In this episode, we speak with Walt McRee (President) and Peter Winslow (Vice President) of the Public Banking Institute (PBI) about their past and ongoing advocacy for public banking. Founded in 2011 by author Ellen Brown and a core collective of advocates, PBI aims to break the monopoly of Wall Street’s private banking system by establishing a nationwide network of publicly owned, democratically accountable banks. Through this work, PBI seeks to foster a wide-spread monetary and banking system that operates explicitly in the public interest, treating credit as a vital public utility rather than a vehicle for private extraction.
If private mega-banks are legally bound to maximize short-term returns for external shareholders, McRee and Winslow explain, then public banks operate under a legal mandate to generate shared prosperity, measuring fiscal success in terms of community participation, well-being, and resilience. During our conversation, we discuss the history of the PBI, the myriad projects that public banks can finance, diverse models for establishing public banks, and the organization’s efforts to serve as a catalyst for the growing public banking movement across the United States.
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Music by Nahneen Kula: www.nahneenkula.com
Transcript
This transcript has been edited for readability.
Billy Saas
Walt McRee and Peter Winslow. Welcome to Money on the Left.
Walt McRee
Thank you.
Peter Winslow
Thank you.
Billy Saas
It’s great to have you. We’ll start, as we normally do, by asking you to say just a little bit about yourselves and how you came to the Public Banking Institute, which is going to be a centerpiece of our conversation today. Let’s go ahead and start with you, Peter.
Peter Winslow
Oh. Thank you. My background is in business and finance. I received a BA in economics at the University of Pennsylvania State, stayed to get an MBA in finance from the Wharton Graduate School. I was a CPA and practiced in New York for many years.
I’m a Deloitte alum. I’ve had a varied career doing a variety of things. I was doing a lot of work in sustainable economic development, especially economic development within the inner city and depressed sections of the community. That’s how I got invited into public banking about ten or more years ago. I’ve been working at it in Philadelphia and nationally ever since.
Scott Ferguson
Are there a lot of folks who are Deloitte alums who are interested in public banking?
Peter Winslow
That’s a really interesting question.
Scott Ferguson
Well, I’m glad I asked.
00;02;46;18 – 00;03;19;19
Peter Winslow
You know, I haven’t asked. I probably should, but there may be. Accountants approach things in a very meticulous way, but conceptually, and have very definite ideas about money and about how money is used and recorded and valuation and risk and so forth. So it’s banking adjacent.
Some of the work I did was involved with securities firms and that was certainly interesting. But in terms of my colleagues, I don’t know. I’m going to my reunion, when we leave here. I’ll ask some of the folks from my class what their opinions are about public banking and see if I can enlist them.
Scott Ferguson
Let us know.
Walt McRee
Yeah. Well, I guess that leaves me. Yeah. I do not have a Deloitte background. Peter brings up that part of our expertise offerings. My background was actually in media. I started in broadcast media, winding up in Philadelphia in major markets, doing radio broadcast and media consulting, voiceover work out of Manhattan. At the same time, then getting involved initially with the public interest activist issues. I started from here in the anti-war movement which was a long time ago, but seems to be ever present. From that, working into discovering something that was powerful, which was working with Bucky Fuller in Philadelphia, when he launched a thing called the Hunger Project. The Hunger Project was a very simple opportunity for people to participate in an issue that was much bigger than them, world hunger. And to do what they want, and to organize around doing new things to end world hunger with a new understanding about why hunger could be ended.
So Bucky said, “there’s no reason why people starve as a public policy. There’s plenty of food, etc., etc.” I mention that because in the public banking application, we were suggesting something that and you all have been suggesting something that hasn’t and doesn’t exist. That is, we are demythologizing banking. We’re demythologizing money. We’re really looking at a new possibility.
So my work there, where I started a lot of national initiatives around media and so forth, was one part of my background. Along the way, I’ve also been a real estate entrepreneur and developer. I’ve been involved in preserving the arts. Another activist campaign was with an environmental fight along the banks of the Delaware River, which involved taking over the government as a citizen action, involving Abbie Hoffman, that’s the name you remember. It was a very exciting, dynamic experience of local people coming from all kinds of a cross-section of ideological, political, financial, wherewithal to come in to stand together around something that they didn’t want, which in that instance was a pumping project along the Delaware River.
Interesting, I think I mentioned before, that being in this Delaware River valley, where Washington crossed the river surprised the Hessians and the English flipped the whole paradigm of possibility. That’s kind of the context in which I have juiced a lot of my involvement here, which has been about 15 years. I started with the Public Banking Institute back when it started.
I was one of the original participating board members and started a media committee, then got on the board and 15 years later, here I am chairing as president, still working at it. Again, to try to qualify my banking bonafides, through all of my University of hard knocks, Harvard would have been cheaper than what I’ve learned. But I’ve learned at the feet of real experts, academics, bankers, banking people, policy people. I’ve been very fortunate to be able to develop my education that way with the likes of you guys.
Peter Winslow
Well, do you want to talk about the origins of the Public Banking Institute and the work with Ellen Brown?
Walt McRee
Sure. That’s a good one, because if you remember, 2008, when the banks collapsed the global economy, financial economist, Ellen Brown, who’s a noted bestselling author who wrote Web of Debt, circulated a new understand, a story and a research piece, an exposé about how our money is organized and how banking is organized and why this failure happened, and the kind of trap, the monetary trap that we find ourselves in in this current, debt driven, financial arrangement.
