Seattle issues a RFP for a public bank feasibility study

On Monday, Seattle made their effort to create a public bank official by issuing a request for proposals for a Seattle Public Bank feasibility study. The city is seeking “a skilled consultant available for immediate work to evaluate the legal, financial and administrative feasibility” of a public bank, as well as the potential community benefits. The consultant will be expected to deliver a final report by August 1, 2018. The city has budgeted $100,000 for the study. You can read the RFP here.

The RFP follows the Seattle City Council’s passage of Ordinance 125257 in February 2017, which cut back on the city’s dealings with Wells Fargo due to the bank’s involvement in the Dakota Access pipeline and predatory lending practices. Seattle opted not to renew their contract with Wells Fargo for bank depository services, and put a three-year ban on new investments in bank securities, while seeking a more socially-responsible banking service provider. At the time, some city council members also indicated interest in a city or state owned bank.

How a Massachusetts Infrastructure Bank could fund disaster relief and preparedness

A little over a month ago, a nor’easter flooded coastal neighborhoods in Boston and both the north and south shores. Today, the Boston area will likely set a new record high for February 21. Municipalities are only just beginning to plan for floods, droughts, severe storms, and record heat in the face of collapsing weather patterns; here’s how a public bank can help increase community resiliency.  This article was part of the presentation at a legislative briefing on H3543, An Act Establishing the Massachusetts Infrastructure Bank.

by Steve Snyder

As a chartered bank owned by the State and People of Massachusetts, the Massachusetts Infrastructure Bank is mandated to serve the needs of its citizens through its loan program. Disaster relief and public health emergencies are now occurring with increased frequency and they must be responded to quickly in order to save lives, preserve communities and businesses, and maintain our vital infrastructure. Institutions, strategies, IT infrastructure, and personnel plans are in place, but the bottleneck is in funding that is responsive, adequate, and sustained.

A state-owned bank can also respond rapidly and flexibly because its profits do not have to be maximized in the short-term to serve absentee shareholders. As a public institution, it can effectively coordinate with the local public safety, media, hospital, business, finance and insurance sectors as well as other State and Federal Agencies

The consequences of a rapid response are clear in the following example. During the Grand Forks flood in the spring of 1997, the state-owned bank of North Dakota quickly established nearly $70 million in credit lines for the state Division of Emergency Management, the state National Guard, the City of Grand Forks and its state university, and the rebuilding of a key dike. The Bank of North Dakota also worked with local financial institutions and foundations to raise and coordinate relief funds both for Grand Forks and other areas affected by spring floods. Further, BND negotiated forbearance on student loans and housing loans backed by the federal government. It also reduced interest costs for farmers.

The flood inundated 75% of homes, impacted five thousand businesses, and necessitated the evacuation of 50,000 people. Throughout the months of recovery the Bank of North Dakota tirelessly supported its citizens. As a result, Grand Forks lost 3% of its population between 1997 and 2000. By contrast East Grand Forks across the river in Minnesota lost 17% of its population during the same period. Having ready credit for saving lives and rebuilding meant that the community of Grand Forks and its tax base were largely preserved.

Massachusetts needs a state-owned infrastructure bank that can provide credit to rebuild our communities in the event of a disaster and support shared economic prosperity. For this reason, in addition to the improved safety and profitability of our State’s deposits, we urge you to support H3543.

 

The cannabis industry’s banking problem, plus Congressional fixes and who supports them

The disconnect between state-level legalization and federal prohibition has left the cannabis industry pretty much “unbanked,” and there are potentially billions of dollars in play, from small business loans to retail banking services to tax payments. In California, the question of what to do with this money is one of the drivers behind a growing interest in public banks, especially at the municipal level.

But federal prohibition also represents a little windfall for the US Treasury, as Ellen Brown points out in this post on the Web of Debt blog. Businesses that are legal at all levels of government are allowed to deduct costs when filing taxes. The bar owner who buys $2000 worth of little fake Tiffany table lamps can claim a business expense; the grower who buys $2000 worth of grow lights cannot. As a result, writes Ellen, “The government makes a massive profit off the deal, snatching up to 70 percent of the proceeds of the reporting businesses, as opposed to the more typical rate of 30 percent.”

Banks that take cannabis industry money can currently be accused of money laundering, which became a crime only in 1986, and probably shouldn’t be a crime in the first place, since, as Brown writes, it hasn’t been a deterrent, and its prevention leads to “reporting requirements [that] are so burdensome and expensive that they have caused many smaller banks to sell out to larger banks or close their doors.” A decriminalization bill in Congress, H.R. 1227, the Ending Federal Marijuana Prohibition Act, sponsored by Virginia Republican Thomas Garrett and 32 cosponsors, is one fix (so far the only Massachusetts cosponsor is Rep. Michael Capuano) Another is the Secure and Fair Enforcement (SAFE) Banking Act (HR 2215 in the House, with our Reps McGovern, Capuano and Moulton co-sponsoring, S1152 in the Senate with both our Senators signed on) to “provide a safe harbor” for banks that provide financial products or services to state-legal marijuana businesses.

Maine Public Banking group recognizes legislative supporters

The Maine Fiddlehead Focus reports that Maine Public Banking recently presented its Profiles in Courage Awards to two state senators who supported a State Green Bank proposal despite what organizer Randall Parr characterized as “substantial misrepresentation” of the concept of public banking by members of the state’s financial establishment.

The Maine green bank bill was voted “ought not to pass” by the state legislature’s Join Insurance and Financial Services committee.

Other state legislators involved with the bill were also recognized by Maine Public Banking.

You can read the proposed legislation here.