Category Archives: Local Economies

Questions raised about Santa Fe public bank

By T. S. Last / Journal Staff Writer | The Albuquerque Journal | November 21, 2017

SANTA FE – One thing was clear from a public forum held by the city of Santa Fe’s Public Bank Task Force, formed to research and identify barriers to forming a public bank: It won’t be easy.

On Monday, the task force presented findings so far made by four subcommittees addressing legal issues, regulations, capitalization and governance of a proposed public bank, then heard comments and questions from about a dozen of the 40 or so people present. Several of them expressed doubts about the viability of a public bank – a bank owned, operated and funded by a government entity.

While the subcommittees laid out many of the challenges the city would face if it were to form a public bank, one in which the city, at least initially, would be the only client, some skeptics in the audience raised other concerns.

Citing a recent audit that showed the city was susceptible to fraud and theft and an audit in 2015 that determined $2 million of a $30 million parks bond was misspent, Berl Brechner said the city should abandon the idea altogether.

“This process has gone farther than it should have,” he said.

A city-financed feasibility study done last year determined that a public bank could potentially improve fiscal management, create a healthier local lending climate and generate better interest rate margins for the city. Earlier this year, the City Council passed a resolution to form the task force to assist the council in making an informed decision about the city applying for a bank charter through the state.

But it’s not clear whether that’s even possible. As the regulatory subcommittee observed, there’s uncertainty over whether the bank would violate the state’s anti-donation clause, which prohibits a government from lending its credit. That committee also noted that the FDIC had concerns about issuing deposit insurance to a domestic governmental unit.

While the committee did not respond to Brechner’s comment, the next speaker did.

Charles Koenig said the Bank of North Dakota, one of the few public banks in America, has turned a profit every year since in was formed in 1919. And the profits didn’t go bankers or anyone on Wall Street, he said.

“If we can establish a public bank in Santa Fe, we can generate profits for the city,” he said.

The task force will present its findings to the Finance Committee on Dec. 4. A final report will be submitted to the City Council early next year.

From Free Lunch to Public Banks, These Cities Are Giving Us Hope

Dispatches from the Urban Resistance: Alameda to Elyria and beyond. 

 

By Jimmy Tobias | SEPTEMBER 29, 2017 | The Nation

Oakland public bank organizers look to fund renewable energy

FILE – In this May 6, 2013, file photo, a wind turbine farm stands near Glenrock, Wyo. Renewable energy developers say they are hopeful about the future despite President-elect Donald Trump’s promise to bring coal mining jobs back. In recent years, huge solar and wind farms have sprouted up on public desert land in the Western United States buoyed by generous federal tax credits. (AP Photo/Matt Young, File)

By Ali Tadayon | East Bay Times | October 6, 2017

OAKLAND — Advocates for a public bank in Oakland are looking to Germany for inspiration, as that country’s public banks fund a large portion of the renewable energydevelopment.

During a community forum hosted Sept. 25 by Friends of the Public Bank of Oakland, German economist Wolfram Morales explained how public banking works in his country and how the banks offer low-interest rates to companies providing solar and wind resources, driving development.

The destruction caused by Hurricane Maria in Puerto Rico and the U.S. Virgin Islands is the most recent marker of the world’s need for renewable energy resources, said Oakland City Council member Rebecca Kaplan, who is pushing for the formation of a public bank in Oakland alongside Councilman Dan Kalb.

“Facing all these storms, droughts and åoods, we need to build a more sustainable world,” Kaplan said. “We need to be using energy that is positive for the environment and for the community, we need to do it in a way that creates and supports local jobs and we need banking institutions that fund projects that help people.”

The Oakland City Council on Sept. 19 approved spending $75,000 to study if creating a public bank is feasible. Berkeley is fronting $25,000 for the remainder of the funds needed for the study.

Though public banks are a fixture in Europe, the only one that exists in the United States is the Bank of North Dakota, Morales said. There are more than 600 in Germany, most of which are county-level, putting billions into renewable energy development. Those banks are able to offer interest rates as low as 1 percent on loans, which is much lower than what commercial banks offer.

Speakers at the forum talked about how a public bank can help give the community more control over its energy sources.

Last year, Oakland and other East Bay cities joined the East Bay Community Energy Authority, a community choice energy program.

