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[Music] welcome to social advances video channel today the topic is public banks and we are speaking with our guest james davis who is with the oregon public bank alliance good morning james good morning okay all of us are familiar with banks from our personal experience and i guess the main things people know is that somewhere where you put your money so they can hold it for you and you can borrow money from them if you need it for things like a car a house student loans okay how's the public bank different from a private bank like that um well interestingly most people's experience of banking won't actually change with the creation of public banks in oregon public banks in oregon like other public banks would tend to be more high finance banks so they would take deposits from large institutions like unions or cities and they would generate loans and sell bonds for large projects like bridges and buildings or help to partner with uh smaller banks like the community banks and credit unions that people are still are used to going to to create lower interest loans safe lower interest student loans lower interest mortgages lower interest loans for small businesses medium-sized businesses uh you know local business so um most people's experience of banking would still be the same they'd go to their their regular bank but they would have more loan options lower interest loan options so they would still do some services directly to the public but mostly their deal it's kind of in my mind it's kind of like a commercial bank in the sense that they don't deal with individual members of the public as much as they deal with larger institutions so you're saying they would be taking deposits from large organizations from um governments i assume holding their tax money um things like that and then they're making loans go ahead they could take deposits from smaller depositors but typically uh most of the deposits are from larger institutional uh investors and people who are you know institutions that want to save and have reserves on hand at the bank uh instead of having to use a wall street bank a ford profit or usury bank um that's out of state they would just be able to put that money here in a bank locally and that money would then allow a bank to generate loans or local projects so it'd be a service in two ways to governments whether depending on what's what scale the bank was if it was a state level bank or more regional focus they would take deposits from governments and then they could also use that money to buy bond issues from those organizations and that's a way of keeping the money here at home rather than routing it through the middle men since it's mostly men i'm wall street big investors uh depositing your money in some big bank and then uh trying to raise money by selling bonds to those uh big brokers that's right over 90 white men running the the uh those big banks out of state for profit for their the benefit of their investors uh instead that money would stay local and those bonds uh could be generated locally at a much lower interest rate so there's a direct benefit to local citizens and local taxpayers because uh in order to build a bridge uh a city could go to the local uh bank to shoot bonds at say one to two percent rather than having to go to wells fargo uh or chase to get bonds at seven to eight percent and that brings the cost of the bridge almost you know down by half a 500 million dollar bridge uh built using bonds from uh big for-profit out-of-state banks can cost a billion dollars whereas here might cost six hundred thousand dollars you know so we save a lot of money and that means we can stretch our tax dollars farther uh and get a lot more benefit from the taxes that we pay more infrastructure more services so in a sense it's eliminating the middleman to save money that's right and of course the big difference is the public bank is in some way controlled by the public that's right maybe an appointed board by elected officials exactly the initial board would be appointed uh and then it would be self-generating uh if the bank is not run by politicians um that's that's an important thing to point out because there's often concern about corruption and self-dealing the public banks are run by banking professionals and when you say self-generating does that mean that the initial board then appoints the people that replace board members as their terms expire it could look that way or it could look much like credit unions where then they have um representatives who are elected by community members um the bank is owned by the public so the public could be uh involved in generating some of those board positions you know through elections and that there's options there yeah it depends on how it's structured because obviously we don't have something in place right now but it also sounds to me analogous to a credit union where i belong to a credit union every so often they send me a ballot to choose new board members although i don't have a lot of information about them so it seems like tenuous version of democracy much like we have in our government right right uh and there there's not a lot of history uh to to lean on in terms of public banks we have the bank of north dakota which has been going now 100 years and done a lot to shore up the that economy um especially through crises and uh just recently uh last year the california passed legislation enabling public banks in california so and there's about 25 or 28 states they're pursuing public banks now this is a function of banks that people are not as much aware of but i think may be important here as well is banks actually create money and they do this when you think they're holding depositors money and they're supposedly lending that money out but the depositor can at the same time ask for their money so all that additional money they're lending out is just based on the promise that they're going to be able to pay it but it's creating new money in order to send it out so this is a way of um enhancing our uh finances here in the state indirectly as well absolutely that is right and that