Public Banking: Detroit Fights for Democracy by Gwendolyn Hallsmith

Here in Detroit, you get a front row seat for industrial capitalism’s demise. The holes and cracks in the roads, the water lines leaking into ice on city streets, the sense of decay everywhere – it’s not pretty. The people I’ve met here share a mixed sense of cynicism for the ravages of a political ideology that have made a bad situation worse along with a perverse hopefulness that out of the ashes of this economic disaster area might rise the phoenix of a better way.

Public banking has traction here like I’ve never seen anywhere, even in independent and idealistic Vermont. The two places have such different reasons for their enthusiasm, yet the roots are the same: a deep value for democratic traditions that rage against the consolidation of wealth and power, an appreciation for the hard work of people from all walks of life, and a recognition that working together in ever-growing coalitions of like minded people, we can win.

Vermonters have a growing mistrust of the large financial institutions, and treasure the small-is-beautiful mantra that shapes our landscape. Detroiters have experienced the theft of their commons, the destruction of their livelihoods, and now the pillaging of their hard-earned pensions by these same institutions – their distrust is not theoretical. They have the scars to prove it.

Yesterday, my day was shaped by Vermont and Detroit. In Vermont, it starts to look like we’ll have a modest win on the public banking front as the 10% for Vermont theme struck by Senator Anthony Pollina will likely make it through the legislature, and 10% of the money the state has on deposit will be transferred to the Vermont Economic Development Authority. To win that, it is also likely that VEDA will not get a banking license, but it will still be a step in the direction we all want to go – reclaiming public, democratic control over one of the critical drivers of economic health – the monetary system itself.

In Detroit, I met with the Sugar Law Center, which is challenging the basis for the emergency managers who are slowly taking over previously democratic cities, charged with the task of paying off the new generation of robber barons created by the same old banking system. The U.S. Constitution guarantees equal protection and due process – none of that is in evidence in the dictatorial powers given to these newly minted petty tyrants.

I met with the leader of Michigan Forward – a group of activists who successfully led a campaign to overturn the first emergency manager laws only to be trumped by a lame duck legislature that put a virtually identical law right back in place. They are now poised to help us run a campaign to make public banking a household word in Michigan.

I talked with the leaders in the local investment movement – public banking’s expenditure side. They have successfully passed MILE – Michigan Invest Local Exemption – which allows even higher limits for small investors and small companies than the JOBS Act regulations the SEC has just promulgated. They are willing to provide a workshop on the Michigan laws at our national conference, to give people interested in redirecting all this taxpayer money somewhere local and sustainable to invest it.

I also met with a former municipal attorney from Detroit (he and I share the dubious honor of being sacked for standing up for the public trust) who has done extensive work understanding the labyrinthine municipal bankruptcy proceedings. He described the myriad trials and judgments due over the next six months that will shape the region’s response to the draconian measures being attempted here. By October, it might be that the dust will have settled enough to start to see the way to the future.

Gwendolyn Hallsmith is the Co-founder of Vermonters for a New Economy and the Executive Director of the Public Banking Institute.