Tag Archives: Public Banking Institute

Phil Murphy wins in NJ! Public Banking on the ballot and wins!

BREAKING: Phil Murphy wins New Jersey’s governor’s race. But it’s not only a win for Murphy, it’s also a win for Public Banks. As John Nichols of The Nation put it today, “Public banking is on the ballot today—not as the sort of statewide referendum issue … but in the form of a candidate who knows a thing or two about banking.”

Phil Murphy describes Public Banking as “the type of big thinking we need to get back on track.” He wants to do even more with a NJ state bank than the successful model of the Bank of North Dakota. “This is money that belongs to the taxpayers of New Jersey, so it should be invested in them.”

PBI’s Chair Emeritus Walt McRee says,

“Phil Murphy has distinguished himself not only in the race for New Jersey governor, but nationally as well with a policy innovation actually capable of turning the state’s economy around.”

Murphy’s win, as John Nichols says, could lead to a different way of talking about economic renewal nationally. PBI believes public banking is a non-partisan issue — conservatives and liberals alike embrace it as a solution for many of the problems facing our country. We are encouraged that so many candidates for office are putting Public Banking on their platform.

What if People Owned the Banks, Instead of Wall Street?

When Craig Brandt marched into the City Council chambers in Oakland, California, in the summer of 2015, he was furious about fraud.

The long-time local attorney and father of two had been following the fallout from the Libor scandal, a brazen financial scam that saw some of the biggest banks on Wall Street illegally manipulate international interest rates in order to boost their profits. By some estimates, the scheme cost cities and states around the country well over $6 billion. In June of 2015, Citigroup, JPMorgan Chase, and Barclays, among other Libor-rigging giants, pleaded guilty to felony charges related to the conspiracy and agreed to pay more than $2.5 billion in criminal fines to US regulators. But, for Brandt, that wasn’t enough. He wanted the banks banished, blocked from doing business in his city.

“I was totally pissed about it,” he says. “It was straight-up fraud.”

So, in a small act of stick-it-to-the-man defiance, Brandt drafted a resolution that barred the municipality from working with any firm that had either committed a felony or had recently paid more than $150 million in fines. He presented the homespun and eminently reasonable legislation to city officials and urged them to adopt it.

“The city councilors said they couldn’t do it,” Brandt says. “If they did, they wouldn’t have a bank left to work with. They said there wouldn’t be any bank big enough to take the city’s deposits.” Oakland, it seemed, was hopelessly dependent on ethically dubious and occasionally criminal financial titans. Brandt, however, was undeterred.

After the City Council turned him down, he started looking for other ways to wean Oakland off Wall Street. That’s when he fell in with a group of locals who have been nursing an audacious idea. They want their city to take radical action to combat plutocracy, inequality, and financial dislocation. They want their city to do something that hasn’t been done in this country in nearly a century, not since the trust-busting days of the Progressive Era. They want their city to create a bank—and, strange as the idea may seem, it’s not some utopian scheme. It’s a cause that’s catching on.

Across the country, community activists, mayors, city council members, and more are waking up to the power and the promise of public banks. Such banks are established and controlled by cities or states, rather than private interests. They collect deposits from government entities—from school districts, from city tax receipts, from state infrastructure funds—and use that money to issue loans and support public priorities. They are led by independent professionals but accountable to elected officials. Public banks are a way, supporters say, to build local wealth and resist the market’s predatory predilections. They are a way to end municipal reliance on Wall Street institutions, with their high fees, their scandal-ridden track records, and their vile investments in private prisons and pipelines. They are a way, at long last, to manage money in the public interest.

Since 2011, advocates from a national nonprofit called the Public Banking Institute have traveled across the country, preaching the practical benefits of public banking and recruiting or training activists and organizers to take up the cause. They have found willing and enthusiastic supporters from coast to coast. The movement has been embraced in Philadelphia, where the city council held hearings on the idea last year. It’s been championed in Seattle and San Francisco, where a number of city supervisors are calling for a task force to study public banking. It’s taken root in Santa Fe, with backing from the mayor, and in Oregon, Vermont, and even New Jersey, where a leading Democratic gubernatorial candidate, Phil Murphy, has proclaimed his desire to create a state bank right next door to the financial capital of the world.

