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State Owned Bank of NJ
ProgressiveDemocrats
of
America
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Return to Prosperity Joint Project
Public Banking Institute
Nonprofit, educational
Disseminating factualinfo
Bipartisan Help U.S. states - SOB
Move Your Money
Non-profit
Divest from large WallSt banks
Establish State Banks
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Current Situation
State and local governments
Deposit public funds in natl private banks.
Current financial debacle
Curtailed credit availability
Record profits
Divert investment to special interests
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American TARP Bail-Outs
Washington Bets on Big Banks
B of A - $45 billion cut 32,000 U.S. jobs
Citigroup - $45 billion cut 51,175 U.S. jobs
JPMorgan-Chase - $25 billion cut 14,000 jobs
while expanding overseas operations
U.S.Bank $6.6 billion while expanding in Europe
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Current Situation - Budget Deficits
Massive Unemployment
Raise taxes
Sell off public assets
Cut services to citizens
Lay-off public workers
Lower standard of living
Reduce government pensions, Medicare,Medicaid, and Social
Security
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Vision
Local and state government banks
Public funds deposited in state banks
Loaned to small, local banks
Earn interest on public funds loaned out
Support local banks, not Wall Street banks
Purchase local loans from small banks
Invest in local businesses Create local jobs
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Understanding Public Banking
Public Bank is formed by using public assets tocapitalize
itself
Using public funds to create the bank and its services
Deposits consist of public tax revenues and rainy-dayfunds
Sales, income, and state and local fees are deposited
No retail branches, no ATM, no/limited private deposits
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State Banks contd
Not a substitute for an investment manager
Pays the treasury a market-average rate for its deposits
Lower overhead (no local branches, ATM, advertising, etc.)
Provide for small, local banks which support local growth
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Logical Solution
Restore credit to local economy
Create local liquidity
Build local and state independence From Wall Street Big Banks
(Bank of America,
Wells Fargo, JPMOrgan Chase, Citigroup andPNC)
To local banks and credit unions
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Example: Bank of North Dakota
Established in 1919 by local farmers
Bi-partisan group
Credit markets work for states economy Strongly backed by local
banking industry
Independent audits
Risk management reductions Loan lossreserves (allowance was 1.79
in 2010compared to 2.03 for similar size banks)
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State Bank a.k.a. Partnership Bank a.k.a.
Development Bank a.k.a. Partnership Bank
Services can be provided such as:
Participation loans loan money to local banks thatinvest in
local businesses
Direct bank stock loaning provide capital to privatebanks for
mergers, acquisitions, capital refinancing,expansions
Infrastructure funding
Bankers bank function
Source of liquidity for Economic Development Programs
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Costs?
No minimum $ needed to start Transition stage needed to
balance
capital requirements with loan requests
This transition period is likely 2-3 years
Many safe-guards in place to protect bankAudits, credit reviews,
lending limits, oversight
State bank supports, does not compete
with local banks No competing for loans or deposits
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How about political interest?
Professional banking staff, not aneconomic development
agency
Public-private partnership= govt & citizen
No increased regulations on private banks
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How do Banks Work?
Based on Trust
FDIC deposit insurance
Uses deposits as loans to support economy
$ loaned is balanced by Fed. Reserve requirements Commerical
Banks business banks
Thrift Institutes Saving & Loans, Credit Unions
Savings Banks Low income workers savings banks
State vs. Federal Charters
Organizing Group
Holding Company Holds 25% of Bank stock
Application
Detailed business plan
H t G t St t d
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How to Get Started
Coordinated Message MORE for NJ
Determination to change Public Policy
Key Message for Specific Audiences
Detailed Evidence
publicbankinginstitute.org for Public Banking in
AmericaLegislative Guide
Share information at [email protected]
N.J. State Banking Coordinator is Laura Orriols
No website, Facebook, or petition yet posted
http://www.publicbankinginstitute.org/mailto:[email protected]:[email protected]://www.publicbankinginstitute.org/
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Starting, contd
Talk with City Council and School Board
Draft a resolution
Enlist members of small business community members
Find a local community banker Build awareness
Educate others
Check with other states Oregon, Washington,
Massachusetts, Maryland, Illinios, Virginia, Hawaii,
andLouisiana who have legislation pending