The program allows cities to pool their money to purchase cleaner energy than what Paciäc Gas & Electric offers. The program is looking to make “big infrastructure investments” such as electric vehicle charging, solar plants and clean energy storage projects, and would beneät from the low-interest-rate loans that a public bank could offer, said East Bay Community Energy Authority CEO Nicolas Chaset.

Gregory Rosen, founder of clean energy advisory firm High Noon Advisors, said he has worked with both commercial and public banks, and commercial banks in most cases make investments based on return, not social or environmental good.

Public bankers would be able to make investments based on what will benefit the community, rather than what will make the most money, Rosen said.

“Instead of having the mission be to make money by lending or providing services, there’s really an opportunity to turn the equation on its head, and say the mission is to serve communities, so let’s go listen to what communities need and then structure products around these community needs,” Rosen said.

Mayor, council reluctantly keep Wells Fargo as city’s bank

By Tripp Stelnicki|The New Mexican|August 31, 2017

City councilors on Wednesday approved a four-year contract extension with Wells Fargo as the city’s fiscal agent.

Councilors, both for and against the measure, expressed trepidation over the extension through 2021, saying the banking giant’s financial support of the Dakota Access Pipeline and fraudulent retail account-creation practices suggested a corporate culture that does not align with the community’s values.

But, by a 6-3 margin, the council ultimately swallowed that discomfort and accepted a recommendation from city finance staff that Wells Fargo was best equipped to handle the city’s banking, treasury and investment functions, including the management of roughly $210 million in city accounts and some $560 million in annual transactions.

On top of that, councilors acknowledged Wells Fargo has a significant community presence, with seven branches in Santa Fe that employ some 90 local workers, with sizable investments with local businesses and residents.

Citing the staff evaluation, Councilor Peter Ives said Wells Fargo represented “the logical choice,” if not the perfect choice. Take any large corporation, Ives said, and “chances are you can find something I don’t like about what they have done in the past.”

But, as Councilor Carmichael Dominguez said, “We can’t just put our cash in a cash box in the finance office. We do have to work with these institutions.”

Councilors Signe Lindell, Joseph Maestas and Chris Rivera voted against the contract extension.

“It’s impossible to ignore the national issues, the corporate issues that have occurred,” Maestas said.

Those who voted in favor — including Mayor Javier Gonzales, who called his vote a “reluctant yes” — said variously they appreciated the local Wells Fargo branches’ community involvement and recognized that the bid process had produced no viable immediate alternative for the city’s needs.

“I can’t in good conscience vote no knowing there isn’t a second selection,” Gonzales said.

Gonzales also proposed a new resolution Wednesday that would amend the city’s investment policy to ensure the city’s financial agents won’t invest city money into fossil fuels. The contract extension will be governed by the investment policy, city Finance Director Adam Johnson said, and would be subject to that possible amendment.

The staff evaluation of five bidders for part or all of Santa Fe’s fiscal services ranked Wells Fargo’s bid highest overall. “Wells Fargo does provide the most comprehensive, safe and efficient fiscal service at the best price,” Johnson said.

Councilors’ and residents’ concerns about Wells Fargo’s corporate-level activities were incorporated into the evaluation under a “community initiatives” section, which found Wells Fargo represents more of a local community bank than other bidders.

Kathleen McClure-Wight, a Wells Fargo executive vice president, told councilors she appeared before them humble but confident the bank would continue to be accountable to the city and community.

“We feel very comfortable that what we do every day is in the best interests of the city,” McClure-Wight said.

The San Francisco-based bank was battered last year by revelations of fraudulent accounts created without customers’ knowledge. Thousands of workers were fired, the bank paid millions in fines and the chief executive eventually resigned.

A former vice president of a Santa Fe Wells Fargo branch filed a wrongful discharge suit earlier this year, alleging his superiors knew about the deceptive account-creation practices and fired him for raising the issue.

But perhaps of greater concern locally is Wells Fargo’s financial support of the contentious Dakota Access Pipeline, which last year drew sustained protests from Native Americans, environmentalists and others who said the project would endanger sacred lands.

Wells Fargo has loaned some $500 million to the project. The financial stakes prompted Gonzales and councilors to ask for a broader review of the city’s fiscal agent services and to try to include local options in the appraisals.

The second-ranked bidder, Bank of Albuquerque, does not have much local presence, Johnson said, with only one Santa Fe branch. In addition, that bank’s parent company is based in Tulsa, Okla.

