Colorado Taking Hard Look At Public Banking.

by Jerry Alatalo

mountain55Alphabet It seemed only natural to follow Elizabeth Warren’s dressing down of Federal Reserve Chair Janet Yellen with a post on public banking. At the Banking On Colorado Conference in Denver on January 31, 2015, Ellen Brown, Gwendolyn Hallsmith and Mike Krauss were part of the first panel on the potentials for public banking in that state.

Former Goldman Sachs derivatives executive, author Nomi Prins also spoke at the conference, and for a few minutes at the end of the video below. For those interested, her 40-minute talk is found by going to YouTube “argusfest” channel, along with more video talks from the Colorado conference.

Some of the interesting facts covered in the discussion include how the Bank of North Dakota (BND) became established in 1919. Farmers in North Dakota were getting squeezed out of business by Wall Street bank monopolists in control of the infrastructure upon which farmers depended to make money. Bankers manipulated costs and prices to guarantee farm failures and bankruptcy, allowing them to sweep down and buy farms for pennies on the dollar.

Farmers became aware of the bankers’ corrupt practices and joined in forming the Bank of North Dakota to prevent losing their farms. Since then the state-owned bank has been successfully operating and helping the state with infrastructure projects, business investments, student loans, natural disaster financial aid, among other benefits. Probably the biggest benefit of BND and public banks in general is the amount of interest expense money saved through self-financing of schools, roads, buildings, green energy projects, and any of the many other large expenditure projects. Public banks allow governments of all sizes to borrow from “themselves” instead of borrowing from privately owned banks.

In these uncertain economic times, especially with the systemic risk of derivatives in the hundreds of trillions of dollars held by the “Big Six” too-big-to-fail/jail banks, public banks remove virtually any risk to city, county or state government deposits. Given how the large banks and Wall Street have steered campaign money to Washington politicians and hence arranged the nation’s laws in their in favor, government finance/treasury officials across America would be wise to consider public banking to keep public revenues safe.

As Ms. Brown, Ms. Hallsmith and Mr. Krauss point out in their discussion, politicians in Washington, D.C. are not going to help cities, counties and states across the country establish public banks because “we are not a democracy anymore”. Speaking to the people of Colorado in the audience, Mike Krauss told them that “we don’t need Washington to start a public bank”. Concentrated wealth equals concentrated political power, and, after the Citizens United Supreme Court decision, financial sector concentrated wealth has in effect used “legalized bribery” to rig the laws and regulations in their favor, making it even more important to intensify the public banking efforts of men and women across the United States.

Other topics touched on in this highly informative and revealing discussion in Denver includes systemic risks posed by massive derivatives holdings in the largest banks, completely inadequate FDIC funds in the unfortunate event of a derivatives meltdown, new banking laws/rules which put taxpayers, government funds, and personal deposits at risk, how oil price drops may entail severe negative consequences for the financial health of the country, Federal Reserve reform, and more.

For the people of America, establishing public banks based on the Bank of North Dakota model is simply a “no-brainer”.

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(Thank you to argusfest at YouTube)

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For more information, please visit:

http://www.publicbankinginstitute.org

http://bankingoncolorado.org

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Public Banking Movement And Trans-Pacific Partnership (TPP).

February 1, 2015

(Cross-posted from publicbankinginstitute.org)

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Is The Trans-Pacific Partnership A Danger To Public Banks?

posted by  
January 29, 2015

Many people fear that secretive trade talks with corporate lobbyists may prohibit public rights to control common assets.

The United States Congress is very close to granting President Obama the authority to “fast track” negotiations for the Trans-Pacific Partnership, a trade deal largely negotiated in secret that could have profound implications on financial, labor, and environmental standards in the United States. Democracy Now! reports:

The top U.S. trade official has told lawmakers the 12-nation Trans-Pacific Partnership trade deal could be wrapped up within months and urged Congress to give the White House fast-track authority to approve the deal. Protesters with the group Flush the Trans-Pacific Partnership repeatedly interrupted U.S. Trade Representative Michael Froman’s testimony before Congress. The protesters — Dr. Margaret Flowers, Kevin Zeese and retired steelworker Richard Ochs — were all arrested after being removed from the hearing.

