These days, when the word ‘public’ is applied to an institution (e.g. public housing) it is a dogwhistle for ‘socialist,’ which in turn is a dogwhistle for communist, leninist, stalinist, and all the other bogeyman ‘-ists’ that hide under the beds of aging citizens who survived the Cold War in America.
San Francisco has dodged that bullet in a just-released report about creating a public bank in that city.
The report is a ‘Municipal Bank Feasibility Study.’ But hiding under this hood is indeed what is better known as a ‘public’ bank, owned by the people, making investments for the people, and returning profit to the people.
Not terribly common, but present in other parts of the world, America’s public banks are an exceedingly rare species. In fact, public banks in America are only one bank away from extinction. Try: Public Banks: What Are They? What Might They Offer Affordable Housing?
There are those who don’t believe that capitalist-oriented shareholders are the privileged few entitled to profit from loans, mortgages, etc. A great many younger Americans are too young to remember all the fears of the ‘red scare’. For all those happier to be red than dead, the notion of a public bank can well be exceedingly attractive.
Two particular features drive activist interest in public banks.
First, governments that generate huge sums of money through taxes inevitably find themselves taxed in turn by private banks that profit at public expense while managing that public money. A public bank would, after expenses, retain all income on behalf of the people. There would be no profit leakage to private bank shareholders.
Second, and of particular interest of affordable housing activists, investments could be channeled to the government district that owns the bank. Loans could be funnelled to local businesses, including those committed to affordable housing. Extraterritorial investments, including those that are morally repugnant (helping to supply guns to terrorists, for example) could be left to the coffers and consciences of privately-owner banks.
The San Francisco report does not to take a stand either for or against public banking. It’s well worth a read, however, not just for its sober analysis of the feasibility of a public bank. It also reaches some thought-provoking conclusions about the lengthy time frame and enormous capital requirements to build a public bank into healthy, viable enterprise.
Read more, including the final report, from the San Francisco Treasurer’s Office: Municipal Bank Feasibility Task Force
