BY IAN FIRSTENBERG – JANUARY 30, 2020 (eltecolote.org)
It has been over a decade since the financial markets crashed in 2008, spurring foreclosure of homes, job loss for millions and economic destitution for many. The effects of this crisis are still being felt by working Americans, but for Wall Street these effects are spelled with a dollar sign.
According to KQED, since PG&E—California’s massive utility company—filed Chapter 11 protection in January 2019, lawyers and consultants have made $217 million. Corporate banks have drawn $114 million in financing fees, a number that could exceed $1 billion by the time PG&E exits bankruptcy next year.
This comes as a narrative absolving Wall Street from blame for that financial crisis is being pushed by a new working paper, published by the Federal Reserve Bank of Philadelphia in December 2019.
This highlights something working Americans have known for a long time: Wall Street is the enemy of average Americans and will make money off of their despair and destitution.
Public banking is the solution. Broadly a public bank, in the context of a large municipality like San Francisco, means that the roughly $11 billion in taxes drawn from residents is under the financial control of the City and accountable to elected officials. This is opposed to how it currently operates which is under the purview of Bank of America.
AB 857, which passed in early October of this year, is the first step to public control of these funds. This bill allows “the lending of public credit to public banks and authorize public ownership of public banks.”
AB 857 is just one step in a full sprint towards people’s control of the City’s money. It was co-sponsored by District 17 Assemblymember David Chiu and championed by local activists as a sign of progress in an otherwise brutal economic environment.
“AB 857 is really about making sure that the public’s money is used to benefit the public,” Chiu told El Tecolote. “Currently, a portion of our tax dollars go to some of the largest Wall Street banks in the form of fees and high interest rates. I think public banking could provide a more efficient and beneficial avenue to keeping the public’s money safe and investing in worthwhile community endeavors.”
Public banking providing a more effective form of money management for the public is a sentiment gaining ground with working people and politicians across the state and even the country.
“From public banking advocacy organizations, civil rights attorneys, environmental advocates, Democratic party activists, and others, many people had a hand in getting this historic bill over the finish line,” Chiu stated.
This unified front of working people, organizers and politicians is what has brought public banking to the forefront of the political discussion both in California and nationwide.
“It doesn’t make sense to line the pockets of Wall Street investors with public tax dollars when we could be investing that money back into our local communities,” Chiu stated. “Also, many large financial institutions invest in industries—fossil fuels, gun manufacturing, private prisons, immigration detention centers—that most Californians are opposed to.”
That wave of public banking support is clearly bolstered by a ground swell of people, across party lines, who see California’s investments in large conglomerate banks as not only immoral but unsustainable.
District 1 Supervisor Sandra Fewer has also pushed the public banking movement forward in recent months with legislation introduced in November last year establishing a second municipal task force focusing on what the process would look like and possibly drafting a business plan.
“This legislation [AB857] changes the game and allows a pathway for local or regional public banks to be formed and chartered by the state, an option that previously did not exist,” Fewer told El Tecolote. “We have taken many steps towards a public bank during my three years on the Board of Supervisors, but the next step necessary to move this project forward is the development of a business plan.”
Both Chiu and Fewer also focused on how a public bank would help refocus the financials power of San Francisco from underwriting corporate profits to affordable housing and small business investment.
These have been key focal points from Public Bank Coalition organizers throughout the entire process and was something some local organizers felt the first task force fell short on.
On a local level the public bank movement has largely been driven by younger, distinctly progressive organizers who have worked tirelessly to bring this conversation to the forefront of the state politics discussion.
Kurtis Wu, co-founder of the San Francisco Public Bank Coalition, is one such organizer.
“AB857 was a huge win for our coalition. We not only proved that we could pass tangible legislation but we proved to ourselves that we can take on one of the most powerful industries, Wall Street, and win. We know the fight isn’t over and we need to take this momentum and energy to the local level,” Wu said.