And, according to Barbara Chicherio, writing last year in Nation of Change:

The Trans Pacific Partnership (TPP) has the potential to become the biggest regional Free Trade Agreement in history. . . The chief agricultural negotiator for the US is the former Monsanto lobbyist, Islam Siddique.  If ratified the TPP would impose punishing regulations that give multinational corporations unprecedented right to demand taxpayer compensation for policies that corporations deem a barrier to their profits.

For at least the last two years, since activists have been expressing concern about the TPP, many commentators have speculated that the agreement poses an immediate, long-term threat to publicly owned banks like the Bank of North Dakota. The rationale for this concern is that public banks are “state-owned enterprises” that are seen as a barrier to private profits—something against which the TPP would throw considerable barriers. In an April 2013 interview on The Real News Network, Kevin Zeese called the TPP “NAFTA on steroids” and “a global corporate coup,” warning:

    No matter what issue you care about—whether its wages, jobs, protecting the environment . . . this issue is going to adversely affect it . . . .

If a country takes a step to try to regulate the financial industry or set up a public bank to represent the public interest, it can be sued . . . .

The suspicion that publicly owned entities would be targeted by the TPP, and that public banks would be included in that targeting, is most notably detailed in a March 2013 analysis by Sam Knight, who describes trade lobbyists as specifically concerned with the “preferential financing” afforded to public services—possibly (though not decisively) services like those financed by the BND. According to Knight,

Publicly owned enterprises, for example, are being targeted by negotiators. One such entity in the United States that has been the subject of considerable interest in recent years is the Bank of North Dakota (BND) – the only fully publicly owned financial institution in the country. The BND, which is only allowed to lend wholesale, was a stabilizing force that helped keep the already energy-rich state insulated from the shock of the financial crisis (Alaska, for example, didn’t fare as well). It has also brought a small fortune to the state’s treasury – $340 million in net tax gain between 1997 and 2009. Legislators in at least 13 different states have proposed studying or emulating the North Dakota model – state-owned development of central-bank style institutions guaranteed by tax revenue. But if the TPP is passed, that option might not be available. Weisel said that State Owned Enterprises (SOE) are routinely “competing directly with private enterprises, and often in a way that is considered unfair.”

“Some of the advantages that can be conferred on State Owned Enterprises are things like preferential financing,” [trade lobbyist] Weisel said. “Those are things that wouldn’t be provided to private companies – preferential provision of goods and services provided by a government.”

She said that “State Owned Enterprises – which in some cases can comprise a significant percentage of an economy – can be used to undermine what we’re otherwise trying to gain from this free trade agreement.”

A spokesperson for the BND declined to comment on whether or not this outlook was perceived by the bank to be an institutional threat. But, depending on the report’s language, foreign bankers could claim that the BND stops them from lending to commercial banks throughout the state.

These concerns led Kevin Zeese and Margaret Flowers to conclude:

These same provisions about state-owned enterprises will affect public banking too. North Dakota is the only state in the US to have a public state bank, although over a dozen states and cities are considering them. Public banks are used to hold taxes that are collected, administer payroll for public employees and provide loans for public projects. The advantage is that all public dollars are managed in a public institution rather than having to pay fees and interest to a private bank. But the TPP would consider public banks to have unfair advantages and therefore violate free trade.

The greatest indication that the TPP threatens to stymie or eliminate public banks comes from trade lobbyist Michael Wendell’s testimony to the Congressional Subcommittee on Trade:

SOEs [state-owned enterprises], by definition, are interested in promoting the interests of their home country, and are all too often guided by state interests, rather than commercial interests. Why does this matter? Let’s consider a Chinese SOE. Chinese SOEs benefit enormously from below-market-rate financing by state-owned banks at rates well below what American companies pay. Many of these loans may not have to be repaid at all. How does a commercial entity here in the U.S. compete with the U.S.-based operations of an SOE that sets up shop here? . . . There are many ways that disciplines on SOEs can be developed as part of the TPP talks. The best approach would be to ensure that all transactions are based on commercial considerations.