Gonzales said he was “disappointed we didn’t see a stronger presence from the local banking community,” acknowledging the city has greater needs than those local institutions could feasibly manage.

At the city Finance Committee meeting last week, the bank’s regional manager encountered councilors’ sharp lines of questioning about both the pipeline project and the bank’s corporate culture.

Bryan Scott, the manager, told the committee he was “personally very disappointed with things that have happened in other areas of our institution” and added certain company actions did not reflect his values or those of local employees.

In a letter to the council and residents, Scott said the bank has “enhanced our due diligence … to include more focused research into whether or not indigenous communities are impacted and/or have been properly consulted” as a result of the blowback the bank has faced over its Dakota Access financing.

A task force assembled for the purpose of examining whether the city should create its own public bank recently met for the first time, and a report on its findings must be delivered to the full council by the spring.

Any move toward a public bank in Santa Fe could still be years away. But either the city or Wells Fargo can terminate the fiscal agent contract by providing written notice at least 60 days prior to the date of termination in 2021.

 

Goliath, not a David, likely wins Santa Fe banking contest

Photo: Protesters outside a Santa Fe Wells Fargo in January called for Santa Fe to withdraw its municipal accounts from the banking giant. (Eddie Moore/Albuquerque Journal). 

By Mark Oswald | Albuquerque Journal North

SANTA FE, N.M. — The Santa Fe City Council, as a customer looking for the best deal, is now faced with something similar to the rancorous debate that took place when a new Super Walmart opened about a decade ago.

Santa Feans, and the council, were divided about having a second and bigger Walmart in town. Walmart was blasted for its labor policies, as a corporate giant that hurts local business and as yet another aggression against the old, traditional Santa Fe.

But in a public comment period during what was literally a night-long council meeting, there was also support for what Walmart and its massive organization has to offer – cheap prices. In the end, the Walmart development on far south Cerrillos Road was approved by a single tie-breaking vote.

Now the City Council is considering a new contract for municipal government’s banking services as the existing one with the giant Wells Fargo Bank expires.

Wells Fargo, of course, is coming off a bad year.

In a major scandal, Wells Fargo acknowledged in September that its employees opened up to 2 million bank and credit card accounts without customer authorization in order to meet lofty sales goals – a case of trying to hoodwink its own customers. Federal and California regulators fined Wells Fargo $185 million.

And the bank has faced protests, including in Santa Fe, for its involvement in financing the controversial Dakota Access Pipeline.

Mayor Javier Gonzales cheered the DAPL protesters who showed up outside a Wells Fargo branch in January and pushed for changes to the bidding process for the banking contract to include assurance of local involvement by the city’s banker. The mayor and others on the council also have promoted study of the ground-breaking idea of a public bank for Santa Fe, in part to gain control over how its money can be used as it bolsters a bank’s assets

But a city fiscal team, after reviewing bids from Wells Fargo and four other banks, now recommends sticking with the Wells Fargo behemoth. Three of the four other bidders are locally based. One other bidder has New Mexico in its name, but is a “member” of a banking outfit from Dubuque, Iowa.

The bid evaluation team’s report makes it clear that the competition wasn’t even close.

“Wells Fargo Bank provided a strong alignment of business interests, community initiatives and process priorities while keeping fiduciary responsibility and the safeguarding of the City’s financial assets in the forefront,” says the team’s recommendation.

In the new “community initiatives” category, Wells Fargo scored 501 points out of a possible 525. No other bidder got more than 338 points here. “The most complete, thorough and involved response was provided by Wells Fargo” in this category, the evaluation report says. The report lists Wells Fargo’s local lending to small borrowers, community donations and its employees’ volunteer services as pluses. It even adds, “Wells Fargo has been an industry leader in social, environmental and governance activities.” Wow.

For what it’s worth, a regional Wells Fargo official more or less apologized for the unauthorized accounts scandal. He was “personally very disappointed with things that have happened in other areas of our institution this year,” he told a City Council committee Monday.

The evaluation committee’s rave review of the Wells Fargo bid is going to make it difficult for councilors to move to another bank. The Finance Committee on Monday sent the recommendation onto the full council.

It’s a tough call for elected representatives to go against political beliefs that they and many of their constituents have expressed and strongly hold to. But the city staffers’ strongly non-political evaluation report is hard to argue with.

