The Public Banking Revolution Is Upon Us

As public banking gains momentum across the country, policymakers in California and Washington state are vying to form the nation’s second state-owned bank, following in the footsteps of the highly successful Bank of North Dakota, founded in 1919. The race is close, with state bank bills now passing their first round of hearings in both states’ senates.

In California, the story begins in 2011, when then-Assemblyman Ben Hueso filed his first bill to explore the creation of a state bank. The bill, which was for a blue-ribbon committee to do a feasibility study, sailed through both legislative houses and seemed to be a go. That is, until Gov. Jerry Brown vetoed it, not on grounds that he disapproved of the concept, but because he said we did not need another blue-ribbon committee. The state had a banking committee that could review the matter in-house. Needless to say, nothing was heard of the proposal after that.

So when now-Sen. Hueso filed SB 528 earlier this year, he went straight for setting up a state bank. The details could be worked out during the two to three years it would take to get a master account from the Federal Reserve, by a commission drawn from in-house staff that had access to the data and understood the issues.

Sen. Hueso also went for the low hanging fruit—a proposal to turn an existing state institution, the California Infrastructure and Development Bank (or “IBank”), into a depository bank that could leverage its capital into multiple loans. By turning the $400 million IBank currently has for loans into bank capital, it could lend $4 billion, backed by demand deposits from the local governments that are its clients. The IBank has a 15-year record of success; experienced staff and detailed procedures already in place; low-risk customers, consisting solely of government entities; and low-interest loans for infrastructure and development that are in such high demand that requests are 30 times current capacity.

The time is also right for bringing the bill, as a growing public banking movement is picking up momentum across the U.S. Over 25 public bank bills are currently active, and dozens of groups are promoting the idea. Advocates include a highly motivated generation of young millennials, who are only too aware that the old system is not working for them and a new direction is needed.

Banks now create most of our money supply and need to be made public utilities, following the stellar precedent of the Bank of North Dakota, which makes below-market loans for local communities and businesses while turning a profit for the state. The Bank of North Dakota was founded in 1919 in response to a farmers’ revolt against out-of-state banks that were foreclosing unfairly on their farms. Since then it has evolved into a $7.4 billion bank that is reported to be even more profitable than JPMorgan Chase and Goldman Sachs, although its mandate is not actually to make a profit but simply to serve the interests of local North Dakota communities. Along with hundreds of public banks worldwide, it has demonstrated what can be done by cutting out private shareholders and middlemen and mobilizing public revenues to serve the public interest.

The time is right politically to adopt that model. The newly elected California governor, Gavin Newsom, has expressed strong interest both in a state-owned bank and in the IBank approach. In Los Angeles, the City Council brought a measure for a city-owned bank that won 44% of the vote in November, and City Council President Herb Wesson has stated that the measure will be brought again. Where there is the political will, policymakers generally find a way.

Advocates in eight Golden State cities have formed the California Public Banking Alliance, which co-sponsored another public banking bill filed just last month. Introduced by Assembly Members David Chiu and Miguel Santiago, Assembly Bill 857 would enable the chartering of public banks by local California governments. The bill, which has broad grassroots support, would “authorize the lending of public credit to public banks and authorize public ownership of stock in public banks for the purpose of achieving cost savings, strengthening local economies, supporting community economic development, and addressing infrastructure and housing needs for localities.”

The first hearing on Hueso’s Senate Bill 528 was held in Sacramento last week before the Senate Committee on Governance and Finance, where it passed. The bill goes next to the Senate Banking Committee. With momentum growing, California could be the first state in the 21st century to form its own bank; but it is getting heavy competition in that race from Washington State.

Washington’s Public Bank Movement: The Virtues of Persistence

Like Sen. Hueso, Washington State Sen. Bob Hasegawa filed his first bill for a state-owned bank nearly a decade ago. The measure is now in its fifth iteration. Along the way, his Senate State Banking Caucus has acquired 23 members, just three votes short of a senate majority.