So, Ellen’s book got to be very successful, and then Occupy Wall Street occurred in 2011, during which time people suddenly discovered that they were in a category, in a cohort that they didn’t know. That is that we are the 99%. Well we didn’t know we didn’t have the money that’s out there. People knew that they were struggling and so forth, but that was a declaration or a distinction that really propelled the public banking movement. It started in California, but it rapidly got buy-in in Philadelphia, becoming one of the core areas in which I helped to start that with Mike Krauss, back in 2011 and 12.
The Public Banking Institute then has been an educational source, an organizing source, a place where resources and collaboration converge. Also, focusing on looking at how the matrix of money management is not in our hands. To realize how the people have abrogated the most powerful tool, one of the most powerful tools they have beside their goodwill and brotherhood and largesse: money, basically.
That’s what the Public Banking Institute is up to now. I will just say one more thing. We’ve come a long way in our work. For the first ten years, what was required was explaining to people how banking works and what we had found along the way was that a lot of legislators and bankers seem to not know the reality that, for example, that banks create our money when they make loans.
Well, that was a huge breakthrough and also, of course, poo-pooed by the institutionalists who think that, “I don’t know, it’s all, you know, something else.” So, that sort of demythologizing education has been part of this ten years. We worked in markets around the country, probably 30 different markets at least, often running into the same sort of obstacles and complexities that are put there by politicians and the banking associations, the ignorance of legislators about banking and their fear of doing anything new.
So we’ve run to a point now where we realize what we can’t easily do, and that is to create these banks outright because the resistance is too strong, for the most part, but we are finding pockets of support and we are finding very large arteries of public support, which we think is going to put this opportunity into a different plane in the very near future, in part driven by the realities of the day that we live in now.
Peter Winslow
You mentioned Buckminster Fuller and one of the phenomena that Buckminster Fuller identified and worked on was ephemeralization. Money is an extremely ephemeral phenomenon in our society that people live with and don’t really understand particularly well. Sometimes ephemeralization is described as the process of doing more and more with less and less until eventually you’re doing everything with nothing.
With the AI future, maybe we’re headed in that direction, but money is inherently an already ephemeral substance in our society that runs through it as information transfer and is interesting to study from that perspective. The banking system performs an alchemy that is really very interesting and does not have to be and has not been in the past the way it is now. It does not have to be that way in the future. We’re looking for a more robust future, and one that’s more equitable.
Scott Ferguson
Yeah. So maybe piggybacking off of that. I know we’ve already started this work, but give us the ground level pitch, why public banking? You know, don’t we have enough banks to finance what society needs? Why more banks and why public banks? What do public banks bring to the picture and why are you two so into this thing?
Walt McRee
Well, the answer to “oh, don’t we have enough banks?” is, of course we do. But that would be the answer of the organized banking industry of private banks and because we deal with private banks in the US, except for one, that is a corporate private industry driven by profit, and therefore it has no universal obligation to serve.
It is not considered a utility other than the fact that people need money to live. But there’s no structural organizational commitment obligation for them to operate that way. When we would explain this, first of all, “what is a public bank?” people think it’s traded on the market.
It’s not that. It’s anything that is owned by the city, county or state, any governmental agency, that would have the people’s money in hand, would be capable of creating a bank, qualified with the other parameters, of course. The idea is to keep our money at home, to invest in ourselves and our message is “look, every time you send in tax dollars to your city, county, state, or whatever fees and so forth, they take that money and they send it essentially to Wall Street.”
It leaves town and that asset leaves the community, a local economy. What public banks do is say, “well, no, leave that in our own bank so that we can do what the private banks would otherwise do with it.” They’ll speculate and invest in all kinds of things we may very well not want them to invest in when in the interest of making a profit.
Whereas if you keep our money at home, we can keep that money and we do the very same thing, but we can invest in our own stuff; our schools, our infrastructure, our affordable housing, small businesses, etc., where we need the money. That’s the transformative opportunity and it is a comprehensively transformative opportunity that we’re talking about here.
I think that at this moment of where we’re seeing the oligarchy and those forces solidifying and controlling and extracting, it’s getting very serious, local economies are failing. So this message is resonating in ways that it hasn’t so much in the past.
Scott Ferguson
There’s at least two dimensions here about keeping money at home. On the one hand, there’s the question of how you are mediating extant claims? How they are, quote unquote, “traveling through the system or the so-called plumbing.” But then there’s also the other dimension, which I think is even more mind blowing for people, which is the fact that banks create money.
This is not just about appropriating a finite amount of funds, and I have to put scare quotes around all these terms, that are “circulating in a system.” Correct me if I’m wrong, it’s fundamentally about reclaiming the capacity to generate money for the public and for public purposes.
Walt McRee
Yes.
Peter Winslow
Yeah. There’s been a failure of imagination, to a large extent, in terms of how people conceive of things, conceive of money and conceive of banking. The system is not broken. It works very well for the banks that are too big to fail. You know, periodically, there’s a financial crisis and they get bailed out and life goes on and they continue doing what they’ve been doing. It works very well for the people who are involved in that particular line of business of banking and financing. Large corporations and so forth don’t have any problem obtaining the money that they need for the projects that they want. We don’t have problems finding money to fight wars and a lot of things that politicians decide are worthwhile, but there is not enough money available to serve the public, the public interest.
That’s what public banks are for, public interest that is not profit for private interests. There is not enough availability of money, there’s not fair access to credit for many people in our society, in the community. There is a need for a non-extractive form of financial ecosystem.
