But if You Cant Steal from their Customers, Where Will the Profits Come From?
Anarchists Doing Socialism Better than Bureaucrats
Anarchists Fill Services Void Left by Faltering Greek Governance
It may seem paradoxical, but Greece’s anarchists are organizing like never before.
Seven years of austerity policies and a more recent refugee crisis have left the government with fewer and fewer resources, offering citizens less and less. Many have lost faith. Some who never had faith in the first place are taking matters into their own hands, to the chagrin of the authorities.
Tasos Sagris, a 45-year-old member of the Greek anarchist group Void Network and of the “self-organized” Embros theater group, has been at the forefront of a resurgence of social activism that is effectively filling a void in governance.
“People trust us because we don’t use the people as customers or voters,” Mr. Sagris said. “Every failure of the system proves the idea of the anarchists to be true.”
These days that idea is not only about chaos and tearing down the institutions of the state and society - the country’s long, grinding economic crisis has taken care of much of that - but also about unfiltered self-help and citizen action.
Yet the movement remains disparate, with some parts emphasizing the need for social activism and others prioritizing a struggle against authority with acts of vandalism and street battles with the police. Some are seeking to combine both.
Whatever the means, since 2008 scores of “self-managing social centers” have mushroomed across Greece, financed by private donations and the proceeds from regularly scheduled concerts, exhibitions and on-site bars, most of which are open to the public. There are now around 250 nationwide.
Some activists have focused on food and medicine handouts as poverty has deepened and public services have collapsed.
In recent months, anarchists and leftist groups have trained special energy on housing refugees who flooded into Greece in 2015 and who have been bottled up in the country since the European Union and Balkan nations tightened their borders. Some 3,000 of these refugees now live in 15 abandoned buildings that have been taken over by anarchists in the capital.
The burst of citizen action is just the latest chapter in a long history for the anarchist movement in Greece.
Anarchists played an active role in the student uprisings that helped bring down Greece’s dictatorship in the mid-1970s, including a rebellion at the Athens Polytechnic in November 1973, which authorities crushed with police officers and tanks, resulting in several deaths.
Since the late 1970s and early 1980s, anarchists have joined leftist groups in occupying portions of Greek universities to promote their thinking and lifestyle; many of those occupied spaces exist today, and some are used as bases by anarchists to fashion the crude firebombs hurled at the police during street protests.
Over the years, anarchists have also backed a spectrum of causes, such as opposing “neoliberal” education reform or campaigning against the 2004 Olympic Games in Athens.
The movement continues to be largely tolerated by the public at large, reflecting a deep distrust of authority among Greeks that has been stoked in recent years by the austerity measures imposed on the debt-racked country by international creditors.
In Athens, the anarchists’ epicenter remains the bohemian neighborhood of Exarchia, where the killing of a teenager by a police officer in 2008 set off two weeks of rioting, helped reinvigorate the movement and produced several guerrilla groups that led to a revival of domestic terrorism in Greece.
The police and the authorities tread lightly in the area.
The police have recently raided some buildings illegally occupied by anarchists, called squats, in Athens, in the northern city of Thessaloniki and on the island of Lesbos, a gateway for hundreds of thousands of migrants over the past two years. But the authorities have stopped short of a blanket crackdown, which would be difficult for the leftist Syriza party of Prime Minister Alexis Tsipras to condone.
In an interview, Public Order Minister Nikos Toskas said that the police sweeps were “systematic,” and that the raids were being carried out “where they are needed.”
The mayor of Athens, Giorgos Kaminis, condemned the squats, saying they have compromised “the quality of life of the refugees.”
“No one knows who they are controlled by and what conditions people being put up in occupied buildings live in,” he said in a response to a reporter’s questions.
The anarchists say their squats are a humane alternative to the state-run camps now filled with more than 60,000 migrants and asylum seekers. Human rights groups have broadly condemned the camps as squalid and unsafe.
In Exarchia, one of the squats includes a former state secondary school that was abandoned because of structural problems. Established last spring with the help of anarchists, the squat is now home to some 250 refugees, mostly from Syria, who have set up a chicken coop on the roof. Many more refugees are on a “waiting list” for other occupied buildings.
The squats function as self-organized communities, independent from the state and nongovernmental organizations, said Lauren Lapidge, 28, a British social activist who came to Greece in 2015 at the peak of the refugee crisis and is actively involved with several occupied buildings.