As Sen. Patty Kuderer explained at an informational forum held by the Caucus in October, their bills kept getting stalled with the same questions and concerns, and they saw that a different approach was needed; so in 2017, they advised the state to hire professional banking consultants to address the concerns and to draft a business plan that would “move the concept forward from the theoretical to the concrete, so that legislators would have a solid idea of what they would eventually be voting on.” They could bypass the studies and go straight to a business plan that laid out the nuts and bolts.

The maneuver worked. Senate Bill 6375 was the first public banking bill to be advanced out of the Policy Committee with bipartisan support. It got stalled in the Ways and Means Committee, but another bill, SB 5959, was filed this year. In yet another bill, SB 6032-Supplemental Budget, the fiscal Ways and Means committee committed $480,000 to assessing risk and developing a business plan for the effort.

The form of the proposed bank was also modified: a bank that simply would have received the state’s tax funds as deposits evolved into a “co-op” that would be open to membership not just by the state but by all “political subdivisions that have a tax base.” Opening the co-op bank’s membership would allow it to generate substantially more credit than could be made from the state’s revenues alone, since it would have the ability to hold as deposits the combined revenues of cities, counties, ports and utility districts, as well as of the state itself. Those entities would also be able to borrow at below-market rates from the co-op bank and to leverage the tax dollars they collected. The concept was similar to that being advanced in California’s SB 528, which would allow the IBank to expand its lending capacity to local governments by taking the demand deposits of those same governments and affiliated public entities.

The Washington State business plan is due no later than June 30, 2019, and legislators expect to vote on the bill no later than 2020.

Whenever it happens, says Sen. Hasegawa, “I see a public bank as almost inevitable because of the current financial structures we’re required to live under.” State infrastructure needs are huge, and the existing funding options—raising taxes, cutting services and increasing debt levels—have been exhausted. Newly-created credit directed into local communities by publicly-owned banks can provide the additional funding that local governments critically need.

Whichever state wins the race for the next state bank, the implications are huge. A century after the very successful Bank of North Dakota proved the model, the time has finally come to apply it across the country.


This article was first published on Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including Web of Debt and The Public Bank Solution. A 13th book titled Banking on the People: Democratizing Finance in the Digital Age is due out soon. She also co-hosts a radio program on PRN.FM called “It’s Our Money.” Her 300+ blog articles are posted at

19 Responses

  1. Star or community development banks dealing wit infrastructure , industry, agriculture, can be of significance ONLY if tied togeher by a National Bank that can coordinate a process of National necessities that comes to existence along with the Glass Steagall legislation. , Anything short of that will not work as Hamilton proposed, but fall back into the trap of a British wall street type speculative system. Nothing visionary in local schemes.

  2. […] gains momentum across the country, policymakers in California and Washington state are vying to form the nation’s second state-owned bank, following in the footsteps of the highly successful Bank […]

  3. Dear Ellen,

    Have a Happy Easter!

    I am so glad that your initiative is gaining traction.

    Keep up your good work.

    You be well!

    Always your friend, Reed Kinney

    El 4/18/2019 a las 3:18 PM, WEB OF DEBT BLOG escribió: > > Ellen Brown posted: “As public banking gains momentum across the > country, policymakers in California and Washington state are vying to > form the nation’s second state-owned bank, following in the footsteps > of the highly successful Bank of North Dakota, founded in 1919. The rac” >

  4. […] via The Public Banking Revolution Is Upon Us — WEB OF DEBT BLOG […]

  5. […] The Public Banking Revolution Is Upon Us […]

  6. Californias Public Bank ids the best news I’ve heard in a sea of ecological despair. Interest payments drive ecocide, exploitation and gouging. returning any interest to the public will create much real wealth and public joy. Love
    Liz Elliott, Australia

    • Thanks Liz! Agreed there is a huge amount of negativity around, but much of it is pushback from an increasingly desperate dinosaur system fighting to maintain its turf against the encroachments of an increasingly enlightened public. We’re on the winning team! (as I read in some inspirational book).

