Comments on Banking and the Occupy Movement related to Ellen Brown’s “The Way to Occupy a Bank is to Own One”

By Janet Eaton

It is encouraging  that so many pundits and advocates of  systemic economic and financial change are linking up  with the Occupy Movement and that the Movement has recognized  that challenges and alternatives to the existing private banking system are  crucial.  The Occupy Movement’s call for citizens to transfer their monies from big banks to local credit unions and community banks was a  direct  challenge to the big banks – indeed billions of dollars were transferred in a relatively short period of time.

But  to decentralize banking, to operate at an appropriate scale for democratic participation, to localize investments, to move money back onto main street, the so-called ‘real’ economy and ultimate path to economic equality, demands knowledge and wisdom of visionary and at the same time pragmatic thinkers.  In the US economic thinkers and writers like Ellen Brown [Web of Debt] David Korten [The New Economic Agenda] and Gar Alperovitz [America Beyond Capitalism] are  stepping into the squares with the Occupy groups  to offer insights and strategies.

Ellen Brown who writes extensively about shifting the paradigm from private to public banking in the US discusses the problems with and potential advantages of municipal banks in “The Way to Occupy a Bank is to Own One” noting that San Francisco has now endorsed a plan to establish a municipal bank. She also throws in her oft and  well-articulated  pitch for state banks based on the iconic successes of North Dakota’s.

In Canada  heterodox economists have also been speaking with and sharing ideas with the Occupy Movement. Canadian Auto Workers’ Senior Economist Jim Stanford offered a teach in with Occupy Toronto:  “What Do Banks Actually DO? later  published on the Progressive Economic Forum blog. Here is how he categorized the ‘take aways’ from his talk:
1. What do banks actually DO?  Create credit out of thin air.

2. Were Canadian banks bailed-out?  Absolutely, to the tune of $200 billion.  And they are still protected and subsidized more than any other sector of the economy.

3. What must be done with these banks?  Tax them, control them, and ultimately take them back.

Another Canadian economist,  Marc Lee, writing in the Progressive Economic Forum,  notes  that he too had hung out at the Vancouver Occupation, and in his blog  “Occupation, Democracy and Co-ops” he suggests that the link between the radical democracy of the Occupy Movement and co-ops is straightforward. Co-ops are member-owned and more deeply anchored in the local economy and they are a way of doing business that is not capitalist but democratic.

It is significant that the private banking system,  as  the dominant  cause of the existing financial chaos, has been targeted by the Occupy Movement.  Equally as  important is that the  Occupy Movement has triggered a global conversation that has led to large swaths of the population questioning the entire global economic system.


Ellen Brown Web of Debt

David Korten Agenda for a New Economy:

Gar Alperovitz:

Jim Stanford:

Marc Lee:


The Way to Occupy a Bank is to Own One by Ellen Brown. Nation of Change Website

The campaign to “move your money” has gotten a groundswell of support. Having greater impact would be to “move our money” — move our local government revenues out of Wall Street banks into our own publicly-owned banks.

Occupy Wall Street has been both criticized and applauded for not endorsing any official platform. But there are unofficial platforms, including one titled the 99% Declaration which calls for a “National General Assembly” to convene on July 4, 2012 in Philadelphia. The 99% Declaration seeks everything from reining in the corporate state to ending the Fed to eliminating censorship of the Internet. But none of these demands seems to go to the heart of what prompted Occupiers to camp out on Wall Street in the first place – a corrupt banking system that serves the 1% at the expense of the 99%. To redress that, we need a banking system that serves the 99%.

Occupy San Francisco has now endorsed a plan aimed at doing just that. In a December 1 Wall Street Journal article titled “Occupy Shocker: A Realistic, Actionable Idea,” David Weidner writes:

Protesters in the Bay Area, especially Occupy San Francisco, have something their East Coast neighbors don’t: a realistic plan aimed at the heart of banks. The idea could be expanded nationwide to send a message to a compromised Washington and the financial industry.

It’s called a municipal bank. Simply put, it would transfer the City of San Francisco’s bank accounts—about $2 billion now spread between such banks as Bank of America Corp., UnionBanCal Corp. and Wells Fargo & Co.—into a public bank. That bank would use small local banks to lend to the community.

