As public banking expert Ellen Brown has highlighted, during the New Deal, the federal government’s Reconstruction Finance Corporation (RFC) lent over $2.5 billion in agricultural loans, backed vast infrastructure investments, and re-stabilized the economy through emergency loans to states and for disaster relief.
Dianne Feinstein, our Senator, had a viral moment on Friday, February 22, when a video circulated online of her lecturing Bay Area children about why she does not support the Green New Deal. The children were her constituents, on a visit to her office as part of an action coordinated with Sunrise Movement Bay Area, a youth-led climate movement. Sen. Feinstein told them, “There’s no way to pay for it,” and went on to detail how her decades of political experience informed her pessimism on the Green New Deal.
Sen. Feinstein presented the activists with a draft of her alternative resolution, which calls for the United States alone to eliminate greenhouse gas emissions by 2050, far short of the Intergovernmental Panel on Climate Change’s warning to limit global warming to 1.5°C. (Sen. Feinstein has since abandoned this resolution, and Senate Democrats have introduced a simpler “unity” resolution on climate change.)
In contrast, the Green New Deal proposal incorporates economic, industrial, and social justice policies to effect deep, systemic change to decarbonize the country in one decade. And as the name suggests, this type of massive transformation and government intervention has a precedent in the original New Deal, which rescued our country from the worst impacts of the Great Depression. As explained by economist Stephanie Kelton and others, the federal government paid for the New Deal’s massive public investments by exercising its financial sovereignty and creating credit via the Federal Reserve. Moreover, as public banking expert Ellen Brown has highlighted, during the New Deal, the federal government’s Reconstruction Finance Corporation (RFC) lent over $2.5 billion in agricultural loans, backed vast infrastructure investments, and re-stabilized the economy through emergency loans to states and for disaster relief.
The Green New Deal relies on a network of public banks — like a decentralized version of the RFC — as part of the plan to help finance the contemplated public investments. This approach has worked in Germany, where public banks have been integral in financing renewable energy installations and energy efficiency retrofits. And it’s an idea that has taken root in California: last November, over 430,000 Angelenos voted in favor of amending Los Angeles’ city charter as a first step towards a public bank, and Oakland, Berkeley, Richmond, and Alameda County have completed a favorable feasibility study. Sen. Feinstein’s own state director, Jim Lazarus, is a member of San Francisco’s Municipal Bank Task Force, which just completed a year’s worth of research into public banking and is presenting the San Francisco Board of Supervisors a range of public bank models to choose from. The Board — of which Sen. Feinstein used to be a member — recently unanimously passed a resolution in favor of the California Public Banking Alliance’s state legislation for a new charter that will allow cities and counties to establish their own public banks.
How will local or regional public banks help pay for the Green New Deal? They will make low-interest loans for building and upgrading infrastructure, deploying clean energy resources, transforming our food and transportation systems to be more sustainable and accessible, and other projects. The federal government can help by, for example, capitalizing public banks, setting environmental or social responsibility standards for loan programs, or tying tax incentives to participating in public bank loans.
Most importantly, as one of the young activists in the video pointed out, the cost of inaction (or insufficient action) far outweighs the cost of implementing a paradigm-shifting program like the Green New Deal. The Green New Deal’s job training, research and development, retrofitting and infrastructure investments, and technology deployment will stimulate and make our economy more resilient and better adapted for the more frequent wildfires, storms, and heat waves we face right now.
Sylvia Chi is a member of Public Bank East Bay and chair of the legislative committee of the California Public Banking Alliance. We’re a coalition of public banking activists in California working to create socially and environmentally responsible city/regional public banks.
Supervisors Endorse ‘Bold’ Public Bank Plan: Momentum builds for a city-run bank as supervisors encourage starry-eyed thinking that could divest $11 billion annual budget away from Wall Street and to local issues. Ida Mojadad, SF Weekly.com, Dec 13th, 2018
After taking months to come up with public bank models criticized for not living up to the full potential, the Treasurer’s Office has a new directive: think big.
Supervisor Malia Cohen urged the department at a hearing on Thursday to not let estimated cost get in the way of brainstorming paths to opening up a city-run bank that can serve the needs of San Francisco by investing in things like affordable housing instead of oil pipelines — and be accountable to taxpayers. Advocates say the banking models presented thus far have not matched what they have called for.
“I’m just not buying that we can’t do it because it’s too expensive,” Cohen said, referring to the city’s $11 billion annual budget, to claps and spirit hands in the chamber. “Good things happen to those who are patient but I just want to make sure that we’re not wasting time spinning wheels.”
Since February, the Treasurer’s Office has guided a 16-member Municipal Bank Task Force through the financial system of big banks that manage city funds and what it would take to establish a public bank, like a state-approved charter and insurance. But at the second-to-last scheduled meeting, it released a draft executive summary with four banking models criticized for not going far enough and delayed the final meeting to January.
The department instead presented three models at the Budget and Finance Committee hearing that would: divest the city’s banking services, hold the city’s short-term cash, and participate in business loans; expand loans to affordable housing and small business loans; or combine the two.
“There’s a healthy tension of thinking big and pushing this thing forward,” said Amanda Fried of the Treasurer’s Office to supervisors. “I think the challenging thing for us is nobody has created a bank from scratch that can immediately operate at a scale we would need it to.”
Despite referencing large start-up costs, the Treasurer’s Office felt it was premature to provide an estimate at the hearing, which Cohen took note of. The outgoing supervisor — who established the task force in 2017 and is heading to the State Board of Equilization— also encouraged the department to reach out to San Francisco’s state representatives like assemblymembers David Chiu, Phil Ting, and Sen. Scott Wiener.
Public commenters took to the mic to add in suggestions to invest in green energy, student loans, and even suggest looking into buying an existing bank. Through it all, the consensus was clear: it’s time to break from Wall Street banks who put money toward disagreeable projects like immigration detention centers and cannot be trusted, especially after the 2008 financial crisis.
Though the task force meetings are open to the public, Thursday’s hearing marks its arrival to a civic forum with a vested interest from city leaders. Supervisors Sandra Lee Fewer and Hillary Ronen have signaled that they will carry on the baton first started in 2011 by former Supervisor John Avalos.
“This is not only sensible, but it’s right,” said Jackie Fielder, a member of activist-run SF Public Bank Coalition, who was pleased with hearing. “We’re very excited to work with supervisors Ronen and Fewer to broaden this discussion.”
Fewer called for a working group that brings together statewide efforts seen in Oakland, Santa Rosa, and Los Angeles. She also expects another hearing once the final report is released in January, and for a fight from big banks to heat up. Jim Lazarus from the Chamber of Commerce sits on the task force and has expressed the most local skepticism thus far.
“There is no social justice without economic power and they know that,” Fewer said. “I think it’s time for a public bank in San Francisco.”