for Public Bank Feasibility Study
Seattle has made their effort to create a Public Bank official by issuing a request for proposals for a Seattle Public Bank feasibility study. The city expects the final report to be submitted by August 1, 2018. Full RFP text here.
For more information and contact details, click here.
Timeline for RFP below:
|Schedule of Events||Date/Time|
|Deadline for Questions||3/12/2018 5:00 PM PST|
|Response Deadline||3/19/2018 5:00 PM PST|
|Announcement of Successful Proposer(s)||3/27/2018 5:00 PM PST|
|Anticipated Negotiation Schedule||3/28/2018 – 4/9/2018|
|Contract Execution||4/10/2018 5:00 PM PST|
Big banks got huge tax cuts, then hiked states’ and cities’ interest rates
The monster banks get monster tax cuts … then turn around and hike interest rates for states and cities. The hikes could translate into millions of dollars of extra costs for cash-strapped municipalities.
Creating Public Banks would cut these middlemen — along with the enormous soaring drain of interest payments and fees — out of public budgets.
“It takes away from money that would help the state’s reserve, or it takes away from money the state may appropriate for other statewide public purposes,” said David Erdman, the capital finance director for Wisconsin, whose payments on a $279 million loan will jump by about $750,000 next year.
Recreational pot sales are scheduled to begin in July in Massachusetts, and as yet, there are no banking services for the industry predicted to have $1 billion in sales by 2020. Cannabis Control Commission chairman Steve Hoffman said in the Boston Globe, “There’s a high degree of urgency, so it’s something we need to start talking about.”
Hoffman suggests the state should consider creating a state-run bank. That adds Massachusetts to the list of states — including California and Ohio — considering Public Banking due to the urgent needs of the legalized marijuana industry.
“Unfortunately, it’s a real possibility that the recreational industry won’t have access to any banking services. We’re working as hard as we can to preempt that, but we can’t force any bank or credit union to service this industry.”
PBI’s Nichoe Lichen said in a related American Banker article:
“There are many different uses or possible purposes for a public bank, and pot has been identified by some states as a possible focus for a public bank. Cannabis brings about a sense of urgency to the need to be able to deposit funds somewhere safely.”
Oops. $330 MILLION is a rather large mistake. Citi hiked credit card holders’ interest rates immediately after two late payments, then never corrected them as required after the customers paid on time for the next six months. Half of the credit card customers got no reduction to interest rates at all. Half got only a small reduction.
Citigroup said it would refund about $330 million to consumers after discovering it had overcharged 1.75 million credit card accounts on their annual interest rates.
The mistake was discovered after a “periodic internal review,” not via an external regulator, and the mistakes had been going on since 2011. That’s seven years of overcharging 1.75 million customers on their interest rates, which seems a very long time to take to discover a mistake of this magnitude, especially when customers are punished immediately after just two months of being late on a payment date.
Which begs the question, how many other megabanks are making these kinds of “mistakes”? And why are we allowing banks with this kind of track record of punishing customers to hold public funds?[read more]
Nomi Prins: Groundhog Day at the Fed
Author Nomi Prins weighs in on the end of Janet Yellen’s reign as chair of the Federal Reserve, and the bloody markets yet to come. There’s a fight going on.
Nomi Prins on Truthdig:
“The decade of cheap money crafted by the Fed, and dispersed through collusion among the world’s major central banks, is more powerful than any new head of any one central bank. More volatility will characterize this year, but these major central and private bankers will have one another’s backs. That means the global status quo of cheap money turboboosting the financial markets will continue, Elon Musk rocket style. It’s all these central bankers know. …
This doesn’t mean a financial crisis of greater magnitude isn’t brewing. It is. But central bankers will fight like hell to avoid it, using the only weapon in their arsenal: an unlimited, unregulated and unchecked ability to fabricate capital for the financial system. …
Cheap Money Hasn’t Worked for Main Street
The markets (read: big banks) got upset that their flow of cheap money might dare come to an end. Yet the stated goal for this money flow, boosting the overall economy, hasn’t been achieved … except in the eyes of politicians, central and private bankers, and people blind to the correlation and causation of cheap-money policy with asset bubbles.