“I believe this is the wave of the future,” says Craig Brandt, who is now a leader of Friends of the Public Bank of Oakland, the group advocating for public banking in the city. “And I hope Oakland will be the first one out the door to do it.”

The city is well on its way. Last November, the Oakland City Council passed a resolution announcing their intention to explore the creation of a public bank. In February, elected officials and community activists gathered at City Hall for a packed forum on the benefits of a public bank, including the possibility that it could hold deposits from the state’s multibillion-dollar cannabis industry and help promote affordable-housing development. This summer, meanwhile, the council will likely vote on whether to dedicate as much as $100,000 to fund a feasibility study that will explore the technical requirements of creating an independent publicly owned financial institution in Oakland.

“The fundamental point is to have a bank whose purpose is to be responsive to community needs,” says Oakland Councilmember Rebecca Kaplan, a key backer of the local public-banking movement. “This would allow us to save money compared to traditional corporate bank rates, and it would allow us to fund vital projects based on community need rather than having those decisions driven by the profit motive.” She says the City is also interested in the possibility of creating a regional public bank by partnering with neighboring cities like Berkeley and Richmond, California.

“The more folks on board,” she said, “the stronger the support for taking this kind of action.”

Public banks have a long, though subterranean, history in the United States that stretches back to the days of Benjamin Franklin, who helped establish a public land bank in Pennsylvania to provide cheap loans to small farmers. Even today many public institutions, from the Federal Deposit Insurance Corporation to the Small Business Administration to the Federal Housing administration, are essential components of America’s banking system. But there’s only one true public bank in this country and it’s not in Washington or New York or some coastal liberal enclave. It’s in North Dakota, where it has survived and thrived for nearly a century.

First established in 1919 by populist state legislators eager to extend credit to cash-strapped farmers and ranchers, the state-owned Bank of North Dakota (BND) is now a modern and multifaceted financial juggernaut. The bank holds deposits from government agencies. It provides low-cost credit for school construction and municipal infrastructure projects. It refinances student debt at reduced interest rates. Rather than opening branches of its own, it generously partners with local community banks and credit unions tos issue small-business, home, and agricultural loans. Best of all, it funnels its profits back into state coffers whenever North Dakota has budget troubles. The bank is, in other words, essentially socialist.

It’s also a steady source of profit. Last year, according to its annual report, the Bank of North Dakota saw its 13th consecutive year of record profits, taking in more than $136 million in income while growing its loan portfolio by $449 million dollars. And, unlike some of its counterparts, the bank accomplished all that without opening fraudulent accounts or manipulating interest rates or otherwise scamming consumers.

The bank’s success—its long track-record of supporting and stabilizing local economies, sharing the wealth, and minting a profit to boot—has turned it into an intriguing model for cities around the country that are keen to find creative fixes for their ongoing financial woes.

“Public banking is finding its time now because municipal executives have very poor choices,” says Walt McRee, the chair of the Public Banking Institute. “As things deteriorate and have to be fixed, as population grows but jobs decline, as tax receipts dry up, cities can either can cut services, raise taxes, fire people, or privatize things. But those trends are enormously destructive.”

“The prospect of a public bank does something entirely different,” he continues. “It gives a community the ability to liquefy its own assets and lend itself money, to do things it needs to do with money it already has, to hold on to people’s capital instead of sending it to Wall Street.”

