On April 9, 2020, the Public Banking Institute released a short and pithy economic relief plan for real people (not corporate “people”) and local economies. In its Open Letter to Congress, PBI outlines four immediate actions. Last night (April 13, 2020) during a City Council meeting (being held virtually because of social distancing), I made a referral to City of Evanston officials about this plan. This is my official Citizen Comment.
CITIZEN COMMENT at the April 13, 2020 City Council meeting
To: City Council of Evanston, IL
From: Debbie Hillman, 4th ward
Subject: Extra emergency funding for COVID-19: Bailing out local economies
Thanks to Evanston’s Economic Development director, Paul Zalmazek, for all the effort he and his department have put into supporting Evanston’s local economies, especially the food & farm businesses. Evanston is truly a regional food hub and I count myself lucky to have lived in the middle of it (Main-Dempster Mile) for the last 40+ years.
Along the lines of supporting all residents, businesses, and workers in Evanston, my comment is a referral about two funding mechanisms that may not be well known to City officials. Both mechanisms are operationalized at the state level and are contained in a bailout plan for local economies. The plan was just released last Thursday by the Public Banking Institute. Although the plan is published as an Open Letter to Congress, the two funding mechanisms do not need additional Congressional authorization.
According to the short, easy-to-understand plan, U.S. states have two ways of increasing the already-authorized emergency funding:
—accessing 0% loans from the Fed for six months or more, under a particular section of the Federal Reserve Act
—creating a state public bank using the state’s emergency executive powers
Below is the exact wording from PBI’s letter to Congress.
CONNECTING Evanston and State of Illinois to PBI
I have been working with the Public Banking Institute for the last 5 years and would be glad to connect City officials and/or State of Illinois officials to PBI for a nuts & bolts discussion of how this would work. Two years ago, Ellen Brown, the founder of PBI, wrote an article about Illinois’s potential for a public bank. We would not be starting from scratch.
In addition, there is an established and growing coalition of voters in Evanston, in the Chicago area, and in Illinois, who have been working on The Money Question—just as colonial and early Americans did for more than 100 years. The Land of Lincoln claims the U.S. president who authorized the most American currency yet, the Greenbacks. Likewise, 21st century residents of Illinois are leaders in the national and international monetary movements. Evanston is lucky to be home to Steven Walsh, a retired Chicago Public School teacher who worked on the 2011 Congressional NEED Act. The NEED Act was a precursor to the Green New Deal and was endorsed by the Chicago Teachers Union in 2012.
I do not know how much funding the City of Evanston could access through either of these mechanisms. Nor do I know if this extra funding would cover the predicted budget shortfall (recently reported in Evanston Now as $10.6 million). But I wanted to alert city officials and Evanston voters to these mechanisms.
PBI’S PLAN and LETTER TO CONGRESS
A “Critical-Care” Bailout for Main Street in the Face of COVID-19:
How Public Banks can Reboot the Real Economy
April 9, 2020
#3: Get money to the states…
States are facing a tsunami of emergency expenses, collapsing tax revenues, and massive bills for unemployment compensation, pushing state budgets heavily into the red. The Fed is now bailing out financial institutions and corporations of all stripes with 0% loans, but it has bypassed state and local governments. States can access 0% loans from the Fed either:
(a) under Federal Reserve Act sec. 14(2)(b), providing for 6 month loans to states and municipalities, such loans to be rolled over as needed; or
(b) by setting up their own public banks using their emergency executive powers. The stellar example is the state-owned Bank of North Dakota. The money needed to start a public bank (capitalization) can be acquired either from funds allocated by Congress to states under the CARES Act or from existing revolving loan funds or rainy day funds. This capital can then be leveraged into 10 times that sum in loans. By eliminating profiteering middlemen, banks can become public utilities that can lend during a crisis to stimulate local economies while generating profits for local governments.