Public Banking Institute – banking in the public interest

(with Ellen Brown) – Linked with Japan: financing reconstruction, the monetary implications of the Nuclear Catastrophe.

  • The Public Banking Institute (PBI) is a non-partisan think-tank, research and advisory organization dedicated to exploring and disseminating information on the potential utility of publicly-owned banks, and to facilitate their implementation. PBI was formed in 2011 as an educational non-profit organization by a group of citizens including past and present community and civic leaders, businesspeople, educators, political economists, writers, and banking and other professionals. The group shares a concern over the destabilizing actions of a private banking industry that, through its corporate business model, has precipitated the economic imbalances now witnessed across the US economy … (full text about).
  • See also: It’s Rainmaking Time.
  • Video: Max Keiser and Ellen Brown discuss High Frequency Trading, 7.48 min, 9 May 2010.

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Public Banking Model for a State /Background: … click on , … and for a video: An Introduction to State Owned Banks, 7.43 min (In Context Report), March 29, 2011 … 

Public banking is banking operated in the public interest, through institutions owned by the people through their representative governments. Public banks can exist at all levels, from local to state to national or even international. Any governmental body which can meet local banking requirements may, theoretically, create such a financial institution.

Public banking is distinguished from private banking in that its mandate begins with the public’s interest. Privately-owned banks, by contrast, have shareholders who generally seek short-term profits as their highest priority. Public banks are able to reduce taxes within their jurisdictions, because their profits are returned to the general fund of the public entity. The costs of public projects undertaken by governmental bodies are also greatly reduced, because public banks do not need to charge interest to themselves. Eliminating interest has been shown to reduce the cost of such projects, on average, by 50%.

When the public interest demands, the mission of public banks is to respond immediately, to assure the long-term prosperity of the community. In the U.S., the Bank of North Dakota is a prime example of such a public bank.

click on link for a video, 2.56 min

Did You Know…?

Public banking was first introduced in America by the Quakers in the original colony of Pennsylvania. Other colonial governments also established publicly-owned banks. The concept was later embraced by the State of North Dakota, the only state to currently own its own bank.

As of the spring of 2010, North Dakota was also the only state sporting a major budget surplus; it had the lowest unemployment and default rates in the country; and it had the most community banks per capita, suggesting that the presence of a state-owned bank has not only not hurt but has helped the local banks.

The BND was founded in 1919 to insure a dependable supply of affordable credit for its farmers, ranchers and businesses.

Without affordable credit, average Americans who do not already have substantial wealth cannot make the investments in their families and small businesses necessary to insure a prosperous future.

The Bank of North Dakota makes low interest loans to students, existing small businesses and start-ups. It partners with private banks to provide a secondary market for mortgages and supports local governments by buying municipal bonds.

The public banking model that the State of North Dakota uses is simple – the State of North Dakota is doing business as the Bank of North Dakota (BND). That means all the state’s assets are used to capitalize the Bank of North Dakota. By law, all the state’s revenues are also deposited in the Bank. Among other advantages, this gives the BND the ability to participate in loans originated by private banks, which then have more flexibility to manage and expand their loan portfolios.

As a public bank, the Bank of North Dakota pays only one dividend to its only shareholder – the people of the state. In the past fifteen years, despite its small population and a volume of economic activity smaller than many other states, the Bank of North Dakota has returned over $350 million to the state’s general fund, helping to ensure regular annual surpluses and no need for drastic tax increases or spending cuts for vital public services.

Most states, with the exception of North Dakota, currently deposit their tax revenues (the public’s money) in private Wall Street banks, which use these deposits for their own private gain. This money could be deposited in the state’s own bank and used to fund projects and programs that will benefit the public over the long term – the very same projects/programs that are currently being cut from state budgets.

The Bank of North Dakota is only one of many public banking models that have developed historically around the world. For most of the twentieth century in Australia, the publicly-owned Commonwealth Bank of Australia was not only the nation’s central bank but engaged in commercial banking, “keeping the other banks honest.” In Alberta, Canada, the publicly-owned Alberta Treasury Branches connect nearly every town in a shared credit system. Public and private banks operate effectively together in many countries, including Switzerland, Germany, India, China and Brazil.

In many cases, banks that are nominally owned by the public are not being used to their full potential for serving the people. The Public Banking Institute has been set up to explore and share this potential.

Public Banking to the Rescue: … (full long text /Background).

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