Consider municipal bonds. Cities regularly go to the municipal-bond market to raise money for big projects, from school construction to bridge building to park development and more. These bonds, however, come with overhead costs in the form of fees that normally hover around 1 percent, but can climb as high as 10 percent, of the bond’s principal value. A recent report by the University of California Berkeley’s Haas Institute estimates that cities and other public entities pay upward of $4 billion a year in such fees, an enormous sum that serves only to fatten the purses of multinational banks, legal firms, and others involved in the bond-issuance business. A public bank could help reduce these costs and free up funds by enabling a city to deposit its money in a public entity instead of a profit-centric institution like Wells Fargo or JPMorgan Chase. The city would then be able to borrow money from its own bank rather than turning to the Wall Street bond market, with its overhead costs and market-set interest rates. It could, in short, introduce a radical alternative into the realm of municipal finance.

One of the other places where this radical alternative has taken root, surpassing even Bay Area efforts, is Santa Fe, New Mexico. The movement in that city of 67,000 started gathering momentum in 2014, when a small but determined group called Banking on New Mexico held a symposium to promote the idea. More then three hundred people showed up, including the newly elected progressive mayor, Javier Gonzales.

“A group of advocates met with me early in my term,” says Gonzales. “I was really intrigued and excited about an opportunity to explore a different way to have fiscal relationships.”

In early 2015, Santa Fe commissioned a private consultant, in partnership with New Mexico State University, to conduct a feasibility study into public banking. A year later, in January 2016, the report came back and the news was positive: By funding the city’s capital needs and improving municipal cash management, among other functions, a public bank could generate more than $24 million in savings and earnings for Santa Fe over a seven-year period. And such a bank would be particularly effective, says Katie Updike, the consultant who authored the study, if it serviced the city as well as the surrounding county and school district.

“In the case of Santa Fe, where I saw the biggest benefit is if the city, county, and school district worked together,” she says. “When you begin to step out of the jurisdiction of the city and look at the county and the school district too, which are separate entities, all their cash could be pooled and used to fund projects and then it began to get more interesting.”

In late April of this year, based on the results of the feasibility study, Santa Fe’s city council announced that it was creating a nine-person task force to spend six months digging deeper into the legal and financial prerequisites of establishing a public bank. The task force will focus, above all, on developing a governance structure for the bank.

“Governance is a concern for a lot of people,” says Elaine Sullivan, a leader of Banking on New Mexico and a passionate promoter of the cause. “People don’t want the bank run by political officials, and it wouldn’t be. There would be a clear distinction between the public bank, which would be managed by public bankers, and the city of Santa Fe.”

Indeed, the prospect of political interference into a public bank is one of the most common critiques of the idea. If public banks are to succeed in cities around the country, say skeptics and supporters alike, they must to be firmly insulated from the whims of legislative bodies and elected officials.

Here, once again, the Bank of North Dakota offers a model. While overseen by a commission of elected officials, including the state’s governor and attorney general, BND is managed on a day-to-day basis by an independent and highly transparent executive committee of professional financial managers. Its operations are also subject to regular inspection by independent auditors. BND, moreover, maintains public goodwill by declining to compete with local banks. It has no retail locations or ATMs. Rather, it partners with community banks and credit unions to provide its services.

By putting similar structure in place and starting small, Sullivan believes a public bank in Santa Fe could someday be a smash hit. It wouldn’t just provide ample economic benefits to the city but would serve a larger purpose too.

“As the global banks and major corporations that don’t have a moral tether have become more and more powerful, communities have become weaker and weaker and more passive,” she says. “A public bank is about addressing plutocracy. It is about restoring hope.” A public bank, she asserts, would be a red-hot engine of local economic democracy.

This essential fact, more than anything else, explains why the public-banking movement is blossoming in a post-recession, too-big-to-fail America where Donald Trump rules the White House and Wall Street rules Washington.

“We are seeing a resurgence of community-oriented life and activism and vision in this imperial era,” says Councilmember Kaplan of Oakland. “And it has strengthened the movement.”

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.”


It’s Our Money: Can History Please Not Repeat Itself?

The earliest days of private banking cartels in America occurred before we were the United States. The pattern of private capital determining government policy is centuries old – but so is the sort of public interest banking emerging in the US now. Ellen’s guest Jim Hogue, an author, broadcaster and historian, recounts how the struggle for control of finance rocked the early American colonies and precipitated a permanent war footing enabled by big finance. Later, cohost Walt McRee talks with Dr. Maurie Cohen about his latest book dealing with the future of consumer society and whether we can create a sustainable post-consumerist economy. LISTEN HERE.


