From: AlterNet
By Ellen Brown
By Ellen Brown
 |
| Photo Credit: Shutterstock.com |
When the Occupiers took an interest in
moving San Francisco’s money into a city-owned bank in 2011, it was
chiefly on principle, in sympathy with the nationwide Move Your Money
campaign. But recent scandals have transformed the move from a
political statement into a matter of protecting the city’s deposits
and reducing its debt burden. The chief roadblock to forming a
municipal bank has been the concern that it was not allowed under
state law, but a legal opinion issued by Deputy City Attorney Thomas
J. Owen has now overcome that obstacle.
Establishing a
city-owned San Francisco Bank is not a new idea. According to City
Supervisor John Avalos, speaking at the Public Banking Institute
conference in San Rafael in June, it has been on the table for over a
decade. Recent interest was spurred by the Occupy movement, which
adopted the proposal after Avalos presented it to an enthusiastic
group of over 1000 protesters outside the Bank of America building in
late 2011. David Weidner, writing in the Wall Street Journal in
December of that year, called it “the boldest institutional stroke
yet against banks targeted by the Occupy movement.” But Weidner
conceded that:
Creating a municipal bank won’t be easy.
California law forbids using taxpayer money to make private loans.
That would have to be changed. Critics also argue that San Francisco
could be putting taxpayer money at risk.
The law in question
was California Government Code Section 23007, which prohibits a
county from “giv[ing] or loan[ing] its credit to or in aid of any
person or corporation.” The section has been interpreted as barring
cities and counties from establishing municipal banks. But Deputy
City Attorney Thomas J. Owen has now put that issue to rest in a
written memorandum dated June 21, 2013, in which he states:
1.
A court would likely conclude that Section 23007 does not cover San
Francisco because the City is a chartered city and county. Similarly,
a court would likely conclude that Article XVI, section 6 of the
State Constitution, which limits the power of the State Legislature
to give or lend the credit of cities or counties, does not apply to
the City. . . . [A] court would likely then determine that neither
those laws nor the general limitations on expending City funds for a
municipal purpose bar the City from establishing a municipal
bank.
2. A court would likely conclude that the City may own
stock in a municipal bank and spend City money to support the bank’s
operation, if the City appropriated funds for that purpose and the
operation of the bank served a legitimate municipal purpose.
A
number of other California cities that have explored forming their
own banks are also affected by this opinion. As of June 2008, 112
of California’s 478 cities are charter cities, including not
only San Francisco but Los Angeles, Richmond, Oakland and Berkeley. A
charter city is one governed by its own charter document rather than
by local, state or national laws.
Which is Riskier, a Public
Bank or a Wall Street Bank?
That leaves the question whether a
publicly-owned bank would put taxpayer money at risk. The Bank of
North Dakota, the nation’s only state-owned bank, has posed no risk
to depositors or the state’s taxpayers in nearly a century of
successful operation. Further, in this latest recession it has helped
the state achieve a nationwide low in unemployment (3.2%) and the
only budget surplus in the country.
Meanwhile, the recent wave
of bank scandals has shifted the focus to whether local
governments can afford to risk keeping their funds in Wall Street
banks.
No comments:
Post a Comment