There is certainly no question about whether TPP advocates are eager to target, penalize, and discourage public entities. Even “liberal” American commentators take a negative view of state-owned enterprises, particularly government management of banking assets. Writing for the Center for American Progress, Sabina Dewan argues:

A number of Trans-Pacific Partnership participants—among them Vietnam, Malaysia, and Singapore—manage their economies through a state-capitalist model in which the government directly or indirectly controls many of the economy’s productive assets, formal financial systems, and activities. These enterprises participate in commercial markets but enjoy state backing. They benefit from preferred access to bank capital, below-market-rate financing, favorable tax treatment, capital injections, and other advantages that distort the playing field and put American firms and workers at a competitive disadvantage.

Similarly, in his analysis of the TPP, the Brookings Institute’s Joshua Meltzer perpetuates the assumption that there is an inevitable “trade distorting impact” when public entities “do not [operate] according to competitive market-based principles.”

Making what, to me, appears to be a typical recommendation, the decidedly anti-“statist” Dewan says that U.S. negotiators “should insist that state-owned enterprises be evaluated under the agreement as if they were operating solely according to commercial considerations.” Of course, we know that public banks may well have mission statements in their charters that mandate operations for the sake of non-commercial considerations. Given this divide, it’s easy to understand why many commentators are worried that public banks would be targeted by the TPP.

It is language and assumptions such as these that lead commentators like Les Leopold to worry that, under the TPP,

Depending on the final language, it is possible that the activities of the Bank of North Dakota could be ruled illegal because “foreign bankers could claim the BND stops them from lending to commercial banks throughout the state” . . .

The assumption that state-run financial operations “distort” the free market, of course, ignores the fact that governments, including and especially the United States, currently prop up big banks to the tune of trillions of dollars, utilizing both bail-outs and, now, bail-ins, intervening at almost every stage of the game, and not necessarily in ways that are conducive to the interests of the majority.

Such assumptions ignore an important distinction made by Ellen Brown in The Public Bank Solution: the distinction between government ownership of the means of production (also known as socialism), and the philosophy of public banking:

. . . government oversight of the system of credits and debits that undergirds a functioning economy, ensuring that the system operates effectively, fairly, securely, and to the benefit of all. Banking, money, and credit are not market goods but are economic infrastructure, just as roads and bridges are physical infrastructure. Banking and credit need to be public utilities for a capitalist market economy to run properly. By providing inexpensive, accessible financing to the free enterprise sector of the economy, public banks make commerce more vital and stable. (The Public Bank Solution, p. 3)

So the real question is whether TPP negotiators and interpreters will see banking more as a market good, or more like a road or bridge (since it is unlikely that public infrastructure such as roads and bridges will fall under critical scrutiny in the regime of TPP trade complaints). Those opposing the TPP believe that nothing in the history or trajectory of America’s big bank-driven policy making suggests that trade representatives would interpret banking as a utility; after all, the very reason that we don’t have more public banks in the United States is precisely that banking is seen as a profit-making venture rather than a utility.

All of this is speculative, though, because the TPP is being negotiated almost entirely under a shroud of secrecy—and this uncertainty doesn’t make anyone concerned about the TPP’s effects feel any better about possible outcomes.

In the end, then, we will not know what the impact of the TPP will be on the BND and other potential public banks in the United States until long after it is negotiated. Given the tendency of trade negotiators to view banks as profit-making businesses, and to argue that state-owned enterprises should be evaluated through the criteria of pure “commercial considerations,” there is understandable suspicion that passage of the TPP will significantly complicate the implementation and existence of public banks.

It wouldn’t be the first time that public banks were challenged, though, nor would it be the only international agreement-based challenge to public banking: As Ellen Brown outlines in The Public Bank Solution, the Basel Committee on Banking Supervision created new global rules (called Basel III) raising the mandatory reserves banks are required to hold, ostensibly to avoid another 2008-style crisis. As Greg Keller and Frank Jordans argued at the time, the rules are a threat not only to community banks, but also public sector banks.