“They are living organisms: Kids go to school, some were born in the squat, we’ve had weddings inside,” she said.
Another initiative in Exarchia involves anarchists and local residents who have moved a cargo container into the neighborhood’s central square, calling it a political kiosk, from which they distribute food and medicine and sell anarchist literature.
Vassiliki Spathara, 49, a painter and anarchist living in Exarchia, said the initiative was necessary because the local authorities would not intervene “even to replace light bulbs” in the square, known as a haunt for drug dealers, though activity has abated recently.
“The authorities want to downgrade the area because it’s the only place in Athens that has an organized, anti-establishment identity,” Ms. Spathara said.
Mayor Kaminis said the local authorities were cooperating with residents “to rejuvenate the area,” and insisted that Exarchia residents had the same rights as all Athenians.
Yet in Greece’s crumbling political landscape, anarchists appear to be styling themselves as a political alternative to the government.
“We want people to fight back, in all ways, from taking care of refugees to burning banks and Parliament,” said Mr. Sagris, the member of Void Network and the Embros theater group, which raises money to fund squats housing refugees. “Anarchists use all tactics, violent and nonviolent.”
He noted, however, that anarchists had a “moral obligation” to make sure that tragedies - like the deaths of three people in May 2010 when an Athens bank was firebombed during an anti-austerity rally - did not happen again. Though anarchists were blamed, none were convicted in a trial that ended with three bank executives convicted of manslaughter through neglect resulting from safety oversights. (They were released on bail, pending an appeal.)
Another anarchist group, Rouvikonas, is looking beyond violence, though its members have made a cause of raiding and vandalizing state offices and businesses.
Last week, members of the group, armed with large wooden sticks festooned with black anarchist flags, conducted a night patrol of a large park in central Athens, saying the police had not intervened to stop the drug trade and prostitution involving young migrants.
Mr. Toskas, who oversees the Greek police force, said the authorities had made a major dent in the drug trade in Exarchia. “Some anarchist groups want to say that they got rid of drugs in the area so that they can control it,” he said.
Rouvikonas members recently applied to a local court to found a “cultural society”- to help organize fund-raising events - and on Saturday the group presented its “political identity” at a squat in Exarchia. (Anarchists insist they are not forming a political party.)
“Anarchists obviously cannot form a political party,” said Spiros Dapergolas, 45, a graphic designer who belongs to Rouvikonas. “But we have our own means to enter the political center,” he said. “We want to get bigger.”
The group’s long-term aim is “militant unionism,” Mr. Dapergolas said. But, he conceded, it is not easy for people to organize themselves. In the meantime, he said, “what Rouvikonas is doing can be done by anyone.”
Anarchists Fill Services Void Left by Faltering Greek Governance
What If People Owned the Banks, Instead of Wall Street?
From Seattle to Santa Fe, cities are at the center of a movement to create publicly owned banks.
When Craig Brandt marched into the City Council chambers in Oakland, California, in the summer of 2015, he was furious about fraud.
The long-time local attorney and father of two had been following the fallout from the Libor scandal, a brazen financial scam that saw some of the biggest banks on Wall Street illegally manipulate international interest rates in order to boost their profits. By some estimates, the scheme cost cities and states around the country well over $6 billion. In June of 2015, Citigroup, JPMorgan Chase, and Barclays, among other Libor-rigging giants, pleaded guilty to felony charges related to the conspiracy and agreed to pay more than $2.5 billion in criminal fines to US regulators. But, for Brandt, that wasn’t enough. He wanted the banks banished, blocked from doing business in his city.
“I was totally pissed about it,” he says. “It was straight-up fraud.”
So, in a small act of stick-it-to-the-man defiance, Brandt drafted a resolution that barred the municipality from working with any firm that had either committed a felony or had recently paid more than $150 million in fines. He presented the homespun and eminently reasonable legislation to city officials and urged them to adopt it.
“The city councilors said they couldn’t do it,” Brandt says. “If they did, they wouldn’t have a bank left to work with. They said there wouldn’t be any bank big enough to take the city’s deposits.” Oakland, it seemed, was hopelessly dependent on ethically dubious and occasionally criminal financial titans. Brandt, however, was undeterred.