the ability to create money uh is is only made possible through government and through government regulation that allows banks to generate loans and effect generate money out of thin air uh i believe it's nine times whatever they have on their deposits so um for for us we take that ability and we use that ability to benefit people instead of private investors it's the only company i can think of where the the benefit of you know that's generated from this magical ability uh to create money is is just or most companies when they get a license to go take trees out of the ground you know oil out of the ground they're actually having to go do real work to extract that natural resource whereas a bank just gets to waive a match's wand and deposit money into people's accounts that didn't exist before and there's no actual work involved in that except for the work of accounting so it's a very lucrative business and classical economists actually uh look at usury banks uh uh as um you know almost like theft it's like it's not there's no real um work there so banks around the world many banks and other countries are public banks and and so private banks there's these two different competing assistants public banks for specific banks or not not really competing but different ways of approaching it and the fact that this is such a powerful tool it only makes sense that it should be run for the public by the public uh for the benefit of the public i i think people often associate this with socialism for good reasons because it has socialist overtones but what they often don't what they're not aware of is we don't have a completely private banking system anyway that we have the federal reserve which is a hybrid that has private bankers giving advice to people appointed by the government who are largely autonomous from congress so it's it serves the function of making sure the system is subject to some public control but it's also subject to a lot of control by the big banking corporations around the country right and public banks are charged with a public mission uh about the profits from interests generated by loans to public banks can be used for other public benefits like uh subsidizing low-income loans or loans to traditionally redlined communities or loans to minority owned businesses and yes it does have a kind of sense of a socialist over our history but it's also like the bank of north dakota was generated by farmers farmers who were tired of paying high-interest loans for their farm equipment and ended up forming a non-partisan league and taking over the north dakota legislature and passing a public bank so it's a very it's also a very conservative approach to handling um banking because it's about local control and keeping our money local so it should appeal to everyone and benefit everyone to some extent it's decentralization instead of having banking all controlled from the from the federal perspective the states gain some control over finances themselves that's right what happened in the 30s with the bank of north dakota is they refused to foreclose on the farmers you know you had farmers being foreclosed on all across this country but not in north dakota when where uh the bank of north dakota owned a lot of those loans and they helped those people get through that time we're going to see a lot of foreclosures around the country now too i think once uh so at some point they're going to have to stop these uh moratoriums on foreclosures people got to pay their loans somehow i'm not sure how that's going to work out but it'd be good to have a public institution making low finance loans available because interest rates now i mean at the from the federal reserve are like down to zero yeah so more of that should translate to people that are real in real need i should also add socialism is not necessarily a bad word to everybody watching this video so to me it doesn't have bad overtones no and and the fact that um socialists and conservatives share a common history uh at least in that time period in north dakota where they were aligned together there were a lot of people who um who are traditionally conservative who would also appreciate having a locally owned and controlled bank versus having uh their you know distant wall street uh you know for-profit banks controlling their loans and able to foreclose on their on their farms and businesses so it's something something that could appeal across the board regardless of political these kind of rigid political categories that were constantly forced to to uh believe have some basis in reality absolutely that's exactly right okay so where are things at in oregon right now you said north dakota has the only public bank in time existence here i saw perusing some stuff this morning there's also one that was recently created for native americans and one in american samoa right and a lot of energy around this in several states around the country so where are we at here in oregon here in oregon it's actually legal for uh cities to create public banks so um but there's there isn't a prescriptive or prescribed path for doing that and there's some some concern about um lawsuits if you know when cities just go out and start creating public banks they'd like a little bit of guidance so right now the oregon public bank alliance is working to pass legislation in the coming session hopefully that will clarify a path for the creation of public banks so did you say local public banks are legal or illegal currently uh according to legislative council uh they are currently legal they're legal yes yes okay but what we want is legislation to give it some kind of structure some regulatory structure that's exactly right yeah and there is a prohibition of state banks in the constitution that says that the legislative assembly shall not have the power to establish or incorporate any banks or banking companies um but that power is not that's that power is still available to um home rule charter cities across the state do you have any idea where that constitutional provision came from what's the history behind that why did they forbid the state from having a public bank sounds like a reaction