Public Banking In 2015: Superior To Wall Street ‘Casinos.’

Posted on January 2, 2015

by Jerry Alatalo

FedAlphabet After the United States House of Representatives and Senate allowed Citigroup-written provisions in the Cromnibus national spending bill to pass into law, Senator Elizabeth Warren “enjoyed” nationwide fame for her forceful opposition to the language which repealed Dodd-Frank rules on derivatives specifically created to protect American taxpayers.

Besides asking how and why America’s elected representatives would agree to a measure in direct opposition to the overwhelming majority of citizens’ demand of never again bailing out too-big-to-fail banks, another question which comes up is “what other private sector companies have secured ‘help’ from taxpayers when their businesses fail?” Perhaps men or women reading this run their own businesses. Even without the ability to take gigantic derivatives risks – or engage in massive financial frauds, certainly people who “play by the rules” when managing their companies have no taxpayer bailouts lined up for them when any combination of conditions greatly harms their firms.

And with the five largest banks holding $280 trillion in derivatives (bets), the “Citigroup Provision” could lead to world record-type “helping” from Americans to Wall Street gamblers. There could be no clearer example of how the United States financial system – along with those of nations in the G20 group who’ve agreed to similar “bail-in” plans – is correctly perceived as “rigged”. Most Americans want to see the Supreme Court decision on Citizens United overturned through a constitutional amendment, surely a worthy cause if ever there were one – removing money out of politics and elections, never again allowing billionaires to literally “buy” lawmaking power in campaigns all across America.

If – when – Americans become successful in the 50 states to overturn Citizens United, besides a constitutional amendment taking money out of political campaigns another amendment could read “Taxpayer money shall not under any condition become appropriated and/or transferred to any privately owned corporation or entity”.  When the inevitable Constitutional Convention comes close to reality, the number of legitimate corrections which have become necessary over the decades will be found significant and the topics of a great many, long overdue debates.

Public banking expert Ellen Brown talks to James Corbett about new G20 rules, where Cyprus-style “bail-ins” could hit ordinary depositors and pensioners very hard. Ms. Brown has spent years talking to people around America and the world about the advantages of creating public banks like the state-owned Bank of North Dakota, the most obvious advantage with respect to “rigged” protection for Wall Street high rollers in the multi-trillion dollar derivatives market being providing a safe, gambling-less place for government, pension, and private depositor money.

Ellen Brown responds to those who think public banks are not feasible or possible to set up that any government institution from city, county to state could start a public bank in a couple of months time. The interest and movement toward public banking is growing and, according to Ms. Brown: “it’s only a matter of political will”. So, will Americans settle for privately owned bank corporations, whose charters demand profit maximization, to continue running all things financial in the 50 states?

Or will Americans in every state take strong actions which embrace self-determination and sovereignty, with the supreme goal of returning the power to control the nation’s monetary affairs to the people, in the form of a public central bank to replace the Federal Reserve created in 1913?

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To get involved, please visit http://publicbankinginstitute.org

(Thank you to GlobalResearchTV at YouTube)

America’s Public Banking Movement: The 99%.

Posted on December 9, 2014

by Jerry Alatalo

aaa-42Alphabet New Mexico is one more state in America where political leaders and citizens have begun looking seriously at the economic benefits of establishing state-owned public banks. The most basic advantage for communities and states is keeping much more of their financial resources instead of transferring significant funds to profits-driven, gambling-addicted, so-called “too big to fail/prosecute” Wall Street giants.

At the end of September 2014 hundreds of citizens, politicians and public banking advocates gathered in Santa Fe, New Mexico for a “Public Banking Symposium”, and entered into discussions centered on changing the financial landscape in the state. The Mayor of Santa Fé, Javier Gonzales, attended and spoke briefly. New Mexico state representative Brian Egolf was one of the organizers of the event, and spoke about how his colleagues in the state legislature had little knowledge on the concept of public banking when he first brought it up with them, and that their reactions were similar to people who hear a new idea/proposal then first conceive of it as impracticable or “pie in the sky”.