After the City Council turned him down, he started looking for other ways to wean Oakland off Wall Street. That’s when he fell in with a group of locals who have been nursing an audacious idea. They want their city to take radical action to combat plutocracy, inequality, and financial dislocation. They want their city to do something that hasn’t been done in this country in nearly a century, not since the trust-busting days of the Progressive Era. They want their city to create a bank-and, strange as the idea may seem, it’s not some utopian scheme. It’s a cause that’s catching on.
Across the country, community activists, mayors, city council members and more are waking up to the power and the promise of public banks. Such banks are established and controlled by cities or states, rather than private interests. They collect deposits from government entities-from school districts, from city tax receipts, from state infrastructure funds-and use that money to issue loans and support public priorities. They are led by independent professionals but accountable to elected officials. Public banks are a way, supporters say, to build local wealth and resist the market’s predatory predilections. They are a way to end municipal reliance on Wall Street institutions, with their high fees, their scandal-ridden track records, and their vile investments in private prisons and pipelines. They are a way, at long last, to manage money in the public interest.
Since 2011, advocates from a national nonprofit called the Public Banking Institute have traveled across the country, preaching the practical benefits of public banking and recruiting or training activists and organizers to take up the cause. They have found willing and enthusiastic supporters from coast to coast. The movement has been embraced in Philadelphia, where the city council held hearings on the idea last year. It’s been championed in Seattle and San Francisco, where a number of city supervisors are calling for a task force to study public banking. It’s taken root in Santa Fe, with backing from the mayor, and in Oregon, Vermont, and even New Jersey, where a leading Democratic gubernatorial candidate, Phil Murphy, has proclaimed his desire to create a state bank right next door to the financial capital of the world.
“I believe this is the wave of the future,” says Craig Brandt, who is now a leader of Friends of the Public Bank of Oakland, the group advocating for public banking in the city. “And I hope Oakland will be the first one out the door to do it.”
The city is well on its way. Last November, the Oakland City Council passed a resolution announcing their intention to explore the creation of a public bank. In February, elected officials and community activists gathered at City Hall for a packed forum on the benefits of a public bank, including the possibility that it could hold deposits from the state’s multibillion-dollar cannabis industry and help promote affordable-housing development. This summer, meanwhile, the council will likely vote on whether to dedicate as much as $100,000 to fund a feasibility study that will explore the technical requirements of creating an independent publicly owned financial institution in Oakland.
“The fundamental point is to have a bank whose purpose is to be responsive to community needs,” says Oakland Councilmember Rebecca Kaplan, a key backer of the local public-banking movement. “This would allow us to save money compared to traditional corporate bank rates, and it would allow us to fund vital projects based on community need rather than having those decisions driven by the profit motive.” She says the City is also interested in the possibility of creating a regional public bank by partnering with neighboring cities like Berkeley and Richmond, California.
“The more folks on board,” she said, “the stronger the support for taking this kind of action.”
Public banks have a long, though subterranean, history in the United States that stretches back to the days of Benjamin Franklin, who helped establish a public land bank in Pennsylvania to provide cheap loans to small farmers. Even today many public institutions, from the Federal Deposit Insurance Corporation to the Small Business Administration to the Federal Housing administration, are essential components of America’s banking system. But there’s only one true public bank in this country and it’s not in Washington or New York or some coastal liberal enclave. It’s in North Dakota, where it has survived and thrived for nearly a century.
First established in 1919 by populist state legislators eager to extend credit to cash-strapped farmers and ranchers, the state-owned Bank of North Dakota (BND) is now a modern and multifaceted financial juggernaut. The bank holds deposits from government agencies. It provides low-cost credit for school construction and municipal infrastructure projects. It refinances student debt at reduced interest rates. Rather than opening branches of its own, it generously partners with local community banks and credit unions to issue small-business, home, and agricultural loans. Best of all, it funnels its profits back into state coffers whenever North Dakota has budget troubles. The bank is, in other words, essentially socialist.
It’s also a steady source of profit. Last year, according to its annual report, the Bank of North Dakota saw its 13th consecutive year of record profits, taking in more than $136 million in income while growing its loan portfolio by $449 million dollars. And, unlike some of its counterparts, the bank accomplished all that without opening fraudulent accounts or manipulating interest rates or otherwise scamming consumers.
The bank’s success-its long track-record of supporting and stabilizing local economies, sharing the wealth, and minting a profit to boot-has turned it into an intriguing model for cities around the country that are keen to find creative fixes for their ongoing financial woes.
