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Occupy Wall Street Calls for a Public Banking Option

October 22, 2011

Sustainable Finance: by Reynard Loki, of

One of the demands floating around the Occupy Wall Street protest movement has been a call for a public banking option. In an October 8 interview on the Real News Network, Dr. Michael Hudson, a professor of economics at the University of Missouri-Kansas City, explains this demand:

“The demand isn’t simply to make a public bank but to treat the banks generally as a public utility, just as you treat electric companies as a public utility. The key about public utilities is their rate of return is guaranteed and the rules which they operate under are guaranteed. Just as there was pressure for a public option in health care, there should be a public option in banking. There should be a government bank that offers credit card rates without punitive 30 percent interest rates, without penalties, without raising the rate if you don’t pay your electric bill. This is how America got strong in the 19th and early 20th century, by essentially having public infrastructure, just like you’d have roads and bridges…The idea of public infrastructure was to lower the cost of living and to lower the cost of doing business. You’re not going to do that if you let Citibank write the rules.”[2]

Ellen Brown, the president of the non-profit Public Banking Institute writes, “We don’t hear much about a public banking option in the United States, but a number of countries already have a resilient public banking sector…the model remains a viable alternative to the private profiteering being protested on Wall Street today.”[3]

America’s only state-run bank is the Bank of North Dakota, which was originally set up to provide loans to farmers. Unsurprisingly, this bank has been getting a lot of national attention of late. As of August 2011, North Dakota has the country’s lowest unemployment rate at 3.5 percent — the only state below 4 percent (Nebraska comes in second place at 4.2 percent).[4] Brown notes that North Dakota is the only state to have had a continuous budget surplus since the banking crisis began.


[1] Tolle, Eckhart. A New Earth: Awakening to Your Life’s Purpose.London: Penguin Books, 2008, p. 20.
[5] Brown, Ellen Hodgson and Reed Simpson. Web of debt: the shocking truth about our money system and how we can break free.Baton Rouge: Third Millennium Press, 2007, p. 76.
[7] Ibid.

(read the article)


This is a well-written article that reviews several options. After studying the situation for some time I reached the same conclusion that the author, and I believe Ellen Brown did, that the best immediate course of action is to introduce more alternative public banks issuing debt-free/and or low interest funds, by spending it into the economy. As you state, countries that adopted the mixed model have weathered the international crisis fairly well.

According to what I understand from Ellen, one of the one of the major flaws in the current US Fed system is that all US money is created out of debt through banks loans, and there is not enough money in the system to pay the interest on those loans. Hence the high debt rate. We need some way of creating debt-free money to solve that problem. The beauty of establishing state or local public banks is that the process is not reliant on Washington politicians.

They can play the Fed game, while Local governments moving their money out of the big banks into their own state-chartered banks, where they can:

  1. Avoid bank fees and climbing interests
  2. Invest and spend locally, instead of sending funds out of state.
  3. Offer better banking services to their constituents, creating competition with the big banks.
  4. Partner with local state chartered banks and co-ops, strengthening them.

All of which could change the way big banks do business, without a single Congressional action.


2 Comments leave one →
  1. November 21, 2011 9:50 am

    Public money and massive forgiveness can be very effective ways to economic recovery!
    Economic recovery through the Bi-partisan Super Committee charged with finding $1.2 trillion in savings over ten years or through automatic cuts kicking in by default, can have only one result: reduced availability of jobs, which will have as a consequence more bankruptcies, more foreclosures, and more people on the street. This does not need to happen in these United States! The Super Committee is caught between a rock and a hard place! That is, between making the cuts or having the cuts made for them. Either way, we the people lose.
    The people’s losing really started on December 23, 1913 when Congress allowed a “fourth branch” of government to come into existence to control the contraction and expansion of the money supply that had been emphatically delegated to Congress in the 1776 Constitution. Congress was told then by Senator Nelson Aldrich of Rhode Island that making up this “fourth branch” of the government would end depressions! The private bankers/banks and legislators who established this “fourth branch” called their creation the “Federal Reserve”, a central bank for the United States.
    This creature has become more powerful than its creator. Its stated goal was to be the lender of last resort and its remedy is bailouts based on the government’s ability to tax the people. The private bankers/banks and legislators have used the monetary power and influence of the Federal Reserve very well. Instead of the U.S. Treasury creating public money for the people, Congress continually borrows money from the private Federal Reserve, and instead of paying back the money it borrows, Congress services an ever-increasing debt. This over time has unjustly enriched the private banking cartel at the expense of the people, with social services having to be cut in order to service the debt.
    To most of today’s working public, a decision on fiscal austerity seems like the right thing to do. In reality, the paradox of thrift comes into play when there is a weak economy. Weak economies only come about because of lack of money. In a healthy economy, people have money and spend that money on new goods and services. If people overspend, they incur debt, and end up having to service debt instead of spending their money. Likewise, the government has incurred and is having to service exorbitant debt. An overpaying of debt slows down an economy.
    What can Congress do?
    Congress can demand that the U.S. Treasury issue public money for the people. In this way, money is issued vs. borrowed into existence!
    The Constitution gives Congress the power to coin money and regulate its value, and no limitation is put on the value of the coins it creates. The entire national debt could be extinguished with coins minted by the U.S. Mint, stamped with the appropriate face value. From my study and research, indications have it that a simple, efficient and a wide circulation of non-borrowed or public money can create a healthy, vibrant economy!
    A way to relieve the people of overburdened debt is through a Jubilee, which throughout history resulted in the forgiveness of all debts in order to bring back into balance a healthy economic system. Eliminating people’s debt will free up dollars for the purchase of goods and services, which will stimulate the economy. Our current economic system has gotten out of balance through a non-transparent, unregulated mortgage fiasco.

    Mortgages have been traded on Wall Street as stock, created through a securitization process of the loans of approximately 62 million homeowners in the United States. It has recently been discovered that this securitization process did not follow proper procedure, which, according to two Supreme Court decisions in Massachusetts, has clouded the original titles of the homeowners’ mortgages. This means that the current homeowners of homes may not have clear title to the home they are living in.

    I say, just give the homes to them…Clear the titles and start fresh!

    An effective way forward is debt forgiveness! Austerity cannot work as that will result in decreased demand in goods and services and spending will devalue the dollar even more. With the money freed up by the debt forgiveness bill H01193, everyone in Massachusetts can have a FREE home. Hey, why not?

    David Snieckus
    99 Crescent Street
    Newton, MA 02466

    David Snieckus of Auburndale, a village of Newton, MA, introduced his Jubilee Act, H01193 through Representative Kay Khan on November 10, 2011 at the State House hearing by the Joint Committee on Financial Services


  2. November 21, 2011 9:44 pm

    A very well thought out reply. Thanks.


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