Standing Rock’s Surprising Legacy: A Push for Public Banks

Matt Remle, far left, and the organization Mazaska Talks led months of protests at Seattle's pipeline- and tar-sands-funding banks: Chase, Wells Fargo, Bank of America, TD Bank and US Bank. Alex Garland

By Deonna Anderson

In February 2017, Seattle became the first city to pass legislation to divest from a financial institution because of its role in funding the Dakota Access pipeline.

Months of rallies, public testimony at city council meetings and protests at Wells Fargo branches across Seattle led to the unanimous vote to divest billions from the bank. Los Angeles and Philadelphia would follow. But when the time came to withdraw its money from the bank at the end of 2018, Seattle instead renewed its contract with Wells Fargo. The political decision to divest city money from one of the biggest banks funding DAPL was reversed because the city hadn't found an alternative financial institution to house its money.

Pipeline Divestment Starts at Standing Rock

Throughout 2016 and after, indigenous activists (often referred to as water protectors) protested the DAPL at the Standing Rock camp in North Dakota. Despite opposition, the camp at Standing Rock was cleared in February 2017, and oil started flowing through the DAPL in June 2017.

But the camp wasn't the only site of resistance. In October 2017, organizers—under the name Mazaska ("money" in Lakota) Talks—launched a campaign that urged individuals and larger entities, especially cities, to take money out of banks funding the DAPL and other pipeline projects transporting oil from Alberta's tar sands, including Keystone XL, Trans Mountain, and Energy East.

The idea was that removing money from the banks could put a stop to the projects. The phrase "Kill the funding. Kill the pipelines" was commonly spoken by divest advocates.

Wells Fargo was one of 17 funders of the DAPL; others included Bank of America, Goldman Sachs, and JPMorgan Chase. In September 2017, Mazaska Talks reported that the divestment movement was responsible for over $5 billion being withdrawn from DAPL-funding banks. That figure included the billions divested by Seattle, Philadelphia, and Los Angeles and more than $80 million in individual accounts.

When Seattle announced it would stop banking with Wells Fargo, city officials cited the bank's choice to fund the DAPL—as well as the 2016 customer fraud scandal—as reasons to move its money.

Public Banks as an Alternative

Moving city money out of Wells Fargo was a way for local politicians to put their money "where their values are," said Seattle resident Matt Remle, co-founder of Mazaska Talks and a member of the Standing Rock Sioux tribe. That's because council members would be removing city money from financial institutions that fund projects that hurt the environment and communities. Some of the banks that fund fossil fuel projects also fund private prisons, detention centers, and weapons manufacturers.

"We want an avenue through which ordinary people can access banking services regardless of income and in a way that does not engage in any exploitative practices," said Seattle City council member Kshama Sawant, who was a co-sponsor for the divestment ordinance.

Once Seattle had committed to move its money, the city needed somewhere to move it to.

"When we were organizing around getting [Seattle] to divest, the question all along was what to do with the city's money," Remle said. "And our philosophy was it's not going to be a victory to close accounts with Wells Fargo and go to Bank of America."

Organizers saw public banks as the solution.

A public bank is an institution owned by a governmental body, funded with taxpayer money, and mandated to serve the public interest. In summer 2017, Remle and other Seattleites started advocating for the city to establish a public bank, a process that could take years.

Sawant said a public bank "would be accountable to the people of Seattle in a way that you could never hold a private bank accountable," adding that the city could better direct the bank's resources, like loans, to projects that support community-directed goals. Remle noted affordable housing, homelessness services, and funding for higher education as causes the city might fund.

Ultimately, the city's historic move to divest from Wells Fargo was undermined. It intended to end its relationship with the bank at the end of 2018, but the city failed to find a new place to house its $3 billion.

So it renewed its contract with Wells Fargo for three more years.

"At that moment there was no other choice but to continue with Wells Fargo, but it's a reminder of how the movements work. Winning the Wells Fargo divestment was sort of step one," Sawant said.