“Public banking is finding its time now because municipal executives have very poor choices,” says Walt McRee, the chair of the Public Banking Institute. “As things deteriorate and have to be fixed, as population grows but jobs decline, as tax receipts dry up, cities can either can cut services, raise taxes, fire people, or privatize things. But those trends are enormously destructive.”
“The prospect of a public bank does something entirely different,” he continues. “It gives a community the ability to liquefy its own assets and lend itself money, to do things it needs to do with money it already has, to hold on to people’s capital instead of sending it to Wall Street.”
Consider municipal bonds. Cities regularly go to the municipal-bond market to raise money for big projects, from school construction to bridge building to park development and more. These bonds, however, come with overhead costs in the form of fees that normally hover around 1 percent, but can climb as high as 10 percent, of the bond’s principal value. A recent report by the University of California Berkeley’s Haas Institute estimates that cities and other public entities pay upward of $4 billion a year in such fees, an enormous sum that serves only to fatten the purses of multinational banks, legal firms, and others involved in the bond-issuance business. A public bank could help reduce these costs and free up funds by enabling a city to deposit its money in a public entity instead of a profit-centric institution like Wells Fargo or JPMorgan Chase. The city would then be able to borrow money from its own bank rather than turning to the Wall Street bond market, with its overhead costs and market-set interest rates. It could, in short, introduce a radical alternative into the realm of municipal finance.
One of the other places where this radical alternative has taken root, surpassing even Bay Area efforts, is Santa Fe, New Mexico. The movement in that city of 67,000 started gathering momentum in 2014, when a small but determined group called Banking on New Mexico held a symposium to promote the idea. More then three hundred people showed up, including the newly elected progressive mayor, Javier Gonzales.
“A group of advocates met with me early in my term,” says Gonzales. “I was really intrigued and excited about an opportunity to explore a different way to have fiscal relationships.”
In early 2015, Santa Fe commissioned a private consultant, in partnership with New Mexico State University, to conduct a feasibility study into public banking. A year later, in January 2016, the report came back and the news was positive: By funding the city’s capital needs and improving municipal cash management, among other functions, a public bank could generate more than $24 million in savings and earnings for Santa Fe over a seven-year period. And such a bank would be particularly effective, says Katie Updike, the consultant who authored the study, if it serviced the city as well as the surrounding county and school district.
“In the case of Santa Fe, where I saw the biggest benefit is if the city, county, and school district worked together,” she says. “When you begin to step out of the jurisdiction of the city and look at the county and the school district too, which are separate entities, all their cash could be pooled and used to fund projects and then it began to get more interesting.”
In late April of this year, based on the results of the feasibility study, Santa Fe’s city council announced that it was creating a nine-person task force to spend six months digging deeper into the legal and financial prerequisites of establishing a public bank. The task force will focus, above all, on developing a governance structure for the bank.
“Governance is a concern for a lot of people,” says Elaine Sullivan, a leader of Banking on New Mexico and a passionate promoter of the cause. “People don’t want the bank run by political officials, and it wouldn’t be. There would be a clear distinction between the public bank, which would be managed by public bankers, and the city of Santa Fe.”
Indeed, the prospect of political interference into a public bank is one of the most common critiques of the idea. If public banks are to succeed in cities around the country, say skeptics and supporters alike, they must to be firmly insulated from the whims of legislative bodies and elected officials.
Here, once again, the Bank of North Dakota offers a model. While overseen by a commission of elected officials, including the state’s governor and attorney general, BND is managed on a day-to-day basis by an independent and highly transparent executive committee of professional financial managers. Its operations are also subject to regular inspection by independent auditors. BND, moreover, maintains public goodwill by declining to compete with local banks. It has no retail locations or ATMs. Rather, it partners with community banks and credit unions to provide its services.
By putting similar structure in place and starting small, Sullivan believes a public bank in Santa Fe could someday be a smash hit. It wouldn’t just provide ample economic benefits to the city but would serve a larger purpose too.
“As the global banks and major corporations that don’t have a moral tether have become more and more powerful, communities have become weaker and weaker and more passive,” she says. “A public bank is about addressing plutocracy. It is about restoring hope.” A public bank, she asserts, would be a red-hot engine of local economic democracy.
This essential fact, more than anything else, explains why the public-banking movement is blossoming in a post-recession, too-big-to-fail America where Donald Trump rules the White House and Wall Street rules Washington.
“We are seeing a resurgence of community-oriented life and activism and vision in this imperial era,” says Councilmember Kaplan of Oakland. “And it has strengthened the movement.”
