Image: Gwen Hallsmith (from left), Gary Flomenhoft, Sen. Anthony Pollina, P/D-Washington, Sen. Richard McCormack, D-Windsor, and Rep. Susan Hatch Davis, P/D-West Topsham, presented a preliminary study of public banking in Vermont at the Statehouse on Tuesday. Photo by Hilary Niles/VTDigger
By Chris White
In a developing story emerging from Vermont, Gwendolyn Hallsmith, Montpelier’s former Planning and Community Development Director, has alleged that she had been fired for her support for a public banking initiative. As efforts to institute a public bank in the state gain momentum at both the grassroots and official levels, a press release issued by the Public Banking Institute (see below) suggests that advocates for the effort have “suffered real and personal blowback for their efforts.”
Currently, advocates are mounting a town meeting campaign calling for local resolutions in favor of such a bank. Matt Stannard, Media Director for the Public Banking Institute stated in an email that
Gwen Hallsmith, the fired advocate and one of the potential interviewees for the story, reported to me this morning that seventeen towns and cities now have a resolution on their town meeting agendas calling for a state bank. They include: Bakersfield, Calais, Craftsbury, East Montpelier, Enosburg, Fayston, Greensboro, Marlboro, Montpelier, Plainfield, Randolph, Royalton, Ryegate, Tunbridge, Waitsfield, and Warren.
Public banking is gaining credence as an alternative to the more speculative and disruptive practices of private banking institutions. As Chris Hedges pointed out in this prescient article, when public institutions borrow from private banks, they wind up spending exorbitant amounts of public funds to manage usurious interest rates over the life of the loans. That money paid out in interest is money that could have been used to improve public projects such as schools and roads. How could public banking support fair community development over the accumulation of private profits? Hedges points to the Bank of North Dakota as a helpful example:
The Bank of North Dakota, the vision of socialists from a century ago, has been in operation for 90 years. It offers the state’s farmers and businesses low interest rates on loans. After floods destroyed much of Grand Forks in 1997 the bank provided a six-month moratorium on mortgage payments and gave low-interest loans to the community to rebuild, a sharp contrast with the raw exploitation that marked the arrival of Wall Street bankers and speculators in Gulf Coast areas hit by Hurricane Katrina. Public banks in the United States, like the public banks in Germany, fund things such as solar power because it is good for communities rather than the portfolios of speculators.
Interest rates on municipal loans may seem like an arcane topic but this is an issue with very real implications for everyone in America. Matt Taibbi has pointed out that the largest private banks have been involved in a nationwide bid-rigging conspiracy on municipal bonds, thus skimming public funds for private benefit. What does this mean for regular folks in the towns victimized by these acts? The City of Baltimore alleged that manipulation of the Libor, the London interbank offered rate, may have cost the city millions of dollars. These costs would simply have been passed on to the public in the form of rate hikes on utility bills.
Not only would public banks tether investment to the public interest, they could also provide much-needed credit at affordable rates to the nation’s unbanked. Monetary policy has vast implications for every facet of American life while also being the policy realm least susceptible to public debate. With credit accounting for roughly 97% of the nation’s money supply, Hedges correctly notes that the potential of public banking to re-democratize this crucial element of policy could be huge.
Vermont Becomes Key State for Public Banking Push; Opponents Call Activists “Anti-Capitalist”
Vermonters for a New Economy reported on Thursday, January 23 that “On Wednesday, January 22, the Senate Government Operations Committee heard the first reading of the bill Senator Anthony Pollina submitted to expand the enabling legislation for the Vermont Economic Development Authority to give it a license to act as a public bank and to transfer 10% of the state’s deposits to VEDA for lending in Vermont.” A study just released by Vermonters for a New Economy, the Gund Institute at the University of Vermont, and the Political and Economic Research Institute at the University of Massachusetts concludes that a public bank would create over 2,500 jobs and add hundreds of millions in additional gross state product in the state. According to the Public Banking Institute, public banks are countercyclical, meaning “they are capable of reducing the negative impact of recessions, because they can make money available for local governments and businesses precisely when private banks decrease lending.”
In addition to Pollina’s State Senate effort, Vermont advocates have launched a town meeting campaign, with Montpelier at its center, but extending to several cities and towns, calling for resolutions in support of a state public bank. According to Vermont Public Radio News, “The effort aims to place a non-binding resolution on town meeting warnings throughout Vermont in March, encouraging the Legislature to form a public bank. ”
Public banking advocates in Vermont have suffered real and personal blowback for their efforts. Rhianna Starheim of Valley News reported December 7 that “Gwen Hallsmith’s advocacy for economic reforms that she believes will ensure sustainability and resiliency for Vermont communities recently cost her a job.” Hallsmith’s boss was Montpelier Mayor John M. Hollar, a paid lobbyist for Bank of America and Wells Fargo, and who in a private email called Hallsmith’s views “fundamentally anti-capitalist in nature,” according to William Boardman in his Reader Supported News article of December 29, 2013.
Available for Interviews:
The former Director of Planning and Community Development for the City of Montpelier, and co-founder of Vermonters for a New Economy, Hallsmith was fired from the City of Montpelier after the Mayor accused her of holding “anti-capitalist views.” She continues to lead efforts to establish a public bank in Vermont. “Some of the most successful economies in the world have state-owned banks,” she told the Valley News. “This is not a radical or novel concept.”
Anthony Pollina, email@example.com, Cell 272-3765, Home 229-5809
A Progressive/Democratic State Senator in Vermont, Pollina submitted legislation on Wednesday, January 22 to expand the enabling legislation for the Vermont Economic Development Authority to give it a license to act as a public bank. A public bank would give Vermonters “the potential to use our own money and essentially borrow from ourselves,” he told VTDigger.org in October of last year.