State of banks

Gwendolyn Hallsmith was fired from her position as Montpelier Planning and Community Development Director after 18 days on paid leave. The planning director evaluates economic policies that will impact the city. Hallsmith spent much time doing similar work as a private citizen with public banking programs and the New Economy.

The City Manager claimed insubordination, but documented communications between Hallsmith, the City Manager and the Mayor call the City Manager’s claim into question. Prior to being placed on paid leave Hallsmith was told, in a memo, to cease discussion of public banking in her free time, because it did not align with the city’s economic policy.

The Mayor of Montpelier, John Hollar, is a registered lobbyist for big banks. He has used his position to make his lobbying job notably easier in the past year – namely by silencing Hallsmith.

Aside from issues of free speech that are obviously present in this case, one only needs to look at the ways in which our current economic system prefers banks like Bank of America and TD Bank North over local alternatives, like credit unions. Public banks can provide huge benefits to economic wellbeing for the state of Vermont. Increased capital staying within the state would impact children’s health, education, economic mobility, and state services and infrastructure.  The amount of state tax money that leaves the state and goes to TD Bank is currently equal to the state’s annual deficit.

Despite the 2010 People’s United case on corporate personhood, corporations and their interests should not be equated with those of individual citizens. Public banks can provide huge benefits to economic wellbeing for the state of Vermont.

The state of North Dakota is the only state in the US to have a public bank, which it has since 1919.  North Dakota’s state bank has proven to be an asset, decreasing economic volatility during the 2008 recession and yielding other gains – including new jobs, economic growth, generating state revenues, lowering of debt costs for local governments, strengthening local banks and building up small businesses (as noted by the Public Banking Institute).

The news coverage of this issue has brought attention to public banking. Yet it has fallen short in questioning how ‘free’ our economic system truly is.  The defense for large, minimally regulated banks like Bank of America or Goldman Sachs is that they operate under free-market capitalism in an ideologically self-regulating system.  Yet we’ve locked ourselves into a one-track bind by refusing to entertain the idea that alternative methods of handling our economy would be highly beneficial to society.  It’s difficult not to draw comparisons to the case of Brooksley Born, the woman who fought to regulate the derivatives market long before irresponsible and unregulated trading of derivatives, in large part, caused the economic crash of ’08.  Our system valued short-term gain at the price of long-term stability.  Despite what we have learned about the interests of corporate banks, it still does.  Only when we forgo the short-term in favor of long-term planning, will we begin to build an economic system that truly works for the people that support it.