to the progressive movement back in the early 20th century yeah i said i don't really know the answer to that but i could imagine that banking interests had an influence on that particular um part of the constitution and they thought maybe that would handle it without realizing that just forbidding the legislature from establishing a public bank doesn't keep cities from doing it for municipalities so so the oregon public bank alliance who's behind that um yeah that is um it's a coalition of people from across the state um and it's a growing coalition it also includes um minority-owned or more minority associations like upano and we're in the process of going out and bringing in more and more people so right now i just encourage people to go to our website and look and you can see uh the list of people who are currently on board and and just know that list is growing there was a piece of legislation in the hopper back in 2019 the regular session um that was very messy sessions so i guess that was one of many bills that got yeah it was just a casualty a lot of people looked at that at that legislation i thought oh this is a slam dunk it's not it's not a difficult bill to pass and um and then it was confusing for some other people and there was just so much going on in session that it just became you know it just dropped to the wayside so it wasn't yeah it was a casualty yeah of that session we have um right now we're going out and getting a lot of sponsors for the current uh session and we're very hopeful that we'll pass it in in the 2021 session okay so january hoping something get well you know some will get introduced if you have people already co-sponsoring what what's the support looking like does it feel like it has a good chance or work needs to be done should people be phoning their legislature legislators right after the election right now people should be going onto our website at warp or pub bank dot org and um just signing up so that we can notify you when when is a good time to call or write so that we can apply pressure at the right times versus uh just having it more of a willy-nilly approach i would encourage people to go and sign up on our website and that way they can stay informed and have you encountered much uh political resistance like are there forces gathering on the other side of the issue to try to kill this no we have not experienced that yet and we're hoping that that remains the case we are in conversation with community banks and credit unions in particular who stand to benefit from this legislation uh one of the unique things about the banking environment in north dakota is it's a very vibrant banking environment because the bank of north dakota partners with community credit unions and community banks to underwrite a lot of their loans and to provide um lower cost uh you know money for them to be doing banking with so in a sense it acts as a banker for these banks absolutely right so you don't have to go to again those distant for-profit wall street banks for that you can split ourselves here locally not necessarily competing with local banks and credit unions would be offering them a service benefiting them and benefiting our communities exactly right so what are your concerns about going forward just that it's not going to get enough attention that it'll be neglected in the rush to do other business how good do you think the prospects are well there's there is a lot coming up in the session for sure and uh especially dealing with cover 19 and the current pandemic and the economic fallout from that um crisis you know we have a health crisis that's led into an economic crisis and so those things will get a lot of attention but the the fact is that public banks have shown themselves to be valuable tools in confronting economic crisis and restoring economic stability so the fact that supporting public banks will contribute to the economic resilience of our state probably will give i the attention that it needs in this coming session it's a good point to make that this crisis doesn't seem like it's going to weigh any time soon so every tool in the box should be considered and making that argument that this helps our our whole financial industry here in oregon and thus the economy um is very powerful argument i would think absolutely would you consider that the the bank of north dakota because its mission is to to benefit the people of north dakota not just make money for its shareholders they were very proactive in letting businesses know about the cares act and the ttp loans and helping them generate loans they got more money in and cares loans and ppp loans than any other per capita than any other state in the nation because the bank of north dakota was on it and that's the power of having a a public bank that is chartered to serve the public interest by contrast a lot of the big banks that were giving out loans to businesses were giving them to the bigger better established businesses because those were the ones they were used to dealing with and those were the ones that had a good credit history that's just how they're used to doing business but if you had an institution looking at public purposes then probably get out the door faster and get to places where people really need it that's exactly right i would be the hope anyway right yeah oh actually and and what we've seen in practice what we have actually seen in real life when you look at how banks have uh attended to this crisis around the nation and what happened in terms of uh the public bank of north dakota okay sounds great and we will put up the website for people once again so they can check out that and sign up and get updates about it any final words you want any neat slogans for this so people can remember the main thing is get involved by going to our website educating yourself about public banks and signing up so that when the time comes we can let you know to call your legislator and we can get this through it'll help all of us all of our families all of our communities okay james thank you very much for taking the time to share that with us this morning yeah thanks alan appreciate being here [Music]