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North Dakota Points the Way Out of States’ “Too Big to Fail” Banking Trap

OCCUPY

By Cliff DuRand

When the big Wall Street banks crashed the economy a decade ago due to their financial speculation, many people began to ask, “Why should we put our money at risk with Wall Street?”

Although the federal government bailed these banks out with billions of dollars at taxpayer expense, it was a clear warning of the danger of trusting our financial future to these private financial institutions. In the aftermath of the crash, homeowners lost their mortgaged houses, homelessness and unemployment rose, local and state governments found their budgets squeezed, and public services were curtailed. Many realized there must be a better way.

The state of North Dakota found one. During the 2008 national crisis, North Dakota had the lowest mortgage foreclosure rate in the country. Unemployment was among the lowest, and local governments enjoyed healthy budgets. How was that possible?

It was possible because North Dakota had a public bank long owned by the citizens of the state. Rather than depositing tax revenues in private Wall Street banks, North Dakota kept that money in state and used it to support the local economy.

Founded in 1919, the Bank of North Dakota used its money for farm loans, student loans, and small business loans, in partnership with small local banks around the state. As a result, North Dakota has more local banks than any other state. It has a healthier economy because it declared independence from Wall Street a century ago.

The lessons of public banking have been taken to heart across the country in the last decade. Local groups of citizens have advocated for public banks in Philadelphia, Vermont, New York, Michigan, Illinois, Washington state, Arizona, Alaska, and elsewhere. In 30 states, legislation has been proposed in support of them. California has just passed legislation opening the way for public banking, and the governor of New Jersey has introduced legislation to explore the idea there.

When a state government has its own public bank, it can finance infrastructure projects without issuing bonds, saving 50 percent in costs. Interest on loans comes back into the state coffers, reducing taxes. Public banks do not pay multimillion-dollar compensation to their executives since they are public servants. And when public banks are democratically accountable, they empower citizens rather than the wealthy few.

Since these banks follow an old fashioned hometown management philosophy, they are risk-averse and in tune with local needs. In fact, the Bank of North Dakota has been judged to be a safer bank than the Wall Street giants.

This Monday, Occupy SMA will hear a video talk by Ellen Brown, founder of the Public Banking Institute. It has been the primary resource for activists promoting public banking across the US. Go to publicbankinginstitute.org to learn more about how finance is being democratized. Come to Occupy SMA to learn more about it from Ellen. Our meetings are free and open to the public.

 

Meeting, Film, and Discussion

Occupy San Miguel presents

Public Banks: Declaring Independence from Wall Street

Mon, Oct 7, 1pm

Quinta Loreto Hotel

Loreto 15, TV room

Centro

Free

 

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