The original Bank Transfer Day, on November 5, 2011, was created by Kristen Christian. The tradition is repeated every November 5 to remind everyone to move their money from the large corporate banks to credit unions or local community banks.
DemocracyNow.org on the creation of Bank Transfer Day:
Move Your Money: Move Your Money tri-fold
Dump your big bank and save
Tired of your megabank’s fees, tactics, and practices?
Remember Bank Transfer Day, two years ago this month? That’s when mad-as-hell consumers were supposed to bring giant banks such as Bank of America, Chase, and Citibank to their knees by moving their money to nonprofit credit unions.
Now the top 10 credit unions have caught up, and many smaller ones have added, or are working to add, smart-phone banking, says Mary Monahan, an executive at Javelin Strategy & Research, a California market research firm. And new competitors have entered the fight for your dollars.
Why? They offer all of the services of a bank (and federal deposit insurance) but tend to charge considerably less for checking accounts and loans. And they generally pay higher interest rates on savings.
Why not? The customer-satisfaction rating for credit unions dropped five points last year, to 82, according to the American Customer Satisfaction Index (ACSI), which tracks 48 industries. Nevertheless, they still outscored Chase (74), Citibank (70), and Bank of America (66).
Where to find them. Membership is open only to people in a specific group, such as employees of a company, members of an association, or residents of certain communities. Go to mycreditunion.gov to find prospects near you.
Why? If you’re uncomfortable cutting the cord to a traditional bank, check out a regional or midsized bank. They now offer the same technological bells and whistles but also provide significantly higher satisfaction than the four biggest national banks, according to the ACSI. Their satisfaction score was 79 last year, placing them below credit unions but above the big banks.
Why not? Smaller isn’t always better. In Texas, Regions Bank ranked last among 13 banks assessed in J.D. Power’s 2013 Retail Banking Satisfaction Survey. That was worse than Wells Fargo, Citibank, and Bank of America, though Frost National, another regional, topped the Lone Star State list.
Where to find them. Go to jdpower.com for rankings of regional banks serving your section of the country.
Why? The nation’s 7,000 community banks are the go-to place for neighborly service, small business loans, and for keeping your money in the local community. Almost all community banks offer online banking, 64 percent have free checking if you maintain a minimum balance, and about half are members of free ATM networks like Allpoint, Money Pass, and SHAZAM. More than half of larger, 10- to 20-branch community banks, with assets greater than $500 million have mobile banking apps.
Why not? If banking by cell phone is a must, you won’t find it at the majority of smaller, three- to six-branch community banks under $500 million in assets, but almost half expect to add this convenience by 2015.
Where to find them. Visit the Independent Community Bankers of America bank locator.
Why? They typically charge no monthly fees, have low penalties or none at all, and offer FDIC insurance, direct deposit, electronic bill payment, debit cards, photo check deposit, and national networks of fee-free ATMs.
Why not? There are no physical branches, which might be unsettling unless you’ve embraced mobile banking and rarely need to set foot inside a branch. Plus the low- or no-fee business model might be jeopardized at some virtual banks that partly finance their operations from the fees they collect every time a customer uses a debit card to make a purchase, because in July a federal court ruling signaled that those fees might be regulated lower.
Where to find them. Search online for virtual banks including Ally, Capital One 360 Checking, GoBank, and Simple.
Why not? All prepaid cards aren’t created equal. And while our Ratings didn’t compare the cost of checking accounts vs. a prepaid-card alternative, we did find that the worst prepaid cards have high, unavoidable charges, including activation and monthly fees, and that one lacked FDIC insurance. Four prepaid cards to avoid: AccountNow Gold Visa Prepaid Card (MetaBank), Reach Visa Prepaid Card (Tom Joyner), Redpack Mi Promesa Prepaid MasterCard, and American Express for Target.
Where to find them. Consider the best we found: Bluebird with direct deposit (American Express), H&R Block Emerald Prepaid MasterCard, Green Dot Card (Green Dot Bank), and Approved Prepaid MasterCard (Suze Orman) with or without direct deposit.
Editor’s Note:This article appeared in the November 2013 issue of Consumer Reports magazine. On October 29, 2013, we added information on community banks.
The Young Turks has partnered with Aspiration.com to promote a progressive alternative to corrupt
banking and investment.
What is Aspiration?
Aspiration is a new kind of financial firm that’s built on conscience, focused on the middle class instead of millionaires, and founded on the idea that we can do well and do good at the same time.
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“Money is a utility that belongs to all of us,” says Walt McRee. McRee is a velvety-voiced former broadcaster now plotting an audacious challenge to the financial system. He’s leading a monthly conference call as chair of the Public Banking Institute (PBI), an educational and advocacy force formed seven years ago to break Wall Street’s stranglehold on state and municipal finance.
“This is one of the biggest eye-openers of my life,” says Rebecca Burke, a New Jersey activist on the call. “Once you see it, you can’t look back.”
This ragtag group—former teachers, small business owners, social workers— wants to charter state and local banks across the country. These banks would leverage tax revenue to make low-interest loans for local public works projects, small businesses, affordable housing and student loans, spurring economic growth while saving people—and the government—money.
At the heart of the public banking concept is a theory about the best way to put America’s abundance of wealth to use. Cities and states typically keep their cash reserves either in Wall Street banks or in low-risk investments. This money tends not to go very far. In California, for example, the Pooled Money Investment Account, an agglomeration of $69.5 billion in state and local revenues, has a modest monthly yield of around three-quarters of a percent.
When state or local governments fund large-scale projects not covered by taxes, they generally either borrow from the bond market at high interest rates or enter into a public-private partnership with investors, who often don’t have community needs at heart.
Wall Street banks have used shady financial instruments to extract billions from unsuspecting localities, helping devastate places likeJefferson County, Alabama. Making the wrong bet with debt, like the Kentucky county that built a jail but couldn’t fill it with prisoners, can cripple communities.
Even under the best conditions, municipal bonds—an enormous, $3.8 trillion market—can cost taxpayers. According to Ellen Brown, the intellectual godmother of the public banking movement, debt-based financing often accounts for around half the total cost of an infrastructure project. For example, the eastern span of the San Francisco-Oakland Bay Bridge cost $6.3 billion to build, but paying off the bonds will bring the price tag closer to $13 billion, according to a 2014 report from the California legislature.
Public banks reduce costs in two ways. First, they can offer lower interest rates and fees because they’re not for-profit businesses trying to maximize returns. Second, because the banks are publicly owned, any profit flows back to the city or state, virtually eliminating financing costs and providing governments with extra revenue at no cost to taxpayers.
“It enables local resources to be applied locally, instead of exporting them to Wall Street,” says Mike Krauss, a PBI member in Philadelphia. “It democratizes our money.”
Legislators, Brown says, commonly object that governments “don’t have the money to lend.” But this misunderstands how banks operate. “We’re not lending the revenues, just putting them in a bank.” That is, the deposits themselves—in this case tax revenues—are not what banks loan out. Instead, banks create new money by extending credit. Deposits simply balance a bank’s books. Public banks, then, expand the local money supply available for economic development. And while PBI has yet to successfully charter a bank, there’s an existing model in the unlikeliest of places: North Dakota.
During the Progressive Era, a political organization of prairie populists known as the Nonpartisan League took control of the state government. In 1919, they established the Bank of North Dakota. It has no branches, no ATMs, and one main depositor: the state, its sole owner. From that deposit base, BND makes loans for economic development, including a student loan program.
BND also partners with local private banks across the state on loans that would normally be too big for them to handle. These loans support infrastructure, agriculture and small businesses. Community banks have thrived in North Dakota as a result; there are more per capita than in any other state, and with higher lending totals. During the financial crisis, not a single North Dakota bank failed.
BND loans are far more affordable than those from private investors. BND’s Infrastructure Loan Fund, for example, finances projects at just two percent interest; municipal bonds can have rates roughly four times as high. And according to its 2015 annual report, the most recent available, BND had earned record profits for 12 straight years (reaching $130 million in 2015), during both the Great Recession and the state’s more recent downturn from the collapse in oil prices. A 2014 Wall Street Journal story described BND as more profitable than Goldman Sachs. Over the last decade, hundreds of millions of dollars in BND earnings have been transferred to the state (although the overall social impact is somewhat complicated by the bank’s role in sustaining the Bakken oil boom).
THE LONG MARCH THROUGH THE LEGISLATURES
Brown founded the Public Banking Institute in 2010, after years of evangelizing in articles and books such as The Web of Debt: The Shocking Truth About Our Monetary System and How We Can Break Free. Since then, by Walt McRee’s estimate, around 50 affiliated groups have sprouted up in states, counties and cities from Arizona to New Jersey.
“I’ve been working against the system all my life,” says Susan Harman of Friends of the Public Bank of Oakland. “I think public banking is the most radical thing I’ve ever heard.” Harman, a former teacher and a onetime aide to New York City Mayor John Lindsay, helped get the Oakland City Council to pass a resolution last November directing the city to determine the scope and cost of a feasibility study for a public bank—a tiny yet promising first step.
A feasibility study completed by Santa Fe, N.M., in January 2016 found that a public bank could have a $24 million economic impact on the city in its first seven years. A resolution introduced last October would create a task force to help the city prepare to petition the state for a charter. “It’s the smallest municipality investigating public banking,” says Elaine Sullivan of Banking on New Mexico, who hopes the task force could complete its business plan by the end of the year. “We’re interrupting the status quo.”
In February 2016, the Philadelphia City Council unanimously voted to hold hearings discussing a public bank. Advocates are now working with the city treasurer to find funds to capitalize the bank.
PBI has faced a rougher path in state legislatures. In Washington, state Sen. Bob Hasegawa (D) has introduced a public banking bill for eight straight years. Despite numerous co-sponsors, the bill can’t get out of committee. Efforts in Arizona and Illinois have also gone nowhere. California Gov. Jerry Brown (D) vetoed a feasibility study bill in 2011, arguing the state banking committees could conduct the study; they never did.
One overwhelming force opposes public banking: Wall Street, which warns that public banks put taxpayer dollars at risk. “The bankers have the public so frightened that [public banking] will destroy the economy,” says David Spring of the Washington Public Bank Coalition. “When I talk to legislators, some are opposed to it because ‘it’s for communists and socialists.’ Like there are a lot of socialists in North Dakota!”
In Vermont the financial industry fought a proposed study of public banking, says Gwen Hallsmith, an activist and former city employee of Montpelier. “We don’t have branches of Bank of America or Wells Fargo in Vermont, but they have lobbyists here.” So Hallsmith got the study done herself, through the Gund Institute at the University of Vermont. It found that a state bank would boost gross domestic product 0.64 percent and create 2,500 jobs.
The state eventually passed a “10 percent” program, using 10 percent of its cash reserves to fund local loans, mostly for energy investments like weatherizing homes. Meanwhile, Hallsmith helped push individual towns to pass resolutions in favor of a state bank— around 20 have now done so. Hallsmith says her advocacy came at the expense of her job; the mayor of Montpelier, in whose office she worked, is a bank lobbyist. Hallsmith now coordinates a citizen’s commission for a Bank of Vermont.
Because of state resistance, PBI has encouraged its supporters to go local. And several issues have emerged to assist. For instance, environmental and indigenous activists have demanded that cities move money from the 17 banks that finance the Dakota Access Pipeline. But therein lies another dilemma: Who else can take the money? Community banks and credit unions lack the capacity to manage a city’s entire funds, and larger banks are better equipped to deal with the legal hurdles involved in handling public money. So divesting from one Wall Street bank could just lead to investing in another.
