A Seattle public bank is an opportunity to divest from Wall Street and invest in our local economy. In order to process our city’s funds, Wall Street banks charge big money. In 2016, Seattle taxpayers spent $37 million servicing the city’s debt. In return, our money is invested in a portfolio of shadowy speculative investments. Recently, Seattle ended its contract with Wells Fargo in protest of the bank financing the toxic Dakota Access Pipeline. A public bank would allow us to invest Seattle’s funds back into the city, and use those funds to invest in infrastructure like housing, as well as offer below market-rate loans to small businesses and individuals.
Additionally, a public bank can provide financial independence to our most marginalized citizens. More than 1 in 4 Americans are classified as either “unbanked” or “underbanked,” meaning they are reliant either in whole or in part upon items like money orders or payday loans for financial management. A public bank would guarantee these citizens have access to basic financial management products like checking or savings accounts. Public banking could also offer student, auto, or home loans to individuals and communities who frequently face predatory rates from private institutions.
Functioning as an independent entity but owned by the city itself, a municipal public bank would be bound by a charter to serve in the public interest, administered by civil servants and free from interference by politicians. Such a bank would minimize interest rates and fees, and in eliminating financing costs, save Seattle money and provide a source of revenue via lending at no burden to taxpayers.
Seattle’s relationship to Wall Street banks leaves taxpayers and local businesses prone to recessions, generated in part by risky financial speculation. Public banks, on the other hand, are counter-cyclical institutions: in an economic downturn, a public bank can actually increase its credit flow, helping to inoculate Seattle from unemployment and business losses. It was this ability to loan in times of crisis that helped the Bank of North Dakota, which has managed the state’s finances for over a century, weather the nationwide devastation of the 2008 financial collapse.
From Oakland, CA to Santa Fe, NM and beyond, municipal banking is gaining momentum among activists, educators, and economists, and for good reason: it can offer our community a level of safety and accountability that simply can’t be found with private banks.