What If People Owned the Banks, Instead of Wall Street?
Anarchists Fill Services Void Left by Faltering Greek Governance
It may seem paradoxical, but Greece’s anarchists are organizing like never before.
Seven years of austerity policies and a more recent refugee crisis have left the government with fewer and fewer resources, offering citizens less and less. Many have lost faith. Some who never had faith in the first place are taking matters into their own hands, to the chagrin of the authorities.
Tasos Sagris, a 45-year-old member of the Greek anarchist group Void Network and of the “self-organized” Embros theater group, has been at the forefront of a resurgence of social activism that is effectively filling a void in governance.
“People trust us because we don’t use the people as customers or voters,” Mr. Sagris said. “Every failure of the system proves the idea of the anarchists to be true.”
These days that idea is not only about chaos and tearing down the institutions of the state and society - the country’s long, grinding economic crisis has taken care of much of that - but also about unfiltered self-help and citizen action.
Yet the movement remains disparate, with some parts emphasizing the need for social activism and others prioritizing a struggle against authority with acts of vandalism and street battles with the police. Some are seeking to combine both.
Whatever the means, since 2008 scores of “self-managing social centers” have mushroomed across Greece, financed by private donations and the proceeds from regularly scheduled concerts, exhibitions and on-site bars, most of which are open to the public. There are now around 250 nationwide.
Some activists have focused on food and medicine handouts as poverty has deepened and public services have collapsed.
In recent months, anarchists and leftist groups have trained special energy on housing refugees who flooded into Greece in 2015 and who have been bottled up in the country since the European Union and Balkan nations tightened their borders. Some 3,000 of these refugees now live in 15 abandoned buildings that have been taken over by anarchists in the capital.
The burst of citizen action is just the latest chapter in a long history for the anarchist movement in Greece.
Anarchists played an active role in the student uprisings that helped bring down Greece’s dictatorship in the mid-1970s, including a rebellion at the Athens Polytechnic in November 1973, which authorities crushed with police officers and tanks, resulting in several deaths.
Since the late 1970s and early 1980s, anarchists have joined leftist groups in occupying portions of Greek universities to promote their thinking and lifestyle; many of those occupied spaces exist today, and some are used as bases by anarchists to fashion the crude firebombs hurled at the police during street protests.
Over the years, anarchists have also backed a spectrum of causes, such as opposing “neoliberal” education reform or campaigning against the 2004 Olympic Games in Athens.
The movement continues to be largely tolerated by the public at large, reflecting a deep distrust of authority among Greeks that has been stoked in recent years by the austerity measures imposed on the debt-racked country by international creditors.
In Athens, the anarchists’ epicenter remains the bohemian neighborhood of Exarchia, where the killing of a teenager by a police officer in 2008 set off two weeks of rioting, helped reinvigorate the movement and produced several guerrilla groups that led to a revival of domestic terrorism in Greece.
The police and the authorities tread lightly in the area.
The police have recently raided some buildings illegally occupied by anarchists, called squats, in Athens, in the northern city of Thessaloniki and on the island of Lesbos, a gateway for hundreds of thousands of migrants over the past two years. But the authorities have stopped short of a blanket crackdown, which would be difficult for the leftist Syriza party of Prime Minister Alexis Tsipras to condone.
In an interview, Public Order Minister Nikos Toskas said that the police sweeps were “systematic,” and that the raids were being carried out “where they are needed.”
The mayor of Athens, Giorgos Kaminis, condemned the squats, saying they have compromised “the quality of life of the refugees.”
“No one knows who they are controlled by and what conditions people being put up in occupied buildings live in,” he said in a response to a reporter’s questions.
The anarchists say their squats are a humane alternative to the state-run camps now filled with more than 60,000 migrants and asylum seekers. Human rights groups have broadly condemned the camps as squalid and unsafe.
In Exarchia, one of the squats includes a former state secondary school that was abandoned because of structural problems. Established last spring with the help of anarchists, the squat is now home to some 250 refugees, mostly from Syria, who have set up a chicken coop on the roof. Many more refugees are on a “waiting list” for other occupied buildings.
The squats function as self-organized communities, independent from the state and nongovernmental organizations, said Lauren Lapidge, 28, a British social activist who came to Greece in 2015 at the peak of the refugee crisis and is actively involved with several occupied buildings.
“They are living organisms: Kids go to school, some were born in the squat, we’ve had weddings inside,” she said.
