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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.
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
82%
13%
5%
DC Gov't Deposits
Large Banks 82%
Treasury Bonds 13%
Local Banks 5%
Where does DC government currently deposit its money?
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.
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
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”
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!
Public Banks Resist Recession
That’s why, around the world, public banks have escaped the credit crisis and helped their economies to recover.
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.
http://www.ncsl.org/issues-research/banking/state-owned-financial-institutions-2012-legis.aspx
Public Banking in the U.S. Today
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
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
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.