Priya Patel
TLDR:
– The current banking and financial system needs to be transformed to end plutocracy and restore democracy.
– Public banking, where banks are owned by the people, is gaining momentum as a way to democratize finance.
To Democratize Finance, We Must Take the Banks Away From the Bankers
Progressive economist Gerald Epstein highlights the need for changes beyond regulation in the financial system to create a system that works for everyone. Public banking, where banks have a public mission and are not profit-driven, offers numerous advantages:
- Provides affordable banking services to underserved communities
- Invests in social goods like affordable housing
- Promotes environmental sustainability
- Reduces dependence on large, speculative mega banks
- Offers cheaper basic financial services due to lack of pressure for maximum profits
- Contributes to community development and economic stability
Challenges facing public banking efforts include opposition from major private banking institutions, lack of public awareness, political obstacles, and logistical hurdles such as acquiring initial capital. However, progress is being made, with initiatives like the New Jersey Public Bank Implementation Board submitting a blueprint for a public bank to the governor.
Public banks like the Bank of North Dakota operate on a partnership model, lending to smaller banks and underserved borrowers. While public banks may not significantly reduce reliance on Wall Street, federal legislation like the Public Banking Act could provide support for their establishment and success.
The Federal Reserve, as the most powerful public bank in the U.S., has the potential to play a crucial role in economic development and climate action. However, challenges from the Bankers’ Club hinder its transformation. To enhance the prospect of financial and social restructuring, a combination of reform and revolution is needed, focusing on weakening the Bankers’ Club and protecting democracy.