One that serves the needs of the people, as opposed to private profit just piling money up, like Midas in his vault. That’s what public banking is all about. It’s really an alternative to the extractive model of the economy, to one that is much more dedicated to where the real needs are for housing, for vibrant local businesses, for the development of cooperatives and so forth.
That’s what public banking serves and it is not intended to replace the existing system. It’s intended to, perhaps, provide an alternative and a corrective, maybe serve as a break or trim tab that does some adjustment to the overall economy. But fundamentally, because of its local focus, it is really determined to serve the needs of the people and the places where those people live and have their local financial ecosystem operating.
Walt McRee
I’d like to just correct the metaphor that you gave Peter. I don’t think Midas had the vault. I think you’re thinking of Scrooge McDuck, just to be correct here. On the one thing, are there enough banks? What we found, when we, for example, were involved in the New Jersey Public Bank Implementation Board study of where the gaps are. The bankers in the state said, “oh, we’re doing a great job. We make community contributions and little leagues and other things and so forth.” As Peter points out, there are enormous sectors of need that are not handled by private banks. The reason is there’s no money or there’s too much risk. What public banks do in reality, at least when we look at the North Dakota model, we see that public private banks succeed like nowhere else in the country because they have a public bank partner.
The rest of the banks around the country are really at that increased risk to take on social emissions and so they’re really constrained, in that way. Whereas public banks really have it as their purpose to extend credit, and that’s an enormous difference.
Peter Winslow
Banks, small banks, local banks proliferated after the Civil War and grew to be the way in which most people did their banking. But, starting in the 60s, there has been a contraction of banks and consolidation has taken place. Now, it’s a healthy environment if you have new banks being created, going to a certain size and needing to have a greater reach, and an exit strategy for those banks is to be acquired by a larger bank and to have a consolidation and so forth. That’s not really functioning very well at this time. The small banks are really very local, and they are not as apt to be properties that the larger banks are requiring. From an historic standpoint, we have fewer local banks and fewer banks overall and one of the things that a public bank can do is nurture the local financial ecosystem and help all of those banks grow and be more robust.
Walt McRee
As an example of the success of that, in Germany, where the Sparkassen, which is a community owned banks, they have thousands of them, but it is that infrastructure, the fabric, the texture of that community-based financing engines that stabilize those economies, and public banks have been shown to do that across the world.
That’s just one of the things they do is they can keep the community resources in place and keep them moving. So we want that here. I think we had about 15,000 private banks in 1980. Now we’ve got 4100. So we’ve lost a substantial number of privately owned community banks.
Peter Winslow
About a quarter of the total assets of the world are held in public banks. The United States is really an outlier in that respect. We only have one public bank in the United States. That is the kind of a bank that we would regard as the model and that’s the Bank of North Dakota.
There are some other examples that are particular anomalies, but the one that really makes the most sense to look at as a model is the Bank of North Dakota.
Billy Saas
Could we talk a little bit about the Bank of North Dakota? How did that bank get started? And if we’re talking about it as the model, what are its key features that other aspiring publics should try to replicate?
Walt McRee
Well, I’d like to just step in with making a reference to my own history. The farmers in North Dakota in 1915, I think it was, were being put out by the banks. The Minneapolis banks, the granaries and the railroads were all conspiring, if you will, to set prices that made the idea of farming in North Dakota even less desirable and certainly less profitable.
The citizens said, “hey, we’re not stupid here.” They created a new political arm called the nonpartisan league, a very fitting sort of a moniker for where we should find ourselves these days, because the common need of the citizens there was clear. They needed to have more economic stability and control on what was happening to their money and their assets.
They wind up taking over the government, which is what we did in Bucks County, Pennsylvania, with this water fight. It was just hugely invigorating to find your neighbors out in the streets. Well, in North Dakota, the Nonpartisan League started a group called the Six Bucks Suckers.
Six bucks was their annual fee to become a part of this movement. That was enough money to drive this thing for a couple of years. Then they took over the legislature in 1919. The first thing they did was to create a state granary. That granary was the largest in the country, and it’s still operating, it belongs to the state of North Dakota.
The next thing they did was to create the state bank. That really helped to firm up things. 107 years later, that bank has made North Dakota the most stable state economy. It is also a bank that is the most profitable of any bank in the United States, profitable in terms of a return on equity.
No scandals along the way. One of the beautiful things about having your own bank, and there are many, but the ability to respond to crises was demonstrated in numerous instances in North Dakota. The Grand Forks fire and flood that wiped out Grand Forks, North Dakota and Grand Forks, Minnesota illustrated how important it was for a local bank to be in place, for the public bank to be in place, because that fire and flood wiped out both towns and an enormous amount of damage.
The North Dakota bank was there the next day and said, “look, let’s clean this stuff up. Don’t worry about the money. We’re going to do what you need for machinery and stuff. We’ll handle the money later.” As a result, North Dakota’s Grand Forks recovered within only a 3% loss of population during an extended period of disaster. Across the same river at the same spot in Minnesota they had to go to Wall Street. They had to go to Minneapolis and borrow the money to recover. They lost almost 20% of their population. Now that’s a huge equity loss, huge asset loss, realized because they didn’t have the means to finance themselves. Well, there were other instances that the bank has stepped in like that.
In the 30s, when the crops were drying up, farms were being reclaimed by the banks, the bank came in and said, “listen, guys, don’t go anywhere near the foreclosures. Just stay put. We will buy your farm. You stay there, the weather will change. You know, things will come back. And when the things do come back, we’ll sell your place back to you with the mortgage that you can afford.” I mean, that kind of flexibility and sort of utility is so logical. It’s like a family mentality, you know? “Hey, we’re all in this together, and we’ve got this money, and you can use it and we’ll save it for you. We’ll save your hide.”
