Why Support a DC Public Bank, Part 1


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This quick presentation covers the DC Public Banking Center's core concepts about the need and benefits for establishing the DC Public Bank. Part 1.

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Why Support a DC Public Bank, Part 1

  1. 1. DC PUBLIC BANKING CENTER   Creating Public Money for the Public Good
  2. 2. Problems a DC Public Bank  Will Address Lack of jobs which are due to artificial scarcity  of affordable credit. Government deposits are not safe in today’s  big banks. Financing is lacking to meet Sustainable DC  goals.
  3. 3. DC Public Bank Solutions Creates new jobs and spurs economic growth Enhances the financial health and security of  the city's general fund Promotes a Sustainable DC
  4. 4. 82% 13% 5% DC Gov't Deposits Large Banks  82% Treasury  Bonds 13% Local Banks  5% Where does DC government  currently deposit its money?  
  5. 5. Do you think your DC tax  dollars are safe in the big  banks  ?
  6. 6. Current U.S. law puts DC government deposits at risk 2010 Dodd-Frank law: taxpayers will no longer bail out failing banks. Now we have bail-ins. Government deposits above $250,000 are not FDIC insured. No DC government deposit accounts are less than $250,000 (as of Jan. 2012). Many DC government deposits are held in uninsured accounts.
  7. 7. Confiscation of deposits to save a bank is called a “bail in”!
  8. 8. FDIC & Bank of England Approve Bail-in Policy “Resolving Globally Active, Systematically Important, Financial Institutions”  A joint memorandum by the Federal Deposit Insurance Corporation and the Bank of England,10 December 2012, which says…  Under Dodd-Frank Act authority, the FDIC would assign losses to shareholders & unsecured creditors if a such bank fails. Source: http://www.fdic.gov/about/srac/2012/gsifi.pdf
  9. 9. Derivatives Held by Bank Receive Priority When Bank Fails  Government accounts may be subject to bail-in requirements.  Derivatives have super priority claim on bank collateral.  There may not be any funds left for local government deposit claims. Source: Ellen Brown, “Winner Takes All: The Super Priority Status of Derivatives”
  10. 10. Are all banks in the world private ?
  11. 11. No! Globally, 40% of all banks are publicly owned.
  12. 12. Germany has had public banks since the 19th century. The Bank of Canada operated as a public bank from 1935 to 1971. Brazil, Russia, India and China all have very large, mature public banking sectors. Japan & New Zealand have public banks through their post offices. The United States once had public postal banks!
  13. 13. Public Banks Resist Recession That’s why, around the world, public banks have escaped the credit crisis and helped their economies to recover.
  14. 14.  North Dakota owns its own public bank  The Shawnee Tribe in Oklahoma also has its own public bank.  At least 15 states, one city, and one county are considering creating public banks. Public Banking in the U.S. Today
  15. 15. North Dakota has had its own bank since 1919 • The farmers were losing their farms to the Wall Street bankers. • They organized, won an election, and passed legislation to create a public bank. Photo thanks to Ellen Brown
  16. 16. The Bank of North Dakota (BND) How It Works  All state revenues are deposited in BND by law.  BND is wholly owned by the state of ND.  BND makes participation loans with local banks. BND’s home today
  17. 17. What does BND do for ND today?  Partners with local banks to increase local lending  Makes low interest loans for designated local projects  Redirects credit away from speculation in derivatives toward local lending  Fulfills mandate to deliver quality, sound financial services that promote agriculture, commerce and industry in North Dakota.
  18. 18. The only state to escape the credit crisis State budget surplus every year since financial meltdown in 2008 Lowest unemployment rate in US Lowest foreclosure rate in US Lowest loan default rate in US How's North Dakota's Economy Now?