 

Housing, battling racism and a municipal bank top agenda for L.A. council president

Los Angeles should explore whether to create a municipal bank that would finance affordable housing and throw its doors open to the cannabis industry, City CouncilPresident Herb Wesson said Tuesday.

Wesson tossed out the idea as part of a sweeping speech that set out his agenda for his final term. In addition to the bank, Wesson said L.A. must take new and innovative steps to battle racism, protect immigrants and build more affordable housing.

“When our grandchildren tell stories of us, what will they say? Will they say we were brave?” askedWesson, who recently was reelected as council president. “When the history books remember us, will they say that we did everything within our power to improve the lives of the people we represent?”

To combat hatred, Wesson wants the city to help organize scores of intimate dinners between people of different races, faiths and backgrounds. To defend immigrants, he wants the city to craft new legislation. And to ensure more affordable housing is built, Wesson wants a new commission to think up ideas.

But his most unexpected proposal was forming a bank: Wesson suggested that a municipal bank could help finance affordable housing, provide loans for small businesses and entrepreneurs, and give the marijuana industry a safe place to park its cash. Cannabis businesses have been shut out of many banks and rely heavily on cash transactions.

“Do you know, we’ve got people that are going to go home tonight and sleep on a mattress that’s worth $2 million?” Wesson said, alluding to marijuana entrepreneurs stashing cash at home. “We have to figure out a way to make this industry work. We in government are supposed to push the envelope, not protect the status quo.”

The Southern California Coalition, a marijuana industry group, welcomed the idea. “The cannabis industry is perceived to be a sitting duck for crime because it’s heavily cash based,” said Adam Spiker, the group’s executive director, adding that marijuana businesses also struggle to get loans and have had trouble finding landlords willing to accept cash.

The speech, which was promoted in advance to the media, had the feel of another State of the City address. Wesson, a former speaker of the California State Assembly, greeted fellow council members Tuesday by saying that the inauguration ceremony earlier this month was “the mayor’s day,” while “today is our day.”

Ahead of his speech, a video revisited some celebrated moments for the City Council, including increasing the citywide minimum wage, passing a bond to help the homeless and courting the Olympics.

Wesson, 65, led his remarks with a story, recounting that white men had pelted him with a milkshake and called him racial slurs when he was a 12-year-old headed to the movies in Ohio. He went on to list a number of hateful incidents in the last year, including the desecration of Jewish cemeteries and the slaying of two men trying to defend a Muslim girl on a Portland, Ore., train.

“We cannot stand by and allow bad people to roll back the clock on the progress that we have made, not just in this city, but in this country,” Wesson said.

Wesson plans to partner with Community Coalition, an advocacy group formerly led by City Councilman Marqueece Harris-Dawson, to host more than 100 small dinners that bring Angelenos together throughout the city.

After the speech, he told reporters that he believed face-to-face dinners could change the world, saying that such discussions at college and church had helped him let go of a hardened heart after he was attacked as a youth.

To address the housing crisis facing Angelenos, Wesson said he wanted a new commission to come up with strategies to make it easier to build affordable housing. The commission, created in partnership with the Los Angeles Area Chamber of Commerce and the Los Angeles County Federation of Labor, could explore everything from speeding up permits to repurposing shipping containers, Wesson said.

Wesson said a municipal bank also could help finance more affordable housing. He did not go into details Tuesday about how precisely the L.A. bank would work, saying that he wanted Councilman Paul Krekorian to start examining the idea and see whether it was worthwhile.

The idea of a public bank has been championed by some local activists who see it as a way to keep money in the community and steer clear of “unethical investments.” North Dakota created a public bank nearly a century ago; campaigns to create public banks have popped up in Oakland, San Francisco and other cities.

As of Tuesday afternoon, more than 400 people had signed a Change.org petition backing a Los Angeles municipal public bank “accountable to the people.” Phoenix Goodman, one of the co-founders of Public Bank L.A., said that activists who want Los Angeles to divest from Wells Fargo had realized that they needed “an ethical alternative.”

“The real solution isn’t going from a big bank to another big bank — it’s transcending Wall Street altogether,” Goodman said.

But the idea also drew some skepticism Tuesday. The city has “structural deficits going on forever and now they want to start a bank?” said Jack Humphreville, who serves on the Neighborhood Council Budget Advocates, which provides input for city leaders on the budget.