  7. […] Ellen Brown, one of the key foremothers of the public banking movement, saying “The Public Banking Revolution Is Upon Us.” Most of her article is about SB 528, a bill to transform California’s state […]

  8. Not quite a revolution yet, but I’m happy to hear politicians spearheading State Banks.

    It’s shocking how little public awareness there is over this simple, yet profound shift that will lead to revolutionary change.

    Thanks for doing the good work Ellen.

  9. Nice article, but dig deeper…

    Take a look at the largest institutional owners of Facebook:

    Now, take a look at the largest institutional shareholders & investors of those backing FB’s Libre.

    It’s one huge cartel.
    Even those corporate backers that are privately owned, are part of the larger cabal of money management & investment firms, led primarily by Vanguard, BlackRock & State Street, Fidelity, et al., but joined by others.

    These money management & investment firms, which have become the largest concentrated owners of the largest “competing” companies, in most every single industry, also exist as the largest shareholders/investors of each other.

    Check SEC 13f forms for proof.

    People are so busily distracted over the FB narrative of this story that they remain most completely ignorant to the true underlying facts.

    Neither FB, nor Zuck, nor Amazon nor Bezos exist as sovereigns.
    Their total wealth is less than 10% of their company’s total valuation.

    It’s their largest shareholders whom maintain true control.
    These billionaire CEO’s exist to continue sending more profits upwards.

    Enter the push for their control of digital currencies.

    The Fed exists as a creation of the largest banks, which are similarly owned by the same core firms.

    Libre won’t exist to bypass that controlled system, but further support it.

    In fact, the Fed (along with the Treasury, the DEA, FBI, CIA, Secret Service, IRS, etc.) have been some of the largest proponents of a global digital currency.

    Libre is just a continuation of the neo-feudal, new American Planned Market Economy.
    It’s the act of eliminating any potential rogue currencies.

    This in conjunction with the growing surveillance state.

    There is already a growing list of companies that exist solely for the commercial purpose of extrapolating currency use data of consets for big businesses.

    Every single aspect of our lives will be constantly tracked.

    You would serve your readers best by bypassing the propagandist/distractionary narrative & outline the true facts, as highlighted herein.

  10. […] institute public banking whereupon , with low or non profit, the consumer will save immeasurably. The Public Banking Revolution Is Upon Us by Ellen […]

  11. […] public banking whereupon, with low or non profit, the consumer will save immeasurably. (Read The Public Banking Revolution Is Upon Us by Ellen […]

  12. […] Whichever state wins the race for the next state bank, the implications are huge. A century after the very successful Bank of North Dakota proved the model, the time has finally come to apply it across the country. [Source] […]

  13. […] Ellen Brown, monetary reform author, discusses how the nationalised public state bank of North Dakota works well Banks now create most of our money supply and need to be made public utilities, following the stella…. […]

  14. […] For those who disagree—and apparently think that “money multipliers” are pure fiction, inflation passively erupts out of nowhere, the $75.5 trillion in total U.S. debt as of 4Q 2019 involved no bank counterfeiting whatsoever and/or that huge debt bubble is somehow caused entirely by the Federal Reserve’s $4.2 trillion balance sheet at that same period—you’re welcome to continue building your happy monetary sandcastles while the tide is still out. The tsunami of federal and personal debt may just vanish, as some insist, when the next monetary wizard waves his or her stimulus wand and utters an incantation about “public banking.” […]

  15. […] Pour ceux qui ne sont pas d’accord – et pensent apparemment que les « multiplicateurs d’argent » sont de la pure fiction, l’  inflation  éclate passivement de nulle part, les  75 500 milliards de dollars de dette totale des États-Unis  au 4T 2019 n’impliquaient aucune contrefaçon bancaire   et / ou cette énorme bulle de la dette est en quelque sorte causée entièrement par le  bilan de 4,2 billions de dollars de la Réserve fédérale  à la même période – vous êtes les bienvenus pour continuer à construire vos joyeux châteaux de sable monétaires pendant que la marée est toujours éteinte. Le tsunami de la dette fédérale et personnelle peut tout simplement disparaître, comme certains insistent, lorsque le prochain sorcier monétaire agite sa baguette de relance et prononce une incantation sur la « banque publique ». […]

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