Another initiative in Exarchia involves anarchists and local residents who have moved a cargo container into the neighborhood’s central square, calling it a political kiosk, from which they distribute food and medicine and sell anarchist literature.
Vassiliki Spathara, 49, a painter and anarchist living in Exarchia, said the initiative was necessary because the local authorities would not intervene “even to replace light bulbs” in the square, known as a haunt for drug dealers, though activity has abated recently.
“The authorities want to downgrade the area because it’s the only place in Athens that has an organized, anti-establishment identity,” Ms. Spathara said.
Mayor Kaminis said the local authorities were cooperating with residents “to rejuvenate the area,” and insisted that Exarchia residents had the same rights as all Athenians.
Yet in Greece’s crumbling political landscape, anarchists appear to be styling themselves as a political alternative to the government.
“We want people to fight back, in all ways, from taking care of refugees to burning banks and Parliament,” said Mr. Sagris, the member of Void Network and the Embros theater group, which raises money to fund squats housing refugees. “Anarchists use all tactics, violent and nonviolent.”
He noted, however, that anarchists had a “moral obligation” to make sure that tragedies - like the deaths of three people in May 2010 when an Athens bank was firebombed during an anti-austerity rally - did not happen again. Though anarchists were blamed, none were convicted in a trial that ended with three bank executives convicted of manslaughter through neglect resulting from safety oversights. (They were released on bail, pending an appeal.)
Another anarchist group, Rouvikonas, is looking beyond violence, though its members have made a cause of raiding and vandalizing state offices and businesses.
Last week, members of the group, armed with large wooden sticks festooned with black anarchist flags, conducted a night patrol of a large park in central Athens, saying the police had not intervened to stop the drug trade and prostitution involving young migrants.
Mr. Toskas, who oversees the Greek police force, said the authorities had made a major dent in the drug trade in Exarchia. “Some anarchist groups want to say that they got rid of drugs in the area so that they can control it,” he said.
Rouvikonas members recently applied to a local court to found a “cultural society”- to help organize fund-raising events - and on Saturday the group presented its “political identity” at a squat in Exarchia. (Anarchists insist they are not forming a political party.)
“Anarchists obviously cannot form a political party,” said Spiros Dapergolas, 45, a graphic designer who belongs to Rouvikonas. “But we have our own means to enter the political center,” he said. “We want to get bigger.”
The group’s long-term aim is “militant unionism,” Mr. Dapergolas said. But, he conceded, it is not easy for people to organize themselves. In the meantime, he said, “what Rouvikonas is doing can be done by anyone.”
Anarchists Fill Services Void Left by Faltering Greek Governance
What If People Owned the Banks, Instead of Wall Street?
From Seattle to Santa Fe, cities are at the center of a movement to create publicly owned banks.
When Craig Brandt marched into the City Council chambers in Oakland, California, in the summer of 2015, he was furious about fraud.
The long-time local attorney and father of two had been following the fallout from the Libor scandal, a brazen financial scam that saw some of the biggest banks on Wall Street illegally manipulate international interest rates in order to boost their profits. By some estimates, the scheme cost cities and states around the country well over $6 billion. In June of 2015, Citigroup, JPMorgan Chase, and Barclays, among other Libor-rigging giants, pleaded guilty to felony charges related to the conspiracy and agreed to pay more than $2.5 billion in criminal fines to US regulators. But, for Brandt, that wasn’t enough. He wanted the banks banished, blocked from doing business in his city.
“I was totally pissed about it,” he says. “It was straight-up fraud.”
So, in a small act of stick-it-to-the-man defiance, Brandt drafted a resolution that barred the municipality from working with any firm that had either committed a felony or had recently paid more than $150 million in fines. He presented the homespun and eminently reasonable legislation to city officials and urged them to adopt it.
“The city councilors said they couldn’t do it,” Brandt says. “If they did, they wouldn’t have a bank left to work with. They said there wouldn’t be any bank big enough to take the city’s deposits.” Oakland, it seemed, was hopelessly dependent on ethically dubious and occasionally criminal financial titans. Brandt, however, was undeterred.
After the City Council turned him down, he started looking for other ways to wean Oakland off Wall Street. That’s when he fell in with a group of locals who have been nursing an audacious idea. They want their city to take radical action to combat plutocracy, inequality, and financial dislocation. They want their city to do something that hasn’t been done in this country in nearly a century, not since the trust-busting days of the Progressive Era. They want their city to create a bank-and, strange as the idea may seem, it’s not some utopian scheme. It’s a cause that’s catching on.