That’s a beautiful thing about one of the transformative aspects about having a community owned public bank.
Peter Winslow
Yeah. The public bank can respond to disasters and crises much faster than other resources do. For example, during the Covid pandemic, the state of North Dakota had put in place a PPE program before Congress acted. When Congress acted, it was able to merge its program into the national program.
But it was out there almost immediately. The same thing when there was a government shutdown recently, the state of North Dakota said, “well, for the people who are not getting paid, you know, we’ll provide them with support and with low interest loans to get them through, for people who have a problems with their mortgages as a result of these hardships, we’ll have forbearance and a moratorium.”
The bank allows the whole community to be more resilient and responsive. Public banking, we’re looking to do two things simultaneously. We’re looking for a systemic change, which gets technical when you dig below the surface of it. We’re also interested in the purposes to which a public bank can be put.
These things go hand in hand. But they’re really quite distinct. One of the things about the Bank of North Dakota is that half of its assets are in participation loans, which means that they are taking 50% of the loans that are being originated by the local banks. By doing that, they spread the risk, they have a collaborative relationship with those banks because they’re looking at the books and those obligations together, and it allows those local banks to take on larger projects than they would be able to based on their own capital, because they have the Bank of North Dakota behind them.
This participation model is one that we think is really, very, very sound. It is conservative from a financial and legal perspective, and it’s one that has served North Dakota extraordinarily well and we think it translates to other locations.
Walt McRee
And systemically, on the banking topic, we believe, I mean, it’s very clear, community banks and credit unions are essential financial infrastructure for any community, and our commitment, and the way we devise or design future public bank applications is to make a very clear distinction that we’re in a noncompetitive position, that what we do is collaborative partnering with their loans to build that business and to enable them to do new business.
So we think community banks and credit unions, the private ones, not the Wall Street ones, and up through new ones, not the Wall Street ones, are really, really important. That’s one of our focuses these days.
Peter Winslow
This is something that we think scales that is helpful both for big markets like Philadelphia and for small ones. In Philadelphia, if we want to do a major water project, we float a bond and support it with the bond. The bond is supported by the revenue stream that comes in from the water project and so forth.
A small town in North Dakota can’t go to the bond market. They don’t have the capacity. They’re not big enough. They can’t play in that pool at all. But if they want to do their water project, they can go to the Bank of North Dakota, get a long term loan at 1%, and do their water project.
So, the infrastructure needs across the country are extraordinary. They’re estimated to be in the trillions, like 5 to 7 trillion dollars of infrastructure projects that should be done in the United States to bring it up to world standards. That’s how far behind we are. One way to do that is with the public bank.
There’s a form of public banking, which is being proposed, which is the National Infrastructure Bank. So that’s a form of public banking that we support. It’s a different model than the one of the Bank of North Dakota, but also a public bank.
Scott Ferguson
Right. It’s important, I think, for listeners to realize who are new to public banking, that there’s not just one model there. Like anything, it’s a design question. What do you want to accomplish? Then you can decide what you want to design for. A bank is not like a simple, stable thing, like a pig or a cow.
Not to say that those are simple animals, but, we think of a cow as a cow is a cow is a cow. And maybe they’re not. But we think that way. And a bank is not just a bank, a bank, a bank. You can do all kinds of things with it. So, for example, I think this has been implied in what you’ve been saying, but, maybe to bring it out into the open as a kind of lesson, the Bank of North Dakota model is really a kind of banker’s bank, right?
There’s not a brick and mortar outlet for any old person just to come deposit their money in and get a car loan from. It’s really doing work at a higher level in assisting lower level banks, community banks, credit unions to help them be as robust as they can and socially responsive as they can, or as you can imagine, all kinds of other designs that maybe do dip into offering financial services.
It does seem like you all are more on Team “Not Compete” with the private sector. But you know, I think we at Money on the Left are maybe a little more comfortable with some crowding out, but that can be a productive tension.
Peter Winslow
Well there is another example in North America of a kind of public bank that competes. Yes, you are correct. We are attracted to the noncompetitive collaborative model, but the territorial bank of Alberta, there was a branch bank of Alberta that does full service banking in conjunction with private banks that also do the same thing.
It is a substantial bank that also anchors the community. So it’s not a bad model, but it is a model that we don’t exactly reject, but we’re more attracted to the banker’s bank, wholesale banking model that is exemplified by North Dakota.
Walt McRee
To look at a variation of of that, if one were to work in an area like Montana or Wyoming or someplace where there are real huge banking deserts, if you had the wherewithal, the means, there was enough capital assets to create a bank in those areas, you could create a retail public bank in that setting where you’re not threatening the private industries.
Peter Winslow
Or even in an urban environment. There are lots of people who are unbanked and underbanked. If that’s the problem that you wish to address, you could have a public bank that would provide them with credit cards, to use their plastic, and that would be available.
Another form of banking that is attractive is postal banking, where all the post offices in the country can be places where people can go to do their banking.
00;37;36;07 – 00;38;22;02
Scott Ferguson
Do you know much about the history of postal banking in general? I’ll just take the opportunity to reference something that’s near and dear to my heart. So they’ve had postal banking in the UK, or they did. I know this because I am, in part, a film and media scholar and historian and during the 1930s, a man, a filmmaker named John Grierson, who nearly invented the form of the documentary. In Britain, he got public financing at an office and the name changed at different moments but for a lot of the period in which he was working and hiring people and commissioning films, it was part of the British Post Office. They made all kinds of public service announcements, advertisements for postal services. There’s a film that includes a W.H. Auden poem called Night Mail.