The public bank concept is not new. It has been proposed before in San Francisco and has a successful 90-year track record in North Dakota. Weidner notes that the state-owned Bank of North Dakota earned taxpayers more than $61 million last year and reported a profit of $57 million in 2008, when Bank of America had a $1.2 billion net loss. The San Francisco bank proposal is sponsored by city supervisor John Avalos, who has been thinking about a municipal bank for several years.

Weidner calls the proposal “the boldest institutional stroke yet against banks targeted by the Occupy movement.”

Responding to the Critics

He acknowledges that it will be an uphill climb. In a follow-up article on December 6th, Weidner wrote:

Of course, there are critics. . . . They argue that public banks would put public money at risk. Would you be surprised to know that most of the critics are bankers?

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That’s why you don’t hear them talking about the $100 billion they lost for the California pension funds in 2008. They don’t talk about the foreclosures that have wrought havoc on communities and tax revenues. They don’t talk about liar loans and what kind of impact that’s had on the economy, employment and the real estate market — not to mention local and state budgets.Risk to the taxpayers remains the chief objection of banker opponents. “There is no need for such lending,” they say. “We already provide loans to any creditworthy applicant who comes to us. Why put taxpayer money at risk, lending for every crackpot scheme that some politician wants to waste taxpayer money on?”

Tom Hagan, who pays taxes in Maine, has a response to that argument. In a December 3rd letter to the editor in the Press Herald (Portland), he maintained there is no need to invest public bank money in risky retail ventures. The money could be saved for infrastructure projects, at least while the public banking model is being proven. The salubrious result could be to cut local infrastructure costs in half. Making his case in conjunction with a Maine turnpike project, he wrote:

Why does Maine pay double for turnpike improvements?

Article image

Improvements are funded by bonds issued by the Maine Turnpike Authority, which collects the principal amounts, then pays the bonds back with interest.Over time, interest payments add up to about the original principal, doubling the cost of turnpike improvements and the tolls that must be collected to pay for them. The interest money is shipped out of state to Wall Street banks.

Why not keep the interest money here in Maine, to the benefit of all Mainers? This could be done by creating a state-owned bank. State funds now deposited in low- or no-interest checking accounts would instead be deposited in the state bank.

Those funds would be used to buy up the authority bonds and municipal bonds issued by the Maine Bond Bank. All of them. Since all interest payments would flow into the state treasury, we would end up paying half what we now pay for our roads, bridges and schools.

North Dakota has profited from a state-owned bank for 90 years. Why not Maine?

The state bank could generate “bank credit” on its books, as all chartered banks are authorized to do. This credit could then be used to buy the bonds. The government’s deposits would not be “spent” but would remain in the government’s account, as safe as they are in Bank of America—arguably more so, since the solvency of the public bank would be guaranteed by the local government.

Critics worry about the profligate risk-taking of politicians, but the trusty civil servants at the Bank of North Dakota insist that they are not politicians; they are bankers. Unlike the Wall Street banks that had to be bailed out by the taxpayers, the Bank of North Dakota invests conservatively. It avoided the derivatives and toxic mortgage-backed securities that precipitated the credit crisis, and it helped the state avoid the crisis by partnering with local banks, helping them with capital and liquidity requirements. As a result, the state has had no bank failures in at least a decade.

With intelligent use of the ever-evolving Internet, truly effective public oversight can minimize any cronyism. California’s pension funds might have avoided losing $100 billion if, instead of gambling in the Wall Street casino, they had invested in infrastructure through the state’s own state bank.

The Constitutional Challenge

In Weidner’s Wall Street Journal article, he raises another argument of opponents—that California law forbids using taxpayer money to make private loans. That, he said, would have to be changed.

The U.S. Supreme Court, however, has held otherwise. In 1920, the constitutional objection was raised in conjunction with the Bank of North Dakota and was rejected both by the Supreme Court of North Dakota and the U.S. Supreme Court. See Green v. Frazier, 253 U. S. 233 (1920), and fuller discussion here.

A municipal bank would be doing with the public’s funds only what Bank of America does now: it would be lending “bank credit” backed by the bank’s capital and deposits. The difference would be that the local community, not Florida or Europe, would get the loans; and the city of San Francisco, not Bank of America, would get the profits.

California and many other states already own infrastructure banks that use the states’ funds to back loans. If that use of public monies is legal, and if public funds can be deposited in Bank of America and used as the basis for loans to multi-national corporations, they can be deposited in the Bank of San Francisco and used as the basis for loans to the local community.