The last time Wesson gave such a speech two years ago, some wondered whether the prominent address meant he was angling to replace Mayor Eric Garcetti. The Tuesday address comes three years before the powerful and charismatic politician will be termed out of the City Council.

In his speech, Wesson repeatedly cast his gaze beyond Los Angeles to the nation at large. But when asked, Wesson said that didn’t mean he was eyeing any kind of national office — only emphasizing that Los Angeles could lead the country toward progress.

“I’m not going anywhere,” Wesson said. “L.A. is stuck with me.”

 

Phil Murphy opens on Broadway

“People focus on the big companies a lot, but small businesses are the big employers in the state, and if you look at where we’re going to get employment going forward, it’s going to be small business more than anything else,” said Democratic gubernatorial hopeful Phil Murphy standing in the 18th Street Farm Fresh Market on Broadway.

“Look down Broadway. You don’t see Apple, you don’t see General Motors. These are small businesses, and they need leadership from the state.” – Phil Murphy

Murphy, the former ambassador to Germany under President Barack Obama, is coming off a commanding victory in the primary election in June. He doubled the number of votes of the next strongest performers, Assemblyman John Wisniewski and Jim Johnson, combined. He’s in full campaign mode, with the November elections coming up fast, where he will face Republican Kim Guadagno, who served as Lieutenant Governor under Gov. Christopher Christie.

Bayonne is a city of small businesses, unlike Hoboken, which is home to major corporations like Jet and Pearson, or Jersey City, with offices that house Advance Digital, Forbes, Mack Cali, and Murphy’s former employer, Goldman Sachs.

Murphy, who visited Bayonne on Friday, July 21, said, “Look down Broadway. You don’t see Apple, you don’t see General Motors. These are small businesses, and they need leadership from the state.”

Instead of Microsoft or Exxon Mobil, Broadway houses small businesses like Herbert’s Army and Navy store, Hendrickson’s Corner, and Garden State News. “You don’t see places like this anymore,” Murphy said at Garden State News, which provides perhaps the widest selection of print news and magazines in town. “I love it.”

Half-banked

Murphy is not known as a progressive thought leader, but rather, by many, as another financier running for office. However, he brings both progressivism and finance to the table with an old idea from a populist uprising in North Dakota a century ago and adapted for modern capitalism –a public bank.

“You ask a small business person the reason you didn’t get bigger, what’s the reason your business failed, why you couldn’t get started to begin with; it’s invariably [lack of] capital,” Murphy said. “So one of our ideas is to start a public bank that the citizens would own. And one of the main lines of business would be lending money to small businesses through community banks. So we’d work with community banks, not compete with them. We want to get more capital to them and through them.”

A public bank would, in theory, funnel tax revenue through local community banks, such as Bayonne Community Bank, to provide loans and credit to small businesses and help fund small-scale infrastructure projects, while returning the profits from interest back into state coffers. It could be a more efficient way to lend than the current system, which relies heavily on a few multinational financial conglomerates and a shrinking number of community banks.

Skepticism about the idea abounds in the finance hub of New Jersey, which ranks dead last in fiscal health in an annual George Mason University Mercatus Center study. Meanwhile, North Dakota, which created its public bank in 1919, and remains the only state to ever have done so, ranks second.

Garnering support

Murphy is shoring up early support in Hudson County, a vital political battleground for any gubernatorial candidate. His tour through Bayonne was facilitated by Assemblyman Nicholas Chiaravalloti, Mayor James Davis, Bayonne Business Administrator Joe DeMarco, and members of the Bayonne City Council, who were on hand for the event.

“I think it’s great that he came out. Hopefully he can make an impact,” said City Council President Sharon Ashe-Nadrowski. “It’s not every day you get an opportunity like this.”

Mayor James Davis, who first met Phil Murphy before he ran for mayor, strongly supports his candidacy. Davis said the most vital policy decision Murphy can make as governor would be to create an equitable and stable school funding policy.

“The thing is, you have to turn around and make it fair for everybody,” Davis said. “I really believe that is going to be one of the staples of his administration. I think school funding is going to become fair for everybody in the state.” He’s confident that Murphy’s experience in finance will be an advantage. “I really believe that his fiscal prowess is going to be something that he is going to show in the first two years of his administration.”

Murphy has heavily criticized Christie’s school funding policies in the past, and said on Friday that more resources need to be dedicated to infrastructure improvements and public education to achieve fiscal health for communities across the state.