Across the country, community activists, mayors, city council members and more are waking up to the power and the promise of public banks. Such banks are established and controlled by cities or states, rather than private interests. They collect deposits from government entities-from school districts, from city tax receipts, from state infrastructure funds-and use that money to issue loans and support public priorities. They are led by independent professionals but accountable to elected officials. Public banks are a way, supporters say, to build local wealth and resist the market’s predatory predilections. They are a way to end municipal reliance on Wall Street institutions, with their high fees, their scandal-ridden track records, and their vile investments in private prisons and pipelines. They are a way, at long last, to manage money in the public interest.
Since 2011, advocates from a national nonprofit called the Public Banking Institute have traveled across the country, preaching the practical benefits of public banking and recruiting or training activists and organizers to take up the cause. They have found willing and enthusiastic supporters from coast to coast. The movement has been embraced in Philadelphia, where the city council held hearings on the idea last year. It’s been championed in Seattle and San Francisco, where a number of city supervisors are calling for a task force to study public banking. It’s taken root in Santa Fe, with backing from the mayor, and in Oregon, Vermont, and even New Jersey, where a leading Democratic gubernatorial candidate, Phil Murphy, has proclaimed his desire to create a state bank right next door to the financial capital of the world.
“I believe this is the wave of the future,” says Craig Brandt, who is now a leader of Friends of the Public Bank of Oakland, the group advocating for public banking in the city. “And I hope Oakland will be the first one out the door to do it.”
The city is well on its way. Last November, the Oakland City Council passed a resolution announcing their intention to explore the creation of a public bank. In February, elected officials and community activists gathered at City Hall for a packed forum on the benefits of a public bank, including the possibility that it could hold deposits from the state’s multibillion-dollar cannabis industry and help promote affordable-housing development. This summer, meanwhile, the council will likely vote on whether to dedicate as much as $100,000 to fund a feasibility study that will explore the technical requirements of creating an independent publicly owned financial institution in Oakland.
“The fundamental point is to have a bank whose purpose is to be responsive to community needs,” says Oakland Councilmember Rebecca Kaplan, a key backer of the local public-banking movement. “This would allow us to save money compared to traditional corporate bank rates, and it would allow us to fund vital projects based on community need rather than having those decisions driven by the profit motive.” She says the City is also interested in the possibility of creating a regional public bank by partnering with neighboring cities like Berkeley and Richmond, California.
“The more folks on board,” she said, “the stronger the support for taking this kind of action.”
Public banks have a long, though subterranean, history in the United States that stretches back to the days of Benjamin Franklin, who helped establish a public land bank in Pennsylvania to provide cheap loans to small farmers. Even today many public institutions, from the Federal Deposit Insurance Corporation to the Small Business Administration to the Federal Housing administration, are essential components of America’s banking system. But there’s only one true public bank in this country and it’s not in Washington or New York or some coastal liberal enclave. It’s in North Dakota, where it has survived and thrived for nearly a century.
First established in 1919 by populist state legislators eager to extend credit to cash-strapped farmers and ranchers, the state-owned Bank of North Dakota (BND) is now a modern and multifaceted financial juggernaut. The bank holds deposits from government agencies. It provides low-cost credit for school construction and municipal infrastructure projects. It refinances student debt at reduced interest rates. Rather than opening branches of its own, it generously partners with local community banks and credit unions to issue small-business, home, and agricultural loans. Best of all, it funnels its profits back into state coffers whenever North Dakota has budget troubles. The bank is, in other words, essentially socialist.
It’s also a steady source of profit. Last year, according to its annual report, the Bank of North Dakota saw its 13th consecutive year of record profits, taking in more than $136 million in income while growing its loan portfolio by $449 million dollars. And, unlike some of its counterparts, the bank accomplished all that without opening fraudulent accounts or manipulating interest rates or otherwise scamming consumers.
The bank’s success-its long track-record of supporting and stabilizing local economies, sharing the wealth, and minting a profit to boot-has turned it into an intriguing model for cities around the country that are keen to find creative fixes for their ongoing financial woes.
“Public banking is finding its time now because municipal executives have very poor choices,” says Walt McRee, the chair of the Public Banking Institute. “As things deteriorate and have to be fixed, as population grows but jobs decline, as tax receipts dry up, cities can either can cut services, raise taxes, fire people, or privatize things. But those trends are enormously destructive.”