The next step, the council member said, is to demand that obstacles—such as the inability for credit unions to serve municipalities and the Washington law that bars cities from establishing any type of business entity—are removed so that the city or state can establish a public bank.

Bank of North Dakota

As it stands, North Dakota is the only place in the continental U.S. with a state bank. Bank of North Dakota was founded in 1919 and, for public bank advocates, it serves as a model.

Opponents of public banking have pointed to the failures of the 1800s public banks in Vermont and Indiana as examples of why public banks don't work. While serving as the director of financial regulation studies at the Cato Institute, Mark Calabria argued that the public banks of this era were "characterized by rampant corruption."

But advocates point to the success of Bank of North Dakota, established at a time when farmers in the state had trouble obtaining credit for their businesses, as evidence that a state bank could work. The bank was started to provide farmers credit and serve as the state's financial repository. It has since evolved to finance the state's infrastructure projects.

"We need banks that are publicly owned so we can take our very substantial public deposits and public revenues and public resources and leverage them for local purposes instead of sending them to Wall Street," said Ellen Brown, founder of the Public Banking Institute. "Cut out the middle man, basically, which is what the Bank of North Dakota does."

While some profits from Bank of North Dakota are used to fund mission-driven loan programs related to economic development and infrastructure, the bank has also faced criticism for lending nearly $10 million for the law enforcement response to the #NoDAPL protests in North Dakota.

With that in mind, advocates in Seattle and elsewhere have been considering how to ensure transparency and accountability in municipal bank charters.

Barriers to Public Banks

Seattle is just one entity looking to move its money out of corporate banks and into socially responsible ventures from which local communities would benefit.

Philadelphia, New Haven in Connecticut, and Santa Monica and Davis in California have divested money from large banks, and others—like Santa Fe in New Mexico, Oakland in California, and Washington, D.C.—have completed feasibility studies for public banks. But not many of these efforts have really taken off. Each location comes with its own set of challenges.

One barrier to getting a public bank off the ground is high startup costs. This was the case in Massachusetts, where a 2011 report from the Federal Reserve Bank of Boston—which used Bank of North Dakota as a model—estimated that startup costs for a state-owned bank in Massachusetts would have been $3.6 billion. Some advocates say this figure is an overestimate; banks generally need tens of millions to start, Brown said.The figure varies based on the bank's location, growth prospects, and risk profile, according to the Partnership for Progress, a program of the Federal Reserve System.

Because proposed banks have unique business plans, market competition, and local economic context, among other factors, the FDIC does not prescribe a minimum of initial capital. But the agency does suggest that organizers examine "the risks inherent in the institution's business model, the potential variability in earnings projections, and the skill and ability of the management team to carry out the business plan" when planning to apply for insurance.

There are also legal challenges to establishing public banks in some locations. Many states and cities—including Sante Fe,San Francisco, and Los Angeles—have clauses in their charters that inhibit them from establishing public banks. There's movement in some cities and states to overcome institutionalized policy barriers to establishing public banks. In Los Angeles, a measure on the November ballot would amend the city's charter and allow it to explore establishing its own financial institution. And in San Francisco, a task force was established in February 2018 to examine legal barriers and startup needs, such as insurance, a government-issued charter, and costs. In November 2018, the task force will have wrapped its examination.

Both Los Angeles and San Francisco are part of the California Public Banking Alliance, with members across the state working to establish city and regional public banks that are "socially and environmentally responsible," as noted on the coalition's website. Additionally, the alliance has pushed for state legislation that would instruct the California Department of Business Oversight to issue a special license for cities to form public banks and allow them to bypass regulations that apply to private banks.

Taking the First Steps

Over the years, Seattleites and Washingtonians have been pushing for a public bank. Since 2009, state Sen. Bob Hasegawa—who represents Seattle's 11th state Senate district—has introduced nine bills to establish a state bank, and he championed a city-owned bank during his mayoral campaign in 2017. While none of the bills passed, state legislators funded a feasibility study in the 2017–19 operating budget.

The main obstacle to starting a public bank in Washington is that the state constitution prohibits the state and its cities from loaning money or credit to individuals, associations or corporations.