“The fact of the matter is, we haven’t had investment in public infrastructure,” Murphy said. “We’ve taken money from infrastructure, from public education. We haven’t really done much for small businesses over the past seven and half years.”

Public Banking Task Force nominees confirmed

The Santa Fe City Council unanimously confirmed Mayor Javier Gonzales’ appointments to a new Public Banking Task Force on Wednesday.

The seven-member task force is charged with determining the necessary procedures, timelines and requirements to establish a chartered public bank.

Gonzales appointed J. Wayne Miller, vice president of commercial real estate at Washington Federal; Randolph Hibben, a retired banker; Darla Brewer, a senior forensic auditor with the state Securities Division; Kelly Huddleston, an attorney who founded the New Mexico Consumer Protection Law Center; David Buchholtz, an Albuquerque attorney who did legal work for a local organization advocating for a public bank; Judy Cormier, who has 30 years of consumer banking compliance experience; Elaine Sullivan, a public bank advocate; retired businessman Robert Mang; and city Finance Director Adam Johnson.

The mayor’s appointments, which council members confirmed without questions or discussion, sparked some concerns from the public about impartiality.

“From what I have read, this group, as presented, appears to be more of an advocacy group than one that can, in an unbiased way, evaluate this proposal,” Santa Fe resident Berl Brechner wrote in an email to the mayor and councilors Wednesday.

“Of particular concern,” the email said, “is that three of the proposed members have direct connections to ‘We are people here!’ which in its website contains a subgroup, ‘Banking on New Mexico,’ which has been a vocal advocate for the public bank concept for Santa Fe.”

Mayor makes picks for Public Banking Task Force

Eight months before the end of his four-year term, Mayor Javier Gonzales is recommending appointments to a task force responsible for research that could lead elected officials to dramatically change the way Santa Fe’s city government does its banking.

The task force will help determine requirements to establish a public bank. The nine-member panel must complete its work within six months of its first meeting, possibly making the idea of a public bank a major campaign issue in next spring’s mayoral election.

Public banking leverages a government’s assets to stimulate investment in the community. Examples of public banking include offering low-interest loans to local businesses or low-cost financing for public projects, such as housing and infrastructure.

Gonzales, who has yet to announce whether he will seek a second term, will ask the City Council on Wednesday to confirm his recommended appointees.

The mayor said the task force and his political future are unrelated.

“The public banking issue has nothing [to] do with politics,” he said in a statement, “it’s about making sure we’re putting Santa Fe’s money — the taxpayer’s money — to the best possible use and investing it back into the community for the things that keep our community moving forward.”

He added, “It’s a stretch to try to make this about an election, and it takes away from what we should be focused on — a debate about the merits of the public banking idea itself.”

While Gonzales is nominating appointees, as he does for other city committees and boards, he is not acting independently. In April, the governing body adopted a resolution to create a Public Banking Task Force that includes three members with financial or banking experience, two members with legal experience, one member with regulatory experience and two at-large resident members, plus the finance director.

Gonzales, who has championed the notion of studying whether a public bank would work in Santa Fe, said he heard about a local movement to create a public bank when he was on the campaign trail more than three years ago and decided then that he would explore the idea further if he won election.

“As I got more into the campaign and learned the stories and the challenges of Santa Fe and recognized that access to capital and new funding sources were limited,” he said in 2014, “the idea of a public bank became more and more important to me.”

Since then, the city has hosted a public banking symposium and commissioned a feasibility study that determined the city could benefit financially if it established a chartered public bank.

Now, the city is taking the next step by appointing a nine-member task force that will help the governing body determine the necessary timelines and procedures to start a public bank and to “make recommendations … in preparation for the governing body to make an informed opinion.”

Twenty-seven people applied to serve on the task force, from a former city attorney to a retired physicist.

“I’m very pleased that we received [27] letters of interest and résumés from a good mix of backgrounds, experiences and expertise,” City Councilor Renee Villarreal, lead sponsor of the resolution creating the task force, said shortly after the city’s deadline to submit applications to serve. “It’s exciting to have so much interest and commitment to serve.”

Here are Gonzales’ recommended appointments:

Adam Johnson is the city’s finance director. The resolution creating the task force called for the city finance director to serve on it. Johnson, who joined the city in February 2016, previously worked as Santa Fe County’s budget administrator.