“The prospect of a public bank does something entirely different,” he continues. “It gives a community the ability to liquefy its own assets and lend itself money, to do things it needs to do with money it already has, to hold on to people’s capital instead of sending it to Wall Street.”
Consider municipal bonds. Cities regularly go to the municipal-bond market to raise money for big projects, from school construction to bridge building to park development and more. These bonds, however, come with overhead costs in the form of fees that normally hover around 1 percent, but can climb as high as 10 percent, of the bond’s principal value. A recent report by the University of California Berkeley’s Haas Institute estimates that cities and other public entities pay upward of $4 billion a year in such fees, an enormous sum that serves only to fatten the purses of multinational banks, legal firms, and others involved in the bond-issuance business. A public bank could help reduce these costs and free up funds by enabling a city to deposit its money in a public entity instead of a profit-centric institution like Wells Fargo or JPMorgan Chase. The city would then be able to borrow money from its own bank rather than turning to the Wall Street bond market, with its overhead costs and market-set interest rates. It could, in short, introduce a radical alternative into the realm of municipal finance.
One of the other places where this radical alternative has taken root, surpassing even Bay Area efforts, is Santa Fe, New Mexico. The movement in that city of 67,000 started gathering momentum in 2014, when a small but determined group called Banking on New Mexico held a symposium to promote the idea. More then three hundred people showed up, including the newly elected progressive mayor, Javier Gonzales.
“A group of advocates met with me early in my term,” says Gonzales. “I was really intrigued and excited about an opportunity to explore a different way to have fiscal relationships.”
In early 2015, Santa Fe commissioned a private consultant, in partnership with New Mexico State University, to conduct a feasibility study into public banking. A year later, in January 2016, the report came back and the news was positive: By funding the city’s capital needs and improving municipal cash management, among other functions, a public bank could generate more than $24 million in savings and earnings for Santa Fe over a seven-year period. And such a bank would be particularly effective, says Katie Updike, the consultant who authored the study, if it serviced the city as well as the surrounding county and school district.
“In the case of Santa Fe, where I saw the biggest benefit is if the city, county, and school district worked together,” she says. “When you begin to step out of the jurisdiction of the city and look at the county and the school district too, which are separate entities, all their cash could be pooled and used to fund projects and then it began to get more interesting.”
In late April of this year, based on the results of the feasibility study, Santa Fe’s city council announced that it was creating a nine-person task force to spend six months digging deeper into the legal and financial prerequisites of establishing a public bank. The task force will focus, above all, on developing a governance structure for the bank.
“Governance is a concern for a lot of people,” says Elaine Sullivan, a leader of Banking on New Mexico and a passionate promoter of the cause. “People don’t want the bank run by political officials, and it wouldn’t be. There would be a clear distinction between the public bank, which would be managed by public bankers, and the city of Santa Fe.”
Indeed, the prospect of political interference into a public bank is one of the most common critiques of the idea. If public banks are to succeed in cities around the country, say skeptics and supporters alike, they must to be firmly insulated from the whims of legislative bodies and elected officials.
Here, once again, the Bank of North Dakota offers a model. While overseen by a commission of elected officials, including the state’s governor and attorney general, BND is managed on a day-to-day basis by an independent and highly transparent executive committee of professional financial managers. Its operations are also subject to regular inspection by independent auditors. BND, moreover, maintains public goodwill by declining to compete with local banks. It has no retail locations or ATMs. Rather, it partners with community banks and credit unions to provide its services.
By putting similar structure in place and starting small, Sullivan believes a public bank in Santa Fe could someday be a smash hit. It wouldn’t just provide ample economic benefits to the city but would serve a larger purpose too.
“As the global banks and major corporations that don’t have a moral tether have become more and more powerful, communities have become weaker and weaker and more passive,” she says. “A public bank is about addressing plutocracy. It is about restoring hope.” A public bank, she asserts, would be a red-hot engine of local economic democracy.
This essential fact, more than anything else, explains why the public-banking movement is blossoming in a post-recession, too-big-to-fail America where Donald Trump rules the White House and Wall Street rules Washington.
“We are seeing a resurgence of community-oriented life and activism and vision in this imperial era,” says Councilmember Kaplan of Oakland. “And it has strengthened the movement.”
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