Oakland Just Voted to Explore Public Banking

The City of Oakland, California joins a host of other communities exploring public banking.

In response to long-term economic instability and disappointment with the mainstream banking system, the Oakland City Council voted Tuesday to investigate a public banking feasibility study funded by money left over from the Goldman Sachs Debarment Proceedings.

The resolution, co-sponsored by Councilmembers Kaplan, Kalb, and Guillen, also directs city staff to solicit input from community stakeholders about the feasibility study, including suggestions of potential contractors and funding sources. Additionally, it instructs city staff to consider the feasibility of an Oakland-specific public bank and proposes the possibility of partnering with other jurisdictions to form a regional bank.

According to Sheng Thao, Chief of Staff for Councilmember Kaplan, the creation of a public bank offers the possibility of achieving multiple policy objectives, including stimulating economic development, spurring job creation, reducing municipal debt service, and expanding the tax base through direct, long-term local lending at below-market rates.

The members of the Finance Committee unanimously passed Councilmember Kaplan’s resolution calling for the city administrator to look into the process of establishing a public bank.

“I was thrilled to see the outpouring of support for public banking,” Kaplan says.“Passing this resolution at the next City Council meeting marks an important first step in the process of investigating public banking for the City of Oakland or larger region, including its benefits for our budget and its wider societal impacts.”

Kaplan’s resolution will be considered at the Tuesday, November 29th City Council meeting, which begins at 5:30PM at Oakland City Hall.


Joan Bartl believes taxpayer-owned financial institution would be ‘logical and practical’ because of the state’s ‘significant fiscal problems’

Who she is: Joan Bartl, state coordinator in New Jersey for the nonprofit Public Banking Institute.

Where she calls ‘home’: Bartl, who was born in Philadelphia and attended the Wharton School of Business, has been a resident of Princeton for nearly 50 years.

Why she matters: Since 2012, Bartl has been leading the effort in New Jersey to establish a public bank that would be modeled on the Bank of North Dakota, the nation’s only state-owned banking institution. The push to create a similar bank in New Jersey received a big boost last month when Phil Murphy, a Democratic candidate in New Jersey’s 2017 gubernatorial contest, outlined an economic platform that included the goal of launching a public bank here.

Bartl is also the founder and president of Payment Management, a credit-card processing company.

What is public banking? While most taxpayer funds right now are deposited in commercial banks, the mission of a taxpayer-owned bank would be to create a new financial institution in New Jersey that could hold those deposits without having to involve the commercial banks. The public bank would also eliminate the profit motive of a commercial institution, meaning taxpayer deposits could be leveraged through the writing of loans that encourage public-policy goals like building new schools or funding infrastructure repairs. And for local governments that rely heavily on revenue collected through property taxes, the public bank could become a new source of capital that could be tapped without having to pay the high fees and interest rates generally charged by big commercial banks.

How she got involved: Bartl was first drawn to the public-banking issue by a friend, Walt McRee, the Public Banking Institute’s national chairman. She read up on the topic, attended conferences, and also learned more about the Bank of North Dakota, which was founded in 1919 by North Dakota’s Legislature. Seeded with $2 million, the Bank of North Dakota now has over $270 million in capital and 168 employees. And while other states, including New Jersey, struggled during the Great Recession, North Dakota was in a much stronger position thanks to its bank.

“It just seemed like such a logical and practical concept,” Bartl said.

Why New Jersey? The public-banking idea may make a lot of sense for a state like New Jersey, which has a number of significant fiscal problems, including heavy per-capita debt, a grossly underfunded pension system and near-annual budget crises, she said.