Some of these are really experimental and they’re part of avant garde cinema. In any case, there was one film that was commissioned to be made by a New Zealand filmmaker who had traveled to London, named Len Lye. He made several films. But the one film in particular that is so near and dear to my heart, is called Rainbow Dance, and it is for public banking.
You can tell that public banking kind of comes in at the end and you can tell he’s just kind of flexing his experimental cinema chops. I don’t think it would fly today, per se, but it’s a gorgeous film. It’s so lively. It’s so experimental. It’s so vibrant.
Every time I watch it, I think, “Wow. To live in a world where, you know, avant garde artists at the top of their game are creating incredible experimental esthetic works to celebrate postal banking, public banking. Oh my God.” So anyway, that’s my one in. But I’m curious what you all know about postal banking, its history and where did it go?
Peter Winslow
But, if you have the itch, you can still go to your postal service and get a money order. That’s what’s left.
Scott Ferguson
Right. What counts is banking?
Peter Winslow
But public banking was pretty widespread in the 30s. It was really promoted, I think, by the Roosevelt administration.
Walt McRee
Postal banking disappeared in the 60s, I think. I believe it was from the pressure from the monopolists who control our banking world these days. There has been a desire to resurrect it, in part, because of the Postal Service’s own financial difficulties. But if you’ve been following those stories, you recognize that it’s one of the targets of the monopolists that want to privatize the Postal Service and keep their monopoly on banking, as well.
The unions of USPS were all in support of it, and they were ready to try a couple of models, a couple of examples of it, but it got shot down. And of course now, the postal board of directors, Scott, are all eight appointees of the Trump administration.
So everybody’s into where they can get a pound of flesh out of public assets and so you really have to fight for that. But I think that that’s one of the many fights that we’re faced with these days.
Billy Saas
So I know that there are, in Louisiana, publicly commissioned artworks, murals, from the New Deal era in those very post offices that would have been probably providing some of those banking services. The public-ness of the public bank does not exhaust itself in the finance question, it can be so much more.
Right. You mentioned, Walt, now a couple times, our current moment, and the urgency of public banking. I’m wondering with respect to your observation that the message is resonating more with more audiences today. If you could maybe reflect on what has worked and what has not worked as well, as you have been spreading the good word of public banking over the last 15 years. As you were talking about your history with PBI, there are, in terms of the timeline, many points of potential overlap and alignment between your story and Modern Monetary Theory as such, getting its own kind of national pseudo-mainstream moment. Part of their mission, as they’ve articulated it — I’m speaking of folks like Stephanie Kelton and Randy Ray — has been that, they might call it a little bit more directly, debunking, or where you’d call it demythologizing, clearing the way for an actual conversation to happen on the grounds of reality. They have talked and reflected in different ways about their approaches, their strategies for talking to audiences that are unable to see it clearly because of the mythology, because of the mystification, we might call it. I wonder what has worked best for you.
Do you have some strategies that you use? Certainly in talking to you, you have gone seamlessly into your description and history with us, with a sympathetic audience. But what does it look like when you approach folks who are maybe a little bit more cynical, skeptical, or flat out not having it?
Walt McRee
Yeah. The moment that we live in is fraught with all kinds of risk, danger and loss in terms of what the public has access to and what our assets have been and what we would like to have for the future. I think because that’s getting to strike home and so much in the way that the people are losing their assets and their prospects and feel disconnected from the economy that they’ve been working in, that there is a more receptive listening, that doesn’t help them understand banking too much.
I think if you tell them that money is made out, ex nihilo, of nothing, and it’s unlimited, and all of the principles that guide the wisdom of MMT, is still very much a skeptical word for a lot of people and yet people are hungry for some sort of parity, or at least fairness, in the economic world.
So I think the listening is changing out of the necessity to have some bright shining something or others somewhere on this. Also, as we see the corruption of the exploitation and how at every little point of juncture between the privately held powers of economic influence and connection are just sucking out the wealth of the people.
So the banks have been bullies. Will you come along with the idea that a bank can be a community asset? And you describe what public banks are and keep our money at home, invest in ourselves. So, we don’t have that already? Where is that? That’s the instinctive response. “We don’t have that already?”
So they’re still learning that they’re trapped in a system that has got them by their cahones and they don’t like it. So they’re willing to listen more to what we have to say about that.
Peter Winslow
We have to engage with multiple audiences. When we’re talking to most people, you go to a community meeting or your neighborhood association meeting and you talk about public banking, people get excited. They love the idea because at 35,000ft, what’s not to like? To have, in addition to the private banking system, a banking system that’s in the public interest rather than for private profit.
People get that and they love it there. Their concerns tend to be that if it’s public and it’s something that’s put together by our legislature or city council, how do we prevent this from being a slush fund? How do we prevent it from being corrupted with favoritism and so forth? So, discussion about governance becomes really, really important and all of that. When we’re talking to the people in the legislature, they get it and they can get pretty enthusiastic about it. Then it’s a question of convincing their colleagues, and then there are people who get campaign contributions from the people who are supporting the interests that oppose public banking. So you have that consideration.
When we talk to our friends, our local bankers and credit union folks, they are interested, but they have some concerns about how that upsets their existing relationships. They have correspondent relationships with different banks. They have relationships with banks that give them investment advisory services and things of that nature. The same thing when you’re talking with officials who have connections with Wall Street and with investment banks, where they place their bonds. What’s this going to do to our bond rating? If we have a public bank, we say this will improve your strength and so forth.
