Public banks, often
referred to as "partnership" banks, are capitalized with public funds and
assets, which are then leveraged as with any bank, to provide affordable and
sustainable credit which is distributed into the productive economy in
partnership with private, community banks.
Public banks are not retail
banks (the BND has one office). They are run by professionals, paid as civil
servants, receiving no mega salaries, bonuses or commissions as incentive for
the kind of run-away risk taking that crashed Wall Street. Profits are
reinvested in the loan portfolio or returned as non-tax revenue to the general
fund of the jurisdiction that established the bank.
The BND has a current
commercial loan portfolio of more than $2.9 billion and has returned an average
of $30 million a year over the past decade to North Dakota taxpayers -- in a
state with a population of about 670,000.
Public banks eliminate the
need for unproductive government "rainy day" funds, can provide disaster relief
and low cost student loans, and substantially reduce debt service on municipal
bonds and infrastructure projects. They do this by bidding down interest rates,
or when the bank buys bonds, returning the interest paid by taxpayers to the
Public banks work
counter-cyclically in the economy, maintaining credit flows during economic
downturns, as has been amply demonstrated both in North Dakota, and nations
whose economies were sustained by their public banks through the recession that
devastated the U.S.
Finally, public banks can
serve as the depository institutions for public funds and revenues, bringing billions
of dollars back from Wall Street to Main Street, and begin to break the
stranglehold the banksters have on the wealth of America.
You can learn about public
banking at www.publicbankinginstitute.org
Mike Krauss is director of the Public Banking Institute and chair of the Pennsylvania Project. Email: Email address removed
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