Better yet, they can be used to buy municipal bonds. Investing in municipal bonds would avoid the constitutional issue with “private loans” altogether, since the loans would be to local government.

Sending a Message to Wall Street

The campaign to “move your money” has gotten a groundswell of support, but move your money into what? Weidner repeats the complaint of critics that private credit unions have gotten too big and threaten commercial banking. Having greater impact would be to “move our money”—move our local government revenues out of Wall Street banks into our own publicly-owned banks, which could then generate credit for the local economy and public works.


About janetmeaton10

* Janet M Eaton is an independent researcher, activist, public educator who has taught part-time in several Nova Scotia’s universities most recently at Acadia University in Political Science and Environment and Sustainability. She has served as a consultant to national NGOs , conducted workshops on Paradigms and Paradigm Shifts for provincial and municipal level governments ; has been a leader in the Environment and Peace Movements co-founding a white arm band campaign that went national to try to stop the war on Iraq, was head of Canadian Voice of Women for Peace where she served as a UN rep to the Women’s commission at the UN. She was Sierra Club Canada’s international rep on Water privatization and Corporate Accountability attending the World Social Forum in Brazil. In 2006- 7 she served as Trade Critic in he shadow cabinet of the Green Party of Canada. She is presently the Trade & Environment critic for Sierra Club Canada as well as their rep on the national Trade Justice Network opposing Free Trade Agreements, and Common Frontiers that works in solidarity with South American social democratic countries. She was also a founding board member of the Nova Scotia Food Policy Council. She considers herself a systemic change agent and has recently completed a 12 week intensive online course for "Agents of Conscious Evolution" to become a leader in the field of evolutionary systems theory and is working on a book : Beyond Collapse: Reframing our World. Janet has a PhD in Marine Biology from Dalhousie University but for more than a decade has been involved with the anti-corporate globalization movement and researching and teaching about political and economic failures and alternatives. Before that she worked in the field of Community Education and Community Economic Development at Dalhousie University and before that a number of other things including marine biology. She has two daughters, one an endangered species biologist with Environment Canada and the other an artist and teacher and four grandchildren.
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2 Responses to Comments on Banking and the Occupy Movement related to Ellen Brown’s “The Way to Occupy a Bank is to Own One”

  1. Bill Woollam says:

    I posted a very simple overview of the difference between interest-free, Bank of Canada issued credit to the Canadian Government for the period of 1939 to 1974……and the ‘compounding interest’ loans of privately controlled banking institutions to the Canadian Government from 1974 to 2012. Just google search the title: How the Bankers place a nation in ever increasing debt

    For the years 1939 to 1974, Canadian Government national debt never exceeded 18 billion dollars. Once the private banker-issued credit replaced the Bank of Canada-issued credit, from 1974 to 2012 , the Government debt rose dramatically and steadily to its present one trillion dollar mark.

    Over three fourths of the collected Canadian income tax goes to paying the ‘compounding interest’ charges to the private banks. Little to no interest charges went to paying the earlier Bank of Canada loans, which incidentally subsidized the mega-projects such as the Trans-Canada highway system, the Canadian National railway system, the St. Lawrence Seaway, and later on the Universal Health Care.

    During the period of 1981 to 1995 the Canadian government collected 612 billion dollars in income taxes. During that same period, the Canadian government paid out 412 billion dollars in ‘compounding interest’ charges. During his presidential term, Ronald Reagan stated that 100% of collected income tax in America went to paying off the ‘compounding interest’ charges to the privately controlled Federal Reserve.

    This simple explanation makes it clear why the ‘Nationalized’ Bank of Canada, owned by the taxpayers, is the best method of issuing ‘interest free’ credit to Government. Income tax will eventually be minimized. And the wealth and jobs created by Government-funded, mega-projects will re-circulate throughout every community in Canada.

    • Thank you for your comments and useful overview. I am most supportive of this kind of monetary reform and indeed am following developments in the US [ e.g. AMI , Ellen Brown] and UK [ Positive Money, James Robertson etc] and in Canada where I’m supporting the COMER group in their effort to push the Canadian Government and Bank of Canada to take back and resume this function of issuing ‘interest free’ credit to Government. The kind of simple comparative data you provide is important for educating the public on this imperative issue.

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