As one
speaker pointed out to Council members, public banks can buy or refinance
municipal bond issues at interest rates below market; or a public bank can
offer a low interest loan to municipal governments and agencies in place of
bond issues. In either case, public debt is reduced and whatever interest the
public bank charges comes back to the people into their own bank, to be put to
use in the local economy.
Last year the BND provided a low interest, $48 million loan to a local school district for new construction. And the bank is consolidating all student loans in the state from whatever lender, public or private, at reduced interest and longer payment terms for students.
Additionally,
the public bank can hold Philadelphia's municipal deposits and provide banking
services to the city at far less cost than the Wall Street banks that now hold the
city's deposits. A study for Los Angeles City Council reports that the annual
savings could fund its entire annual budget for street paving and maintenance.
Neighborhood
Networks Vice Chair, Stan Shapiro cited a litany of Wall Street abuses that, he
said, "cost Philadelphia hundreds of millions of dollars," and said that the
city's money is safer in its own bank than on Wall Steet, where it is at risk
of confiscation in a "bail in" in the event f another Wall Street crash.
Pennsylvania
Project Director, Frank Nuessle told the hearing, "For decades, state and
municipal governments have met budget shortfalls with the same old tools: cut
public services, lay off and add to unemployment, seek employee givebacks,
raise taxes or take on more debt."
He
said, "A public bank offers a game changing alternative, a new tool
to deal with public finances, a tool that adds to and does not subtract from
the prosperity of the people."
One supporter observed, "City Council has set Philadelphia on a new course. The first American Revolution was launched in Philadelphia. Why not the second?"
At
the conclusion of the meeting, Councilman-at-large Derek Green, a sponsor of
the original public bank resolution, announced that he would "convene the
working group which planned the hearings, to work out the next steps."
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