Tuesday, February 1, 2011

Public Banking for Cascadia

Yes! Magazine reported last week that Washington State Joins the Movement for Public Banking. To anybody who is familiar with the history and success of the 92-year-old, publicly owned Bank of North Dakota, this is is very good news indeed, although judging by the low level of local news coverage, it is hard to say if the idea is going anywhere in the Legislature. The predictably pro-oligarchy Seattle Times has been dismissive of the idea (So much for a state bank). But the advantages of a state-owned bank, vs. continuing to send the state's money to Wall Street to earn profits for bank shareholders rather than for our own citizens and government, are pretty strong:
  • A public bank doesn't pay outrageous salaries and bonuses to executives, or reward them for the sort of reckless risk taking that brought Wall Street down in 2008 and is threatening to do so again.
  • Profits on the savings held by the state stay in the state rather than being funnelled off as bank profits to private shareholders.
  • A public bank is better able to provide affordable credit to local business.
  • A public bank would be operated in a financially conservative manner. The Bank of North Dakota remained profitable throughout the recent credit crisis unlike banks such as Bank of America, which Washington State currently uses to hold state savings.
  • Unlike most of the banking system, which is private in name only (for more on this, read Why Do We Keep Indulging the Fiction That Banks Are Private Enterprises?), profits are privatized and losses are socialized (i.e., paid by taxpayers). A state bank would socialize the profits and could very conceivably avoid the losses, because it would be run like a bank and not like the current Wall Street casino.

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