J. Wayne Miller is an Española native who has been vice president of commercial real estate at Washington Federal since May 2005. Before that, he worked as a senior vice president at both Century Bank and First National Bank of Santa Fe.

“I love our community and would like to see the business environment grow to create new job opportunities for our youth, where they do not have to leave Santa Fe to find employment,” he wrote in his letter of interest.

Randolph Hibben has founded a number of community banks in suburban Chicago. Hibben retired in 2008 as chairman and CEO of Lake Forest Bank & Trust Co. in Illinois.

“My partners and I founded the bank in 1991 to provide a low-cost community-banking alternative to the major national players that predominated at the time,” he wrote in his application.

Hibben, who serves as vice president of the Santa Fe Habitat for Humanity board, wrote that he was introduced to the idea of a public bank through the “We are people here!” initiative. He said Craig Barnes, who led the effort until his death last year, finally convinced him the concept could be viable.

“I have a number of questions and concerns but there appears to be a niche for public banks in our nation’s financial system,” he wrote. “I see no reason why the city of Santa Fe shouldn’t fully explore becoming one of the first municipalities to establish a grassroots bank of the people.”

Darla Brewer is a financial analyst with more than 15 years of experience. She is a senior forensic auditor with the state Securities Division, working with a team of attorneys, financial auditors and others to investigate fraud, embezzlement and violations of securities law.

Brewer, who has worked for the State Investment Council and state superintendent of insurance, also is the creator and interviewer of a radio show called New Era Economy.

“My vision is to combine my passion for finance with my passion for communication to help form a deeper understanding of how profit can coexist with human, social and environmental impacts,” she wrote in her application letter.

Kelly Huddleston, an attorney, is the founder and owner of the New Mexico Consumer Protection Law Center and Huddleston Law LLC. She said she is interested in exploring the public bank option after having worked as a consumer protection lawyer dealing directly with bank issues and abuses for the past seven years.

“My primary interest in joining this task force would be to research the national and state legal framework necessary for creating a public bank and to clearly lay out the regulatory steps in a straightforward manner for [the governing body] and the public to consider,” she wrote.

Huddleston said she is also interested in sharing what she learns in Santa Fe.

“On a more personal note, I am a member of a tribe in Oregon, and they are interested in creating a bank of their own,” she wrote. “It is my hope that I can take what I learn in this process to help out my tribe as well.”

David Buchholtz is a partner in an Albuquerque-based law firm with an office in Santa Fe. He has served as lead bond counsel to the city of Albuquerque, the New Mexico Finance Authority and The University of New Mexico.

“I did some legal work for the ‘We are people here!’ foundation [and] Mr. [Craig] Barnes before he passed away,” Buchholtz said in an interview, referring to a group that has pushed for the city to establish a public bank.

“I’ve been talking to those folks. I have an expertise in government finance and such, so they asked me whether I would be interested to do this, and I said, ‘You know, so long as I’m not taking the place of a person who lives in Santa Fe.’ I have an office up there, but I haven’t lived there for a long time.”

Buchholtz, who counsels private businesses and governments in a variety of matters pertaining to growth, corporate governance affairs and government relations, also has served as state chairman of the New Mexico Anti-Defamation League.

Judy Cormier, who moved to Santa Fe from the East Coast with her husband four years ago, has 30 years of consumer banking compliance experience.

“I have built successful compliance programs within two separate institutions and was chief compliance officer/director of consumer compliance for 11 years,” she wrote in her application.

Elaine Sullivan is a founding member of “We are people here!” and now serves as president of the organization and its initiative, Banking on New Mexico, which advocates for a public bank “to democratize our local economy and support the city in its stewardship of the peoples’ money.”

Sullivan has two master’s degrees, one in education and the other in applied behavioral science.

“I am delighted that a task force will now address the questions yet to be answered about whether a chartered public bank is a fit for our city,” she wrote. “I would like to help ensure that qualified due diligence is applied to this research, in whatever ways I can be helpful.”

Robert Mang co-founded and retired from the Regenesis Group, a Santa Fe-based international consulting company to developers, architects, civil engineers and planners.

“I am particularly interested in the potential a public bank has to offer our citizens, both in savings to the city as well as the greater beneficial impact that would come from investing its funds locally,” Mang wrote in his application letter.

A Bank Even a Socialist Could Love

“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 like Jefferson County, Ala. 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.”

 

Public Banking — Funding Local, Sustainable Economies