Public Banking, for banking in the public interest

[Jaylo]

Now is the perfect time to do complimentary Public Banking (PBI) alternatives for local, regional and state banking needs.

See articles by PBI Chairman, Ellen Brown, at the Web of Debt Blog: https://ellenbrown.com and
The Public Banking Institute:

https://www.publicbankinginstitute.org/

THURSDAY APR 23 — While Senate Majority Leader Mitch McConnell says states should consider declaring bankruptcy, the Public Banking Institute advocates in an open letter to state governors and treasurers that states set up their own banks to readily tap into newly created financial options to rescue communities from the pandemic-induced economic crisis.

As states and cities face a tsunami of emergency expenses, imploding tax revenues, and a shrinking bond market, the actions listed above can provide a real financial lifeline to struggling communities desperate for funds. Taking these steps and using emergency powers to establish publicly-owned state banks will not only help stave off crushing economic disaster for their constituents but will create an honest and efficient financial infrastructure that can keep communities productive and healthy long into the future.

PBI Chair Ellen Brown states:

“The Federal Reserve has stepped up to the plate by relaxing some of its rules and dropping interest rates to zero, but only for banks. States could take advantage of this opportunity by having their own banks, something that could be done quickly by executive order. Newly created state banks could follow the example of Germany’s public bank KfW and grant 1% loans directly to Main Street businesses. Building a public bank network accountable to the public is a crucial part of the solution communities need.”

America is at a crossroads. New York City Comptroller Scott M. Stringer has said the city will face mass homelessness without a comprehensive plan. State and local government officials do not need to wait on the federal government to act. They have independent power to create a trustworthy financial infrastructure that works for all, not just for Wall Street.

In an open letter to state governors and treasurers, PBI details three new funding possibilities states can tap to rescue communities from financial catastrophe and provide for future fiscal health.
Immediate actions:

#1: States can borrow from the Fed at 0.25% through state-owned public banks established by emergency executive order. According to banking experts, a public bank could be set up in a matter of a month if fast tracked by executive order, using a portion of the funds allocated to states under the CARES Act for capitalization. The bank could then borrow from the Fed at 0.25% to provide 10 times its capital in low-cost credit to communities. It could also work with community banks to fund loans for small and medium-sized businesses that are too small to qualify for the Fed’s new Main Street Lending Program.

#2: Use the Federal Reserve’s new Municipal Liquidity Facility (MLF) to sell bonds directly to the Fed. With this new MLF, states and cities can sell short-term notes of 24 months or less directly to the Fed without going through the private bond market, saving related fees. PBI Advisory Board member Prof. Robert Hockett has proposed a game plan for how states can put this facility to immediate use.

#3: Get low interest loans under Federal Reserve Act 14(2)(b). This section of the Act already allows the Fed to buy 6 month debt instruments from states and municipalities. Governors need to collaborate to urge the Fed to activate this section, lend to state and municipal governments on the same favorable terms banks are getting, and roll over the loans, as the Fed is now doing for financial institutions in the repo market.

Ellen Brown is an attorney, chair of the Public Banking Institute, and author of thirteen books including Web of Debt, The Public Bank Solution, and Banking on the People: Democratizing Money in the Digital Age. She also co-hosts a radio program on PRN.FM called “It’s Our Money.”Her 300+ blog articles are posted at EllenBrown.com.
Ellen Brown | April 19, 2020 at 11:41 am | Tags: Debt deflation, Federal Reserve, helicopter money, Inflation, public banking, quantitative easing, UBI, Universal basic income | Categories: Ellen Brown Articles/Commentary | URL: https://wp.me/p4HMf-3O8 https://ellenbrown.com/2020/04/19/a-...and-will-work/