“It became obvious that the financial situation for New Jersey was not working long-term for the people, and it was not going to get better,” Bartl said. “If we have our own bank for New Jersey, we can lend to ourselves and New Jersey can take back control of where and how the money is invested.” As an advocate for establishing what would be the first new public bank in nearly a century, she’s met with local and county officials, and some state lawmakers, to share information about public banking and gauge interest in launching one here. “We realized that everybody liked the idea,” she said.

The Murphy factor: With Gov. Chris Christie’s two terms in office coming to an end in early 2018, the Public Banking Institute has been working to provide information about the issue to candidates from both parties who’ve shown interest in running in next year’s election. Murphy, a former Goldman Sachs executive who declared in May he is running as a Democrat, met with the group in Princeton. “His ears perked up. He was so interested and kept asking us more questions,” Bartl said of that meeting.

Murphy then announced last month during an economic policy speech that if elected he would seek to establish a public bank in New Jersey. The former U.S. ambassador to Germany who has quickly become a frontrunner in the gubernatorial race said he believes the public bank could help local governments in New Jersey when they need to borrow money for capital projects. He also said during the speech delivered at the New Jersey Institute of Technology in Newark that small businesses and college students could stand to benefit from a public bank. New Jersey right now deposits more than $1 billion in commercial banks, some located overseas, he said.

“It’s time to bring the money home,” Murphy said. Bartl called Murphy’s decision to include the public bank in his economic platform “very exciting and very rewarding.” She said, “It’s the right thing to do, and it’s the right time to do it.”

Latest developments: Bartl and McRee are working to get a task force started with other New Jersey stakeholders to begin establishing the mission of the state’s public bank. That will include ensuring proper safeguards are put in place to insulate the proposed bank from political interference and also requiring full transparency.

Other interests: A divorced mother of a daughter and a deceased son, Bartl has a history of social activism. She was a member of Women on Words and Images, a group that published the analysis “Sex Stereotyping in Children’s Readers” in 1972. “It took four or five years, but we changed the way girls and boys were portrayed (in the media) … That was a really powerful time in my life.”

Bartl is a longtime board member of Womanspace, a Mercer County-based nonprofit that serves individuals and families impacted by domestic and sexual violence by offering crisis intervention, emergency shelter, counseling and other services.



Former Goldman Sachs executive also called for a higher minimum wage, tax breaks for those with lower incomes, and efforts to encourage high-tech.

Democratic gubernatorial candidate Phil Murphy delivering a major policy speech on the campus of the New Jersey Institute of Technology in Newark.
Democratic gubernatorial candidate Phil Murphy delivering a major policy speech on the campus of the New Jersey Institute of Technology in Newark.

Democratic gubernatorial hopeful Phil Murphy called for a sweeping revision of state economic policies during a major speech in Newark yesterday, saying New Jersey’s economy is now saddled with inequality after more than six years under Republican Gov. Chris Christie’s direction.

To help restore fairness for everyone, Murphy said the state minimum wage must go up, student-loan programs revamped, and tax breaks for the working poor expanded. But his most noteworthy proposal was a call for the creation of a state-owned public bank that would allow college students and small businesses to access loans at more equitable rates than those charged by profit-driven commercial institutions. Only one other state currently operates such a bank in the United States.

Murphy, a former Wall Street executive and ambassador to Germany under President Obama, also criticized tax breaks for major corporations that have become a hallmark of Christie’s tenure, saying the governor’s approach represents “outdated” economic thinking. If he becomes governor, Murphy said the state would invest more in cities, infrastructure, and higher education, even if it means hiking taxes on the wealthy and forcing big corporations to pay more by closing loopholes to bring in new revenue.

“We can no longer tolerate a zero-sum economy where some are able to succeed only because others have been left by the wayside,” Murphy said. “There is too much inequality (and) our economy is in a place you don’t want to be, profoundly unfair and flat as a pancake.”

Murphy’s speech, delivered on the campus of the New Jersey Institute of Technology, drew praise from several fellow Democrats and proponents of public banking. They said his plan to create such a bank in New Jersey is worthy of national attention. But Murphy’s economic agenda was also loudly criticized by state Republicans, and they predicted his ideas would bring on higher unemployment and increased taxes.

