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An idea whose time has long since come

I read about this several years ago, and unless my aging mind is letting me down, I wrote a post or two about it, at or around the time when the bankers destroyed the economy:

Across the country, community activists, mayors, city council members, and more are waking up to the power and the promise of public banks. Such banks are established and controlled by cities or states, rather than private interests. They collect deposits from government entities—from school districts, from city tax receipts, from state infrastructure funds—and use that money to issue loans and support public priorities.

They are led by independent professionals but accountable to elected officials. Public banks are a way, supporters say, to build local wealth and resist the market’s predatory predilections. They are a way to end municipal reliance on Wall Street institutions, with their high fees, their scandal-ridden track records, and their vile investments in private prisons and pipelines. They are a way, at long last, to manage money in the public interest.

via Daily Kos, quoting the Nation

Basic banking is a lot like insurance. The basic rules are well known. The government does insurance far better, at lesser cost, than the private sector. The only innovations that takes place in either sector are methods for soaking more money from the customer while providing less service. In the case of insurance companies, it’s ever more clever ways of refusing to provide coverage. In the case of banks, it’s ever more multiplying ways of extracting excessive fees for what should be basic services. I’m old enough to remember the olden days before ATMs and debit cards. Back then, you went into a bank to cash a check: cost zero. If a merchant took your check the cost to the merchant of depositing your check and getting your money was zero. Now, if you use an ATM, there is no teller for the bank to pay, yet the bankers have combined to, in most instances, extract a fee from you for accessing your money. Their costs have gone down, but their fees have gone up. When you use a debit card you are paying a hidden tax of several percent to your bank, which extracts it from the merchant, who, of course, passes it on to you. My (soon to be former) bank just started charging me $10.00 a month to maintain my checking account, while it pays me as close to 0% on my savings as it can get. It is passing strange that I am paying my bank to borrow my money, for that, when all is said and done, is what banks do: borrow their depositor’s money.

This isn’t a new idea. I believe one of the red states (Nebraska or one of the Dakotas) has a state bank chartered long before the state turned red. People once were able to do their banking at the post office; a system that worked well. 

Unfortunately, I can predict the future on this one. If the movement grows, the state legislatures, particularly in the gerrymandered red states, will step in and forbid towns and cities from forming banks. It’s the same pattern that we saw when municipalities tried creating reasonably priced internet providers or public wireless. Can’t have that sort of thing, when your overriding concern is funneling money into the pockets of the rich.

Still, there’s always hope.

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