So each of these audiences has different concerns, and we talk to the people who are involved with affordable housing or business development and so forth. They get it for what their needs are. Same thing when we talk to the people in unions. It depends on who the audience is, what the concerns are and how we go about addressing those concerns.
Scott Ferguson
How about the mainstream press? And by mainstream, I mean a pretty broad swath. So like, it doesn’t have to just be our ill fated CBS News and The New York Times. It could also be, you know, major progressive magazines like The Nation and things like that. We have our own publishing platform and we do the best we can.
I’m assuming that maybe there’s a little bit more legibility with public banking. But, what about your own efforts? You know, Walt, you were involved in broadcasting and various forms of media, what’s your relationship to the press and to the journalistic world?
Walt McRee
We do exist on the periphery of development thought and policy and so forth. Because money is a bit of an esoteric pursuit, you have your own section of the newspaper for that. Of course, because we really find ourselves at odds sometimes with some of the principles of economy, that they’re operating a debt structure, a debt monopoly, and we’re talking about something that’s not that, that it’s entirely a different world, It’s kind of out there. They don’t think it’s maybe necessarily a mainstream concern. I would also say that our resources are limited and so we haven’t done a major job in moving the media forward as much as I would certainly love to do, but we’re working well past our weight already. But I do think that that is a conversation that’s going to change, in part because, I’ll give you an example, we have a national conference coming up in October in which we will build some awareness.
It’s called Public Banking, Public Prosperity: Declaring Financial Independence on America’s 250th anniversary, is an opportunity for us to focus on how we’re still trapped by the Bank of England. We’re still locked into the financial structure that made that, in part, as Ben Franklin said, was the reason for the revolution, which was because they wouldn’t allow us to create our own currency here.
That was the primary driver, according to him, in Philadelphia. And by the way, the public banking thing started in Philadelphia with the Quakers back around 1720-1730. It was community funding. Hey, you want to build a barn? Yeah. Here’s some money. We know where you live, and we’ll help you build it.
No taxes at all. We were all taking care of each other. I think you guys did a brilliant job illustrating the kind of liquefaction of public assets that can become part of a democratic financial policy and platform. It’s a lower and smaller “d” but that’s part of the moment too.
We are at that point where the citizens are so threatened by their own survival, in their own futures, that we think they’re going to be paying a whole lot more attention about how we keep our money at home and not double the cost of our infrastructure by paying Wall Street. That’s the fact. When we go to the bond market, that immediately costs double, whereas if we find our finance ourselves, it’ll be a lot cheaper and we’ll also keep the profits as the Bank of North Dakota’s wonderful history has proved about how it’s grown.
Peter Winslow
So in Philadelphia, the leading newspaper is the Enquirer. We have access to the editorial pages of the Enquirer. When we do place editorials about public banking and public banking related issues that are important for the city, we’ve had that relationship for quite a while. We are not reported on a regular basis in the business section.
It would be nice if we were, but that’s not what the business section readers are interested in right now. So we do not really have access to the business section. However, at our conference in October, I’m pretty sure we’re going to have access to the front page of the Enquirer and that we’re going to be making news that is worth the Enquirer paying attention.
I think that will follow for other media. We have a monthly zoom program that we’re doing now. Coming up on our 54th edition of Financing Philadelphia’s Future. We invite the press to that, and periodically we get channel ten that will come in depending upon what it is that we’re discussing, we may get somebody from the media who will come and listen in. They don’t necessarily report on us, but they are keeping track of us.
I should mention that we do have some folks that are knowledgeable about public banking and interested in it and report on it, such as New City, and that’s also based here and has a national reach. It’s not the mainstream media, but it is a viable media outlet.
Walt McRee
I would just add that where there are local public bank initiatives like in California; Los Angeles, San Francisco, East Bay, Sacramento all have visible campaigns. They’ve been doing a great job. They’ve got a lot more people involved in their effort and focused on media work. This is a great story, and I think that it becomes increasingly relevant as we’re able to bring in the legislators who want to speak to it and look for an advantage.
In New Jersey, for example, Governor Phil Murphy, the outgoing governor of New Jersey, made it part of his public campaign for office. It was a winning message. It was very simple. He said, on the stump, “last year we spent a billion and a half dollars on building the infrastructure of the future in Japan because we would spend our money, then the Bank of America put it there. What did Bank of America do for us, for New Jersey? $250,000 in loans for the whole year.”
The comparison was, are you investing locally or investing elsewhere? Another thing on our agenda is public pensions. Trillions of dollars of public dollars sit in the hands of private managers. They do not have a stellar track record of returns. They’re only focused on returns. The money’s not going into your communities, by and large. That’s one of the things that the Public Banking Institute is focusing on making some impact.
Peter Winslow
There are many ways in which a public bank can be capitalized. One of the simplest and most straightforward is to have the local municipal pension fund invest in the public bank.
Scott Ferguson
Absolutely. We had a behind the scenes call a little while ago and we were getting into some of the weeds and technicalities of public banking. How do you start a public bank? I don’t want this to get too wonkish or too nerdy, but I think a couple of examples might be helpful just to give our audience a sense of how there’s different ways of doing this.
I’m going to make a gesture and then you guys clean it up. You add and correct me. One of the dominant models here is you need a movement at the state level with state legislatures who are willing to create what often gets called a legal framework, a set of laws that make it possible to to charter a bank at the state or municipal level.