The fight against the DAPL brought new energy to the effort in Seattle. Organizers believe a public bank could allow the city to have more funds to address the needs of residents.

"Recapturing some of that would create major savings that could help us fund things like education, housing, and transit," wrote organizer Alec Connon on a blog for the climate justice group 350 Seattle. "Done right, a public bank would save city money, create jobs, and provide affordable loans to small businesses."

While Seattle had to postpone its divestment from Wells Fargo, organizers—and city council members—have continued to push for the idea.

"That movement for divesting from Wells Fargo not only did the groundwork, but also set a line in the sand that this is something that we believe the city of Seattle should be going toward," Sawant said, noting that there is still hope of establishing a public bank in the city.

"We don't expect a straightforward path but we also believe that this is the correct thing to do."

In December 2017, city council members voted to allocate $100,000 to conduct a feasibility study for a municipal bank. The study was released in October 2018 and concluded that creating a public bank would be an involved and long-term process. One of the next steps identified was for the city of Seattle to develop a business plan for a municipal bank that would meet all the legal and regulatory requirements in Washington. Council member Sawant has submitted a request for a business plan in the budget development process for 2019.

"We're still looking at very long term. Even if the study comes back positive, the city council says yes, the mayor approves—we're still looking at probably, I would assume, another year plus to get the actual infrastructure and everything kind of set," Remle said. "But the wheels are definitely in motion."

This article originally appeared in the Winter 2019 edition of YES! Magazine. It's been updated here to correctly designate Bank of North Dakota as a public, not a municipal bank, and to include the results of the city of Seattle's study on creating a municipal bank.

Reposted with permission from our media associate YES! Magazine.

EcoWatch Daily Newsletter

georgeclerk / E+ / Getty Images

By Jennifer Molidor

One million species are at risk of extinction from human activity, warns a recent study by scientists with the United Nations. We need to cut greenhouse gas pollution across all sectors to avoid catastrophic climate change — and we need to do it fast, said the Intergovernmental Panel on Climate Change.

This research should serve as a rallying cry for polluting industries to make major changes now. Yet the agriculture industry continues to lag behind.

Read More Show Less
Edwin Remsburg / VW Pics / Getty Images

Botswana, home to one third of Africa's elephants, announced Wednesday that it was lifting its ban on the hunting of the large mammals.

"The Ministry of Environment, Natural Resources Conservation and Tourism wishes to inform the public that following extensive consultations with all stakeholders, the Government of Botswana has taken a decision to lift the hunting suspension," the government announced in a press release shared on social media.

Read More Show Less

By Richard Denison

Readers of this blog know how concerned EDF is over the Trump EPA's approval of many dozens of new chemicals based on its mere "expectation" that workers across supply chains will always employ personal protective equipment (PPE) just because it is recommended in the manufacturer's non-binding safety data sheet (SDS).

Read More Show Less
De Molen windmill and nuclear power plant cooling tower in Doel, Belgium. Trougnouf / CC BY-SA 4.0

By Grant Smith

From 2009 to 2012, Gregory Jaczko was chairman of the Nuclear Regulatory Commission, which approves nuclear power plant designs and sets safety standards for plants. But he now says that nuclear power is too dangerous and expensive — and not part of the answer to the climate crisis.

Read More Show Less
A lake in Rocky Mountain National Park. Brett Walton / Circle of Blue

By Brett Walton

When Greg Wetherbee sat in front of the microscope recently, he was looking for fragments of metals or coal, particles that might indicate the source of airborne nitrogen pollution in Rocky Mountain National Park. What caught his eye, though, were the plastics.

Read More Show Less
Gabriele Holtermann Gorden / Pacific Press / LightRocket / Getty Images

In a big victory for animals, Prada has announced that it's ending its use of fur! It joins Coach, Jean Paul Gaultier, Giorgio Armani, Versace, Ralph Lauren, Vivienne Westwood, Michael Kors, Donna Karan and many others PETA has pushed toward a ban.

This is a victory more than a decