The Young Turks' Cenk Uygur interviews Public Bank LA Co-Founders Phoenix Goodman and Trinity Tran on Revolution LA, Divest LA, and its evolution into the campaign to create a municipal bank for Los Angeles. Watch the interview:
By Adele Peters, Fast Company. As activists pressure governments to remove their deposits from banks that back bad policies, cities are considering a new option: become their own financial institution that serves the needs of the citizens, not investors.
When the movement to push the city of Los Angeles from keeping its money at Wells Fargo grew in 2017–as in other cities that decided to pull money from the bank because of its fake accounts scandal and funding of the Dakota Access Pipeline–organizers of the campaign realized that they faced a challenge: Where to put the money next.
The largest city accounts are too big for small community banks to handle, so divestment from one major bank typically means moving money to another major bank that likely has social responsibility issues of its own. In addition, even ethical smaller banks aren’t directly accountable to the public. L.A., along with other U.S. cities, is now considering another option: a public, city-owned bank that would keep money inside the community, and follow a socially and environmentally responsible charter.
“This started as a divest campaign,” says Phoenix Goodman, cofounder and policy director for the activist group Revolution LA, which runs both Divest LA and Public Bank LA. “I was tasked with doing research on alternatives and what that would entail financially, and in looking into it, I realized, wait a minute, we have so much money that the only other banks that can handle our accounts are other huge Wall Street firms, all of which are complicit in this same system, more or less. Maybe Wells Fargo is the most egregious, but in a way it’s a smaller victory, because we’re just going to move to another big bank, and we’re not changing the system, we’re changing a symptom of the system.”
Posted by Public Banking Institute. Trailblazer New Jersey Governor Phil Murphy wastes no time. Directly following his swearing in last week, State Senators Nia Gill and Richard Codey introduced the State Bank of New Jersey Act at the beginning of the legislative session.
According to Politico: "Under the Codey-Gill proposal, all public entities in New Jersey would be able to use the state-run bank. It would provide transportation project loans, student loans, small business loans and be able to purchase mortgages from commercial banks. The bank would also be able to purchase, lease and construct buildings, and would even have the power of eminent domain. And it would be able to buy and sell federal funds."
The bill sets up a 13-member board of directors to govern the bank. The board would appoint a president and determine his or her salary. Six of the directors would be appointed by the governor, including four with respective experience in banking administration, credit union administration, consumer financial advocacy and public administration. Two picks would be recommended by the Senate president, two by the Assembly speaker, and one each by the Assembly and Senate minority leaders. The state treasurer would serve as the 13th member.
The state auditor would be required to hire an independent financial firm to examine the bank once a year and to prepare a report.