A public bank could solve this problem, either by accepting cities’ deposits or by extending letters of credit to community banks to bolster their ability to take funds. Lawmakers in Seattle have floated a city- or state-owned bank as the best alternative for reinvestment, and Oakland council member Rebecca Kaplan has connected divestment and public banking as well.
Another opportunity arises with marijuana legalization initiatives. Because cannabis remains illegal at the federal level, most private banks are wary of working with licensed pot shops, fearing legal repercussions. This means many of these shops subsist as all-cash businesses. “It’s seriously dangerous; people arrive in armored cars to City Hall to pay taxes with huge bags of money,” says Susan Harman. In Oakland and Santa Rosa, Calif., public banking advocates are partnering with cannabis sellers to offer public banks as an alternative, which would make the businesses safer while giving the banks another source of capital.
While Donald Trump hasn’t formally introduced a long-discussed infrastructure bill, his emphasis on fixing the nation’s crippling public works has also bolstered the case for public banking. Ellen Brown maintains the country could save a trillion dollars on infrastructure costs through public-bank financing. That’s preferable to Trump’s idea of giving tax breaks to public-private partnerships that want big returns.
FROM THE GREAT PLAINS TO TRENTON
“All it’ll take is the first domino to fall,” says Shelley Browning, an activist from Santa Rosa. “Towns and cities will turn in this direction because there’s no other way to turn.” And PBI members think they’ve found an avatar in Phil Murphy, a Democrat and former Goldman Sachs executive leading the polls in New Jersey’s gubernatorial primary this year.
Murphy has made public banking a key part of his platform. “This money belongs to the people of New Jersey,” he said in an economic address last September. “It’s time to bring that money home, so it can build our future, not somebody else’s.”
Derek Roseman, a spokesman for Murphy, tells In These Times that Bank of America holds more than $1 billion in New Jersey deposits, but only made three small business loans in the entire state in 2015. Troubled state pensions could help capitalize a state-owned bank, and would earn more while paying lower fees.
Murphy’s primary opponent, John Wisniewski, chaired the Bernie Sanders campaign in the state, while Murphy raised money for Hillary Clinton. Some believe Murphy is simply using public banking to cover his Wall Street background—and on many issues, Wisniewski’s policy slate is more progressive. But Brown thinks Murphy’s past primed him to recognize public banking’s power: “It’s always the bankers who get it.”
The first new state-owned bank in a century, chartered in the shadow of Wall Street, could shift the landscape. What’s more, blue-state New Jersey and red-state North Dakota agreeing on the same solution would highlight public banking’s biggest asset: transpartisan populist support. “We have Tea Partiers and Occupiers in the same room liking public banking. What does that tell you?” asks PBI’s Mike Krauss.
“Regardless of declared conservative or progressive affiliations,” says state Sen. Hasegawa, “regular folk … almost unanimously grasp the concept.” He is working with Washington’s Tea Partybacked treasurer, Duane Davidson, to advance public banking. “I go to eastern Washington, … they get the whole issue about independence from Wall Street and corporate control.”
In fact, Krauss is himself a Republican. “The biggest thing going on in America, people decided we don’t have any control anymore,” he says. “Whether it’s Bernie’s people or Trump’s people, they’re articulating the same thing but differently. … They want control of their money—and it is their money.”
– See more at: http://www.occupy.com/article/bank-even-socialist-could-love?utm_source=Website+%27Join+Us%27&utm_campaign=28a60f94d6-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_77fe4a462d-28a60f94d6-73720709#sthash.xAGs9y9L.dpuf
Photo: Jeff Chiu, Associated Press. Supervisor Malia Cohen speaks ouside of City Hall in San Francisco. Cohen wants to create a task force to assess the feasibility of establishing a San Francisco-owned bank.
April 21, 2017
This time San Francisco wants to be second — second in the nation to have a publicly owned bank, that is. There’s only one right now: the Bank of North Dakota.
