By Kurtis Wu of SF Defund DAPL and the SF Public Bank Coalition. Kurtis is also a part time employee at OpenInvest.
A year ago today the SF Defund Dakota Access Pipeline (DAPL) Coalition pushed the San Francisco Board of Supervisors (equivalent to a city council) to pass a resolution that would divest San Francisco from the financial institutions funding the Dakota Access Pipeline (DAPL).
But the victory was short lived when the City discovered that it couldn’t divest because there was no alternative institution that could manage the huge investments of a major US city. Unfortunately, most of the big banks invest in the DAPL, and credit unions, a good alternative for regular folks, simply do not have the capacity or infrastructure to handle billions of dollar in cash flows of major cities. Other major cities that originally celebrated divestment were running into the same issue: where do we put the money?
The answer: a public bank.
A public bank is a financial institution owned by a public entity like a state or city. Unlike private banks that are owned by shareholders and operate simply to maximize profits, public banks only need to earn enough to cover their costs, and the rest can be reinvested back into the community. Instead of being beholden to profit focused shareholders, the bank answers to the community and the local government.
A public bank allows cities or states to have more control and transparency into where their money is going. A “San Francisco Public Bank” could free up more capital to invest in things like affordable housing, homeless shelters, renewable energy, schools, and public transit. In fact, a recent report concluded that “a public bank would be better equipped to meet the city’s business needs and policy goals” than private banks do.
Currently there is no transparency or accountability with Wall Street banks. San Francisco has an approximate $10 billion dollar budget that is managed by Bank of America and CitiBank. Not only do these banks charge the city high transaction fees, they simply invest in things that do not align with San Francisco values, such as fossil fuel companies, gun manufacturers, private prisons, and tobacco.
Report from the San Francisco Budget and Legislative Analyst Office
Above is a chart showing how some of the biggest banks invest their assets. For example, between 2014-2016 CitiBank poured $13 billion into companies that extract ‘extreme’ fossil fuels (those that have particular high impacts, such as fracking). Bank of America provided a $40 million line of credit to Ruger Firearms, a gun manufacturer, and $138 million in bonds to Core Civic and Geo Group, two of the largest private prison companies in the country. Both banks invest in the Dakota Access Pipeline that violated indigenous and human rights at Standing Rock.
But it doesn’t have to be this way. Cities across the country are now exploring the idea of public banks, a direct result of the indigenous led movement borne from Standing Rock. Standing Rock sparked a movement that could potentially reshape the greater financial system.
The big banks have only become more concentrated and bigger. If our federal government can’t break up the big banks than local cities and states may very well do it for them. This is part of the growing and changing culture of finance, driven by new eras of activism. Neighborly, Beneficial State Bank and New Resource Bank are some examples of business that are reshaping the landscape of finance.
Activist and leader Jackie Fielder speaking at San Francisco City Hall
Want to get involved and take action yourself? Here are three ways you can support public banks.
- Divest yourself. The best way to start supporting divestment in your community is with your own bank. The big banks do not make it easy to switch so use this toolkit to find the your local credit union or mission driven bank. If you have an investment account you can use OpenInvest to divest from the big banks, fossil fuels producers and other undesirables in your portfolio.
- Organize to divest your city. Find out if there is already a group organizing to divest your city. If not, you can use this toolkit to start one.
- Learn more about public banking. Most people do not understand how a private bank works, let alone a public one. Here are a couple resources so you can better understand how a public bank would work.