Christie has held firm since taking office in early 2010 to an economic strategy that has emphasized streamlining regulations and reducing a tax burden that the state’s business community has long blamed for holding back growth and investment. His administration has enacted more than $2 billion inbusiness tax cuts while also authorizing more than $6 billion in corporate tax incentives through the state Economic Development Authority.

But New Jersey’s economy has remained stuck in a trend of largely slow growth since the end of the Great Recession, and the unemployment rate has trailed the national average in recent months as the state has struggled to string together consecutive months with net job creation. Some of the economic wounds have also been self-inflicted, as Christie and Democratic legislative leaders have been mired in an ongoing stalemate over renewing the state Transportation Trust Fund, leading to a lengthy shutdown of state-funded road, bridge, and rail projects.

Christie will reach the end of his second term in office in early 2018 and cannot run a third time. With the governor now struggling to overcome extremely low approval ratings, most Democrats believe New Jersey voters will be unlikely to give Republicans another try when they go to the polls next year.

Murphy right now is the only official candidate in New Jersey’s 2017 gubernatorial contest, though Senate President Stephen Sweeney (D-Gloucester), Sen. Ray Lesniak (D-Union), Assemblyman John Wisniewski (D-Middlesex), and Jersey City Mayor Steven Fulop are among the high-profile Democrats who are expected to eventually join the race for the Democratic nomination. The field on the Republican side could include Lt. Gov. Kim Guadagno, Senate Minority Leader Tom Kean Jr. (R-Union), Assembly Minority Leader Jon Bramnick (R-Union), and Assemblyman Jack Ciatterelli (R-Somerset).

Murphy, during the speech yesterday, suggested investing more in infrastructure and the state’s cities would provide far more incentive for companies to relocate to New Jersey than a tax credit. He also said state colleges and universities need better funding to prevent high-school seniors from being the state’s “leading export.”

The Middletown resident also called for the organizing of an “innovation cabinet” that would be focused on getting New Jersey back into the lead when it comes to fostering new technology, and he stressed the need for the state to improve technology within government itself to be more responsive to innovators and entrepreneurs. Murphy also called for an increased minimum wage, gender-pay equity, tax credits for childcare and family caregivers, and an expansion of the state’s Earned Income Tax Credit for low-wage workers.

But he pitched the creation of a public bank in New Jersey as the cornerstone of his economic vision, holding up North Dakota’s state-owned bank as a model. Established by the North Dakota Legislature in 1919 in response to the rising interest rates that commercial banks were charging for agricultural loans, the public bank was seeded with $2 million in capital. As of last year, the bank had over $270 million in capital and 168 employees and had returned hundreds of millions of dollars in profits to the state’s general fund.

Local governments could borrow money for infrastructure projects at cheaper rates than those offered by Wall Street if New Jersey created a similar state-owned bank, Murphy said. It would also allow college students and small businesses to access capital without having to pay the high fees that sustain shareholder profits and exorbitant bank-executive bonuses.

Right now, the state deposits more than $1 billion in commercial banks, some located overseas, he said.  “This money belongs to the people of New Jersey, it’s time to bring the money home,” he said.      Pressed by reporters after the speech about how he would keep the proposed public bank from being used for the wrong purposes in a state known for its political corruption, Murphy said that could be accomplished through the drafting of the bank’s charter and the selection of its board members.

Walt McRee, national chairman for the nonprofit Public Banking Institute, has previously pitched New Jersey as a prime candidate for the nation’s next state-owned public bank. He praised Murphy’s proposal yesterday, calling it “bold” and “timely.”       “Phil Murphy has distinguished himself not only in the race for New Jersey governor, but nationally as well, with a policy innovation actually capable of turning the state’s economy around,” McRee said.

But several of Murphy’s economic policies put him at odds with the state business lobbying groups like the New Jersey Business & Industry Association, including calling for a higher minimum wage, earned sick leave, and the adoption of combined-reporting corporate-accounting policies that would make it harder for multistate corporations to shift profits to states with lower tax rates.