An older public banking citizen activist by the name of Craig Barnes delivered a thoughtful, insightful address that was one of more excellent philosophical explanations of the good reasons communities and state should consider the – as Ellen Brown coined it as the title of her book – “Public Bank Solution”.  Mr. Barnes pointed out the deep contrast between historical city, county and state finance which sees large amounts of capital leaving states and regions, essentially “vacuumed” toward international banking cartels enabled by Washington, Wall Street lobby-procured politicians, and public banking, where those funds stay “at home”.

Mr. Barnes told the audience that “We are here to get off of our knees and stand up”. Apparently, a lot of Americans feel the same way as New Mexico’s Craig Barnes, and have taken action resulting in 20 or so state legislatures across the country considering and talking about creating public banks. President and founder of the Public Banking Institute Ellen Brown gave the keynote address at the end of the symposium, where she mentioned to the audience that the world’s largest depository bank is found in Japan, and that it is state-owned – a national public bank.

Public banking systems, the movement toward establishing them across America, and widespread discussions on the tremendous benefits to local, state, regional or national (the Federal Reserve system is privately owned) communities have very little connection to ideological or political stances (public banking is incorrectly perceived as socialism) but have timely, extremely relevant connection to the idea of small to large communities of citizens’ sovereignty, or independence.

The following video comes from the New Mexico discussion on public banking. Lest people miss the global aspect of sovereign, public banking systems and how the choices of nations/people on their financial organization have highly significant consequences, one need look no further than the recent historic announcement by the international association called the BRICS nations (Brazil, Russia, India, China, South Africa and others) of a new development bank which will “compete” with the International Monetary Fund (IMF), World Bank (WB) and other major institutions.

The BRICS development bank announcement was a profoundly historic event which has created a new, never-before-seen set of conditions on Earth. Whereas before the governments of the world had no other option when faced with the need to obtain multi-billion dollar development loans but the IMF, WB and similar global banking institutions – and because of the highly negative societal results coming from many of those transactions through recent decades, especially massive, impossible-to-repay debt incurred by so-called third world countries – there is now another option.

A simple analogy is where there has been one bank to serve a county – a monopoly, no-competition situation – for what seems like forever, then a new competitor bank sets up operations and begins to compete for the county’s customers. Considering the astonishing fact not one bank executive went to jail (not one was prosecuted) after the economic crisis of 2007/8 even though most serious observers agree that massive, systemic fraud occurred – and combining that with the perceived-by-most, absolutely out-of-balance influence exerted by America’s wealthiest on members of Congress – one can envision the level of opposition to proposals for public banking initiatives going forward.

Of utmost importance with regard to analyzing global conditions is envisioning the true extent of the extreme dangers of major escalation in violence when the scale of opposition cannot possibly be larger: international, formerly competition-less banking institution major stockholders/owners opposed to BRICS. Returning to the simple county bank analogy, let us assume that the monopolistic bank had taken advantage of its competition-less position and that their reputation had suffered severely because everyone living in the county heard many “horror” stories from their neighbors.

The international banking cartel has become placed in a very difficult competitive position due to degradation of their reputation after “horror stories” told by leaders of nations (customers) to each other over time became widely known. BRICS offers those customers another option; people around the Earth must become extremely vigilant to prevent unwise, violent, harmful reaction from occurring in what can reasonably be described as perhaps emergence of the greatest high-stakes wealth competition in world history.

Assuming that those who hold tremendous financial power think deeply and choose to refrain from taking the horribly unwise, immeasurably tragic option of war and killing to “win”, humanity will experience encouragement and an increase of belief in the real chance of cooperatively creating a new, more equal, peaceful and moral world for this and future generations.

When Americans in the Occupy movement marched with signs reading “We Are The 99%”, likely none of those men and women imagined that only a few short years later their message would have traveled and become loudly heard around the Earth.

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Please share the following website with friends, relatives, and elected officials in your region. For more information please visit:

http://www.publicbankinginstitute.org/

(Thank you to OccupyNewMexico at YouTube)