Then that clears the way, as they’ve done in California, to have local movements for a Bank of San Francisco or a Bank of Oakland, etc., etc. but that’s not the only way of doing it. We learned from you on our call that there are efforts to kind of circumvent that state process because, you know, that’s hard, and instead develop a kind of a public investment authority of some kind. You were even telling us about one model where somebody who was involved was a former banker and somehow had a legal charter already and so it’s allowing for the possibility of acquiring a bank. These are just radically different paths up the mountain.
Correct to me, flesh it out, paint a better and bigger picture than I’m able to.
Peter Winslow
As a practical matter, there are two pathways that we usually follow toward creating a public bank. One is, in one step, to go get a bank charter. You can get a bank charter by buying one, taking one that is already in existence and convincing the banking authorities that you want to convert that to public ownership, or to create it anew, in one step. What we found in Philadelphia and also is true in other places, is that sometimes it’s better or the pathway is to do it in two steps.
The first step is to establish an authority that does all the things that you want your public bank to do as a revolving fund, and have that authority seek a charter to become a bank. So those are essentially the two ways that we see as pathways. If, in Philadelphia, we could have done it in one step, we would have.
But, for a variety of reasons, we took a different path. We use the Pennsylvania economic development finance law, acts 1 and 2, which is on the books and has been used over and over again to establish public authorities for particular purposes and to establish the Philadelphia Public Financial Authority.
We were successful in doing that. We had legislation that was passed 17 to 1 in the city council. So there’s a veto proof majority and Mayor Kenney at the time declined to sign. So it went into law and is now an ordinance of the city of Philadelphia without his signature.
But in order to take the next step, the mayor needs to appoint the initial board of directors for the financial authority and mayor Kenney declined to do that and his successor, who voted for the legislation when she was on city council, Mayor Parker, has also not yet appointed the initial board of the financial authority.
Scott Ferguson
Are there reasons given? Is it just a kind of a timidity, a political risk aversion? What’s going on?
Peter Winslow
I think that there is a political power struggle that’s involved. In Philadelphia, we have the PIDC, the Philadelphia Industrial Development Corporation, which has been around since the 50s and is very large. It is governed by the Greater Philadelphia Chamber of Commerce, which are the established business and financial interests of the city.
They see a public bank as being a competitor, and they are not comfortable with the democratic governance structure that we have for the Philadelphia Financial Authority.They are saying, “well, you know, we already have institutions that can do all of these things.” We don’t because we don’t have a bank.
If you wanted to establish a bank, you could do it. We invite you to, and we would invite you to have democratic governance rather than the governance that exists for PIDC. So that’s the primary problem that we have. The other problems that they have are sort of saying, “can we afford it? Is there a risk that is involved in this, will the city have to be on the hook if things go belly up?” Questions that we really would like to have a conversation about, because we think that all of these objections really are smoke and that we like to blow that smoke away so we can see it more clearly.
Walt McRee
There are lots of reasons, or not reasons, but excuses that are put in the way and I think Peter touched on several of them, but one of them really is about the power structure. The power power politics. People don’t get into office these days without having money. The interest behind them, banks are very much a part of that scene.
As Dick Durbin said about Congress, “banks own the place.” That reality is part of our democracy. That is part of the corruption that is part of this moment. But starting a bank, it’s not against the law to create a bank, North Dakota proved that back in the 20s and 30s.
It’s not necessarily against the law. Depends on what your state constitution might say or what your limitations are for your municipal authority and so forth. They’re all different situations, but they’re not generally prohibitive of a community having its own bank. It depends. Obviously, it’s a complicated affair on some level.
But, the willingness to do so comes from the need. People say, “look, we really have to do something about our housing or our infrastructure,” and they don’t see a way that their tax base is going to swing it, then what, what kind of outcomes? The state of Washington is looking at that situation now yet again.
They’re out of their borrowing capacity. They’re running out of money, which is sort of a systemic failure of the monetary system. So we’re talking about a whole new horizon frontier of the ability for us to create our own money out of our own equity, in our own terms, and with our own mission.
This is the public option that exists not just for banking, but for other utilities, for the schools and environment. I mean, all of these things deserve to have the public power in place. So this is really about a systemic rejuvenation and renewal and I want to see a transformation into a new day where we’re not dependent on being supplicants to big money interests.
I would just say there are all kinds of things that happen along the way of making a public bank. A revolving fund, which is where they want to send you, which is what happened in New Jersey. They send it to a revolving fund. People need to know the difference between a revolving fund and a bank.
A depository bank enables your capital to be leveraged ten times, roughly speaking. Okay. Well, that’s a money tree, that’s a money cranking machine that has to be tempered and operated properly and balanced with risk and all of that. But it is a much different thing than a revolving fund now. To answer your question a little bit better, Scott, I would say, and as Peter pointed out, these intermediaries among municipal financial authorities or organizations are interim steps, fine. As long as they are part of a continuum of a purpose, that once we get this system working, once we demonstrate that we know how to do this, once we’ve got the public governance structure in place, once we’ve established the separation between this and government political control, then we can get on with formulating a working model for a local public bank. Totally doable.
I think you’re going to see that illustrated. I will give you one more example of how that has worked and I think it’s working excitingly in Vermont. Back in 2014, when we were working on that, the treasurer, who said, “look, I understand this, but I don’t like it though.”
