Please ask your Congressemember to sign on in support of the following letter.
As we work to develop bold actions to mitigate the length and depth of the unfolding pandemic, one thing is clear: we cannot go back to business as usual. The lion’s share of federal relief funds are going to big corporations on Wall Street and not working-class and middle-class households on Main Street. We need to ensure that economic responses put people over profits and seek to rebalance deep wealth inequalities, generations of systemic racism, and financial investments that increase our carbon footprint when alternatives are available. The most powerful tool for states and municipalities to provide immediate relief and ensure long-term economic recovery is public banks. Public banks democratize money and finance.
Right now, state and local governments are on the front line in responding to the COVID-19 pandemic, both in terms of making public health decisions and providing for the delivery and financing of key public services, including critical health services. Yet states and localities have limited fiscal resources, even as the federal government directs trillions in assistance to less essential areas of the financial markets. Like any other bank, a public bank can multiply its capital base.
Our request is simple: provide explicit support for the creation of municipal, regional, and state public banks, as follows:
- Allow federal recovery funds to be used as Tier 1 capital as part of the capitalization plan of a public bank.
- Relax collateralization requirements for government funds that are held in a public banking institution.
- Work with the Federal Reserve to expand guaranty programs (e.g. the PPP) to cover qualifying loans that meet community development standards by addressing low- or moderate-income households and reaching businesses, farms, and nonprofit organizations with gross annual revenue less than $2 million.
- Require the Federal Depository Insurance Corporation to create a streamlined process for newly created public banks, should such a bank require FDIC insurance.
Public banks will:
- Help small businesses by lending directly to them, rather than letting large banks choose favorites with larger “small” businesses. Large banks are already prioritizing existing relationships and larger loan requests.
- Partner with community banks and credit unions to increase lending capacity. These banks and credit unions have already been “first responders” in meeting the pressing needs of small businesses in their communities.
- Provide a source of emergency funding for municipal and state governments by purchasing government-issued bonds so that governments do not need to deplete reserves.
- Provide resources for individuals left out of stimulus funding. Municipalities, regions, and states can set aside funds for addressing the pressing needs of taxpayers without an SSN, classified as an employee unable to receive stimulus money, or simply unbanked or underbanked.
- Create a sustainable stream of revenue for emergency funding so we can be better prepared in the future.
The COVID-19 crisis is unlike anything we have seen before and the just and equitable recovery will take years, not months. We need solutions that empower our localities to help our communities now and down the road.
We must empower Main Street NOT Wall Street.