Rick Rosenberg, a spokesman for the state Republican Party, also criticized Murphy’s economic agenda, comparing it to policies enacted by former Democratic Gov. Jon Corzine. Corzine served one term in office before being unseated by Christie in 2009 at the onset of the economic collapse. Corzine and Murphy are both former employees of Wall Street-powerhouse Goldman Sachs.

“Phil Murphy has made it abundantly clear that he is hell-bent on resurrecting the same kind of failed big-government policies of the Corzine era,” Rosenberg said. “His plans for bloated government and job-killing regulations would bring us back to the days when New Jersey had the highest unemployment in the region, a government teetering on bankruptcy, and families and seniors paying the highest tax burden in the nation.”


PBI Launches Public Banking Caucus


PBI logoPBI Chair Walt McRee has announced the creation of a bi-partisan Public Banking Caucus, a strategic campaign to link together the many local and state elected and appointed officials (and candidates) already supporting public banking.

Mike Krauss, PBI founding director and chair of the Pennsylvania Project, has been selected to lead this effort. The Pennsylvania Project was the first PBI affiliate.

“As many in the public banking community know, Mike Krauss is one of our ablest and most respected public banking advocates,” said McRee. “As a former officer of Pennsylvania county and state government, and a former Executive Director of the Pennsylvania Republican State Committee, he brings to the task a unique understanding of the way in which public policy is advanced by citizens through the political process.”

Efforts to identify local and state officials (and candidates) who support public banking are already underway.

Krauss is asking the PBI community to assist in assembling a roster of public banking advocates who are either currently in local or state government or running for public office.

Stamford Advocate: Committee to Consider Public Bank Bill

By Alexander Soule, Published 7:43 pm, Monday, February 23, 2015

A Connecticut legislator is seeking a study of whether the state should create a publicly held bank as a way to provide a stable source of funding for various projects, among other potential benefits.

State Rep. Susan Johnson, D-Windham, proposed the bill, which is under deliberation by the Connecticut General Assembly‘s Banking Committee, co-chaired by Sen. Carlo Leone, D-Stamford. Johnson said she became interested in the concept of a public bank following the financial collapse of 2008 and 2009, when many consumers and business owners voiced frustration with banks for what they felt were restrictive credit policies.

Johnson said she does not envision a public bank in Connecticut structured similarly to a consumer bank, with branches and deposits, visualizing it as a stable steward of capital and funding for projects in Connecticut.

With a history dating back to 1919, the Bank of North Dakota is the only state-backed public bank in the nation, with assets totaling $6.9 billion in 2013 and generating income of $92 million that year. Legislators in Massachusetts have attempted without success to get a public bank authorized in the Bay State, one of 15 such efforts tracked nationally by the National Conference of State Legislatures.

Ed Heflin, a Greenwich resident who lost last year as a Green Party candidate for the seat of state Sen. L. Scott Frantz, R-Greenwich and Stamford, has been a vocal supporter of a state-backed bank in Connecticut. Heflin, who is chief technology officer of a Clifton, N.J.-based startup called Retail Shopping Systems, testified last week before the Banking Committee and filed a proposal to demonstrate how a bank law could be drafted.

“The Bank of North Dakota turns out a tidy profit year after year because it substantially lowers costs and risks, more so than any private commercial bank,” Heflin said. “It has no exorbitantly paid executives; pays no bonuses, fees or commissions; has no private shareholders; and has very low borrowing costs.”

Walt McRee, Director of Communications

Public Banking Institute



Former Goldman Insider Endorses Public Banks

Nomi Prins

The Banking on Colorado event a few weeks ago was a great success, and even if you have read articles or books by Nomi Prins, you really have to watch this video of her rousing keynote address.

It was truly remarkable to see a former Goldman Sachs insider heaping praise on public banking, pointing out that the Bank of North Dakota truly is leading Wall Street banks in important ways including return on equity.

Don’t miss this inspiring talk!  WATCH HERE