(Westsideobserver.com May 2017)
|During the early 1900s, North Dakota’s economy was based on agriculture, specifically wheat. Frequent drought and harsh winters didn’t make it easy to earn a living. The arduous growing season was further complicated by grain dealers outside the state who suppressed grain prices, farm suppliers who increased their prices, and banks in Minneapolis and Chicago which raised the interest rates on farm loans, sometimes up to 12%.North Dakotans were frustrated and attempts to legislate fairer business practices failed. A.C. Townley, a politician who was fired from the Socialist Party, organized the Non-Partisan League with the intent of creating a farm organization that protected the social and economic position of the farmer.
The Non-Partisan League gained control of the Governor’s office, majority control of the House of Representatives and one-third of the seats in the Senate in 1918. Their platform included state ownership and control of marketing and credit agencies. In 1919, the state legislature established Bank of North Dakota (BND) and the North Dakota Mill and Elevator Association. BND opened July 28, 1919 with $2 million of capital.
Where does money come from? It’s created from nothing – by banks. Because of fractional reserve banking, banks can lend $10 for every dollar they hold. By charging interest on this fabricated money, banks extract much more than they lend. Since loans are marked as deposits, they can also be sold for cash. Meanwhile, governments collect taxes and deposit them in big banks. By serving as intermediaries, banks profit from investing this money or lending it. Instead of fostering community development, most bank loans benefit other financial institutions, insurance and real estate companies, hedge funds and corporate raiders. Cuts in federal housing and urban development grants have locked cities into the private banking system. Averse to raising taxes or cutting budgets, cities obtain private credit via municipal bonds or public-private deals that reward investors and can double the costs of public projects. Private banks monopolize a wealth-transfer mechanism that enriches their executives and shareholders at taxpayer expense.
The deregulation-enabled and fraud-driven banking crash of 2008, the $700 billion public bail-out, and Federal Reserve’s multi-trillion dollar rescue measures converted public dollars into private profits. Then emerged a sordid history of predatory loans, falsified mortgages, improper foreclosures, concealed liabilities and phony AAA securities that banks pitched, then covertly bet against. After profiteering from deception, big banks have grown larger, less accountable and at greater risk of collapse due to massive speculative trading. Trillions of dollars in risky but lucrative derivative deals circulate in proprietary Dark Pools. Although the 2010 Dodd-Frank bill prohibited bail-outs for bad derivative trades, insolvency can now trigger “bail-ins” whereby banks confiscate depositor assets. Meanwhile, an uninterrupted stream of public looting scandals has come to light, notably, rigging the London Interbank Offered Rate (LIBOR), the world’s benchmark interest rate, as well as currency exchange rates and municipal debt servicing auctions. These and a host of other violations yielded billions in pilfered profits despite billions in fines and settlements.
Supervisor Sandra Lee Fewer directed the Budget Analyst to re-assess the feasibility of a city-owned bank. Treasurer Cisneros will also have an opportunity to re-assess his stance. With the ongoing risks and predations of private banks, threats of federal cuts to sanctuary cities, and revenue losses from denying bank services to the cannabis industry, a public banking option is needed.”
One antidote for these abuses is to establish public banks. Their purpose is public interest – not private profits. Run as public utilities under public oversight, they take tax receipts deposited by governments. They provide credit for public projects and local businesses and return profits to General Funds. Run by salaried civil servants, there are no commissions for boosting loans or pursuing speculation. This alternate paradigm works for the Bank of North Dakota (BND), the nation’s only public bank. Founded in 1919 to support farmers who couldn’t get loans from commercial banks, it now finances infrastructure projects, and provides low-interest loans for students, farmers and public services. BND partners with local banks that lend to homeowners and small businesses. Over the past decade, it pumped some $300 million back into State coffers – one reason North Dakota was uniquely solvent during the financial crisis. In 2015, the BND’s Infrastructure Loan Fund offered 30-year loans – at 2% interest. Globally, 40% of banks are publicly-owned. Among US cities considering public banks are Oakland, Santa Fe, Philadelphia and Seattle.
