Democratic Socialists of America LA's Josh Androsky interviews Public Bank LA's Legislative Director Dave Jette for Left Coast Podcast. Dave explains why most of the money in the world is invisible and why municipalities like LA should divest from private banks and instead create publicly funded banks, controlled by the residents of the city it serves.
By Ellen Brown, Public Banking Institute. Crushing regulations are driving small banks to sell out to the megabanks, a consolidation process that appears to be intentional. Publicly-owned banks can help avoid that trend and keep credit flowing in local economies.
At his confirmation hearing in January 2017, Treasury Secretary Stephen Mnuchin said, “regulation is killing community banks.” If the process is not reversed, he warned, we could “end up in a world where we have four big banks in this country.” That would be bad for both jobs and the economy. “I think that we all appreciate the engine of growth is with small and medium-sized businesses,” said Mnuchin. “We’re losing the ability for small and medium-sized banks to make good loans to small and medium-sized businesses in the community, where they understand those credit risks better than anybody else.
The number of US banks with assets under $100 million dropped from 13,000 in 1995 to under 1,900 in 2014. The regulatory burden imposed by the 2010 Dodd-Frank Act exacerbated this trend, with community banks losing market share at double the rate during the four years after 2010 as in the four years before. But the number had already dropped to only 2,625 in 2010. What happened between 1995 and 2010?
By David Jette, Sydiot.com. Los Angeles has 44 departments and bureaus who manage $5,549,000,000 in annual revenue collected from tax, fee and fine payers, as much as the whole country of Iceland.
At any given time, there is an average of $45 billion in public money sitting in various operational accounts, reserve funds or short- and medium-term investments. That money is currently held in accounts at commercial banks, where it earns next to zero interest. The city paid over $109 million in annual and transactional fees to these commercial banks last year. The banks then use these deposits to bolster their own lending activity, earning interest for their shareholders.
Commercial banks are under no obligation to lend money to businesses within the city of Los Angeles, or to extend credit to projects which aim to make a positive impact on its residents and communities. Instead, the power and resources we give to banks is used in the most profitable lending sectors, where they add to artificially high housing prices, subsidize industries with harmful externalities like fossil fuels and defense, and even engage in widespread fraud against their customers, all in the interest of greater shareholder profit.