Even though the state Congress approved it, she said, “as treasurer, I’m not going to do it. But I will tell you what I will do. We’ll put in a new plan called ‘10% for Vermont.’” What that was, they would use 10% of their available cash balance on deposit in a Canadian bank, but in a big bank. “We’ll use 10% of our balance and you can use that for local investment. We’ll do it through our economic development agency.” That was 10-12 years ago? Well, since then they have had $30 million that wound up in local investment out of that effort. Now, 12 years later, it has gone from 10% to 12.5% and grown to one over $110 million of investment in the bank.
I think they’re in a different place where they say, “you know what, this is a good pile of money. We can really make this into a bank.” That is one approach that would be another way of starting a bank. Use your industrial or development authorities and agencies as vehicles, as capital sources to transform them into a depository, singular depositories, narrow banks, the things that are just used for specific public investment.
Those are very real, very available opportunities that do not require a great deal of heavy lifting or fabrication.
Peter Winslow
There are green banks around the country.
Walt McRee
…That are not banks.
Peter Winslow
…That are not banks, but they’re called green banks for solarisation projects and things of that nature. There are a lot of them around, but none of them are banks. If there were a bank, like in Philadelphia, we would be able to support the Philadelphia Green Capital Corp, which is our green bank in Philadelphia.
We’d be able to support them and their programs and be able to expand their programs enormously. But one of the things that may happen as the federal government starves the states and the cities, public banking is going to become increasingly attractive to the politicians because it’s a solution to their problem.
It’s a case that we have to make strongly because it’s the case that holds whether they’re starved from the federal government or not. It’s a question of the ability of a government agency in our federal system to exert its own sovereignty.
Walt McRee
The National Association of Counties recently did an assessment of that and said, because of the cutbacks at the federal level, these counties are looking at, in the next ten years, potentially a $1 trillion lack of resources that their budgets are not going to be able to compensate for because they weren’t designed to do this without federal support.
So, that’s part of this moment, the very dynamic moment for our money. It’s our money and people forget that it’s our money.
Peter Winslow
The public bank also can be a source of liquidity for local governments because the nature of the tax revenues are periodic and the nature of the expenditures are not.
Billy Saas
Well, as we start to wind down here, I want to direct our listeners to check out publicbanking institute.org, where you have more of your resources. But I want to ask both of you, pertinent to what you were just sharing, where else can people who are interested in following the latest in public banking, where should we be looking?
Where are the most exciting sort of moments for public banking right now?
Walt McRee
Well, I think we need to pay attention to what our neighbors’ needs are. What is needed? What is wanted? What must we stand for? To be driven by a mission. It’s always about a mission. The Bank for North Dakota had a mission. Every public bank has a mission. When you discover what it is that’s missing and needed, then you have a reason but also focus an energy that can be aligned around it.
I think that one of the things that we’re starting at the institute is a public banking community action network, which will be very much like an individual declaration of “I’m in favor of starting publicly owned financial institutions in my town.” We will be networking and creating a collaborative understanding where we can communicate with each other.
Not just within the sector of public banking interest, but in all of these other sections, like working families, community environmental justice and fairness, all of these other organizational frameworks become part of a common thread of community, of how we’re going to get this institutional framework established. The politicians are going to need to see the people standing together around this, because it takes an enormous amount of courage and even when they’ve got it, like Bob Asagawa, God bless him, up in Washington state, has been at this for ten years in the Senate. He’s still at it and it will take a while. When people stand together, that’s a whole new possibility. Again, part of this moment we’re in is where people are standing together.
We’re not going to be fooled forever about how we are being treated and how people are taking this opportunity to take our stuff away from us.
Peter Winslow
It’s a national movement at the local level and people can watch what’s happening in the build up to the conference in Philadelphia in October. People can see what’s happening in their local states and cities. New Mexico has a very vital program that is looking toward success.
California has a framework, where a variety of cities are working on this. I don’t think we’ve mentioned New York very much, but New York is also a place, New Jersey, Pennsylvania, Massachusetts, Vermont, Oregon, Colorado, Colorado is very big.
You see on the Public Banking Institute website a map that shows where there are state and local initiatives underway and have links there to get in touch with your local effort.
Walt McRee
Yeah. I just want to reinforce that if you go to publicbankinginstitute.org, there’s an enormous amount of resources there to give you a background and links to things to really get the inside scoop on how the Bank of North Dakota works. There are five videos that are made of a presentation that Don Morgan, the president of Bank of North Dakota, made in New Mexico back in January.
Easy guy to listen to. He really lays it up straight. It’s not difficult at all to understand. But you see how beautiful the symmetry and the synergy is of how that bank works.
Peter Winslow
Individual websites in Philadelphia, like the philapublicbanking.org website. In addition to information about our combined effort that’s called, Project Beloved Community, which is built upon Martin Luther King Jr. ‘s concept of a beloved community, which is based upon a non-extractive economy.
All of the videos of Financing Philadelphia’s Future are there and on YouTube, and similar information is available in Colorado and Washington state and so forth. So there’s a lot of information that people can get, and through the Action Network, be in a position to join and coordinate with their neighbors.
Scott Ferguson
Well, Walt and Peter, thank you so much for joining us on the podcast. We so look forward to future collaborations with you and we so thoroughly enjoyed this.
Peter Winslow
Thank you so much.
Walt McRee
Thank you very much for having us and guys, we really admire your work and, indeed, look forward to the future collaborations. We’re going to need each other’s brains and courage to press on. So, thanks.
* Thank you to Zachary Nosbisch for the episode graphic, Nahneen Kula for the theme tune, and Thomas Chaplin for the transcript.
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