Los Angeles Measure B: Public Bank for the City
by Michael Novick, Anti-Racist Action-L.A.
httpss://ara-la.tumblr.com/post/179467863760/public-bank-for-los-angeles
LA City voters have an opportunity to strike a blow against financialized monopoly capitalism by authorizing the creation of a public bank on the November 6 ballot. The City Charter currently prevents such a measure, which is being considered by a number of other municipalities and states (only North Dakota currently has a full state public bank).
If Measure “B” is adopted, it will send a strong signal to office holders around the country that people are sick and tired of being bled dry by banks in fees and interest on local and state bonds for needed infrastructure.
According to public bank advocate Ellen Brown, writing on her Blog and Truthdig, “Despite having slashed spending in the wake of revenue losses from the Wall Street-engineered financial crisis, LA is still being crushed by Wall Street financial fees, to the tune of nearly $300 million just in 2014. The savings in fees alone from cutting out Wall Street middlemen could thus be considerable, and substantially more could be saved in interest payments. These savings could then be applied to other city needs, including for affordable housing, transportation, schools, and other infrastructure.
“In 2017, LA paid $1.1 billion in interest to bondholders, constituting the wealthiest 5% of the population. Refinancing that debt at just 1% below its current rate could save up to 25% on the cost of infrastructure, half the cost of which is typically financing. Consider, for example, Proposition 68, a water bond passed by California voters last summer. Although it was billed as a $4 billion bond, the total outlay over 40 years at 4 percent will actually be $8 billion. Refinancing the bond at 3 percent (the below-market rate charged by the California Infrastructure and Development Bank) would save taxpayers nearly $2 billion on the overall cost of the bond.”
The city of Los Angeles has pots of money sitting around in various commercial bank accounts, earning almost no interest. The city could consolidate those funds in its own bank and use the money as the basis to issue much larger loans (at a more nominal interest rate) just as other commercial banks do (but minus the costly fees). The vast amount of “money” in circulation under financialized monopoly capitalism is not currency printed by the government, but loans created by banks out of thin air based on a low percentage of “reserve requirements” that are used to back a much larger amount of outstanding debt. The loans are used to finance construction projects and other commercial operations. By eliminating the Wall Street middlemen, the city would be in a position to save tens of millions in taxpayer funds. The city is already involved in substantial operations (including the Department of Water and Power, LAX and the Port of Los Angeles — income generated from these sources could also be deposited in a public bank).
The local airwaves are saturated with (mostly negative) political ads about various Congressional candidates and several statewide ballot measures, such as Props. 6 (repealing the gas tax that pays for roads and public transit), 8 (regulating for-profit dialysis centers) and 10 (repealing the state ban on cities adopting full rent control on apartments and houses built in the last 20 years). But little attention has been paid to this local measure that could have big repercussions not only in L.A. but around the US.
