Ayn_Rand1

Public Banking: Ayn Rand’s Worst Nightmare

A few weeks ago a Colorado grassroots group, Be the Change, of which I am a board member, sponsored an all -day conference on public banking.   I know, it sounds like the equivalent of an all- day climate debate between aging Republican Senators, but the public banking concept may have some value, it might even surprise you.  Indeed, it could provide a source of funding for desperately needed infrastructure, particularly at the local level.

Over 20 states are looking into the public banking option.  But only one, North Dakota has a public bank, and it dates from the populist era, early in the last century.  In a recent WSJ article the North Dakota bank was lauded for having a return on investment of almost 20 percent, a 70 percent greater return than either Goldman-Sachs or J.P. Morgan, two of Wall Street’s best bullies.

From a short-term perspective, a public bank’s chief advantage is that revenues generated at the city, county, and state level from taxes and fees, stay in the state.  They would no longer be sent to the grand casino that has become Wall Street where the prospects of another melt down grow. The recent actions of Congress make it likely that giant retirement funds such as Colorado’s public employee’s retirement plan, PERA, can be appropriated to cover Wall Street speculative losses should a melt down occur.  Even FDIC insured personal accounts might be at risk.  Moreover, the high management fees Wall Street charges for using our money to gamble with would be eliminated, thus greatly increasing the amount available for local and regional projects of wide public support and interest.

Critical to a public bank is its structure.  If it looks like just another bank, public support and interest will be ho hum, at best.  But if it is chartered so that management rests with a citizen advisory board, with a professional banking staff answering to them, interest will be  sustained, with the public interest more likely to be served.

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