New Mexico’s Alliance for Local Economic Prosperity announced that the Credit Union Association of New Mexico, a statewide trade organization that advocates for credit unions, has formally endorsed a public bank for NM. This is a key endorsement and bolsters the group’s growing alliance to advance upcoming legislation that will be introduced in 2021.
Now that the big banks have concluded their earnings season, with the top highlight being the collapse in loan loss reserve builds from $33 billion in Q2 to just $5 billion in the quarter ended Sept 30…. in what some have taken as a vote of confidence for the economy as bank risk managers clearly don’t anticipate another sharp leg lower in the economy (that may change if a second wave of covid forces new shutdowns), we can take a closer look at some of the other, just as notable observations within the US financial sector.
Oregon lawmakers on Friday approved $30 million to turn hotels into shelter space in wildfire-affected areas — less than half of the money initially sought in a strikingly contentious and emotional committee hearing.With many Democrats urging swift action as wildfires and a pandemic have exacerbated an existing shortage of shelter beds, two prominent Democratic Senators wound up siding with Republicans to block another $35 million that could have been used to site shelters more broadly.
The pandemic has laid bare the failure of the federal government to justly deal with the economic fallout wrought by a disaster. Public banks at the state and local level could have helped our country get through the pandemic, and they could be vital in our recovery.
Public banks can provide a financial bulwark in our federal system by supporting local banking systems. They achieve this both by providing banking services to state and local governments and by financing credit programs to assist those most harmed by disasters, who are inevitably part of our most disadvantaged communities.
Loath to be seen profiting from the economic disaster caused by the coronavirus, the nation’s biggest banks were quick to pledge that they would donate to charity any money earned from helping deliver the government’s signature small-business relief plan.
That promise may be something of a mirage.
Here’s something you might not have known. The Fed is a national development bank – our national development bank. Its mandate originally was and remains that of a facilitator of local business and productive community bank lending across the entire nation, not a bottomless liquidity hole for Wall Street high rollers.
Cities and states are in a fiscal crisis. Municipal bond defaults are now at their highest in a decade. Despite a $500 billion Federal Reserve intervention, with more potentially on the way, regulators have yet to address a longstanding structural problem—a group of the nation’s biggest banks that has cornered the market for municipal bond underwriting. This concentration of power has the potential to raise the interest rates on the bonds local governments urgently need to salvage their finances and the costs could be in the billions. While some municipalities will default on their debt, others will need to increase borrowing to continue providing public services. But the structural issues in the municipal-bond market could make borrowing costlier and alternatives are needed.
Amid the economic fallout of the COVID-19 pandemic, which has exposed systemic inequities, some say a public bank could be a key asset to Philadelphia’s financial recovery.
Could or should Rochester have a publicly-owned bank? As reported by Gino Fanelli for CITY Newspaper, “the idea would have the city take the millions of dollars in tax revenue it currently deposits in big commercial banks and park the money in a city-owned and -operated financial institution that would invest in the local economy by providing inexpensive and accessible financing to city businesses, developers, and would-be homeowners.”
As Connecticut reckons with the economic impact of the COVID-19 pandemic, lawmakers and community organizers have returned to the idea of public banking as a possible saving grace. Public banks — described as “operated in the public interest” and “owned by the people through their representative governments” by the Public Banking Institute, or PBI — are not an unfamiliar concept to the Connecticut legislature. Multiple bills to establish such banks, or to study the feasibility of doing so, have been introduced without success in the past five years.