San Francisco already has a template for public banking. In 2009, then-Supervisor John Avalos collaborated with Sociologist Karl Beitel, who went on to publish a monograph; “Municipal Banking: An Overview.” It showed how a public bank could recapture $68 million annually by purchasing the City’s short-term bonds. Pressed by soaring foreclosures and housing costs that displaced City residents, as well as the Occupy Wall Street and Move Your Money movements, in 2011 Avalos asked the City’s Budget and Legislative Analyst to research a City-owned bank. Harry Rose’s September 2011 report identified a major barrier: State law. Government Code section 27003 states: “a county shall not, in any manner, give or loan its credit to or in aid of any person or corporation.” However, a 6/21/13 City Attorney opinion concluded that as a charter city, San Francisco could establish its own bank. Ominously, State bills to create public banks (AB750 in 2011 and AB2500 in 2012) were vetoed or buried after opposition from the California Bankers Association, and the State Treasurer.
City Treasurer Jose Cisneros was guarded while testifying before the City Operations and Neighborhood Services Committee on 10/24/11. He admitted that the City deposited its funds with Bank of America, Wells Fargo, and Union Bank at a cost of $2.7 million/year. He emphasized his legal obligation to prioritize security, liquidity, and return, in that order, for City investments. There was no assessment of the security of City funds placed with Bank of America that co-mingles its $1 trillion in deposits with $70 trillion in derivatives. When such banks fail, the derivative claimants have “super-priority”, meaning that the City would get nothing. Cisneros vowed to adjust banking contracts to promote social responsibility.
In 2013, Cisneros asked UC Berkeley’s Goldman School of Public Policy to “recommend policy alternatives” to increase access to credit for home-buyers, small businesses, and non-profits. However, the 2014 analysis itself, titled Promoting Access to Credit, shows that he requested recommendations for “existing financial institutions in the City” – not a public bank. The analysis found that the City’s policy of “attracting firms, job creation and providing incentives for the tech sector…inevitably leads…” to rising commercial and housing costs.
Cisneros’ current Investment Policy keeps “social responsibility” subordinate to security, liquidity, and returns. However, his “social responsibility screen” steers City investments away from firearms producers, major polluters, and predatory lenders. A foe of predatory banking, Cisneros uses public bank-like tools to boost community financing. In 2008 he advanced the Bank On SF program that partners with credit unions and “responsible banks” to provide low-income residents with low-fee accounts. Last year he suspended Wells Fargo from the program for opening 2 million sham accounts nationwide. His Kindergarten to College program used City and philanthropic funds to open $100 savings accounts for over 18,000 kids. This March, he was pushed by the Board of Supervisors to divest from banks that sponsor the Dakota Access Pipeline. Why not open a public bank?
E-mails obtained from the City Treasurer’s Office since 2011 reveal wariness, skepticism, and defensiveness toward public banking – and its proponents. Inquiries from Avalos and associates were cautiously tracked by the Treasurer’s Legal Section. Correspondence between City and regional treasury officials expressed these concerns;
- Conflicts of Interest: Can bank governance be insulated from politics? Will politics influence what projects get loans, or how bad debts are collected?
- Complexity & Cost: Can the City provide the necessary expertise and start-up capital?
- Risk-Management: Would prioritizing economic development loosen loan standards and put public funds at risk?
The Public Banking Institute has answers to these questions. And on 4/11/17 Supervisor Sandra Lee Fewer directed the Budget Analyst to re-assess the feasibility of a city-owned bank. Treasurer Cisneros will also have an opportunity to re-assess his stance. With the ongoing risks and predations of private banks, threats of federal cuts to sanctuary cities, and revenue losses from denying bank services to the cannabis industry, a public banking option is needed.
Dr. Derek Kerr and Dr. Maria Rivero and were senior physicians at Laguna Honda Hospital where they repeatedly exposed wrongdoing by the Department of Public Health. Contact: firstname.lastname@example.org