Banking
The establishment of a Municipal Public Bank will be revolutionary to the health and well-being of the Portland community.
A Municipal Public Bank would provide a depository for Portland revenue. Currently, because public money must be collateralized (backed by liquid cash), the only institutions that have that kind of liquidity are the big banks, i.e., Wells Fargo, which is currently the bank of choice for Portland.
More importantly, the city of Portland currently uses Wall Street to issue bonds which are necessary to
provide capital to fund public utilities, schools and retirement. The city currently owes Wall Street $3,512,570,016 in principal with interest and fees equaling $1,580,721,573. The percentage of interest and fees is 43.8%. The 2018 debt service payment will be 469,044,992.
A Portland Municipal Bank could provide capital at a marginal interest of 4% without huge Wall Street interest, fees and legal expenses. That is a revolutionary change in public finance that can release capital from the burden of Wall Street debt. This will dramatically affect the capacity for Portland to fund schools, housing and community health.
Capital is at the center of all controversy. Banking is at the center of all capital.
Banks provide loans in the form of a credit that is backed by the full faith and credit of the Federal Reserve, which is the United States central bank. Those loans do not use deposits they simply provide an "IOU" credit to the borrower. The borrower then deposits that credit in his bank, creating capital that was not there before the transaction. This creation of capital from "thin air" is the magic of banking. Banks have been creating capital in this way for centuries.
The Federal Reserve does provide a constraint on banks that requires a minimum deposit of 10% of the loaned capital. This reserve requirement combined with the magic of banking allows banks to loan up to ten times that of its required reserves.
Currently, the ending balances of Portland accounts provide capital which is invested in Federal Bonds, Corporate Bonds and Corporate entities. That investment amounts to one billion dollars and returns less than 1%. If that investment were instead to provide capital to a municipal public bank then the subsequent investment in the community could amount to ten billion dollars using the magic of banking referred to earlier. The impact of that investment is three times what is currently owed to Wall Street.
This capital investment would have the full faith and credit of the Portland Municipality behind it, which substantially reduces risk, cost and eliminates corruption.
So, there is an expression that comes to mind, "a no brainer", do you know that expression?
This is not a partisan issue, this is about money. I have never met anyone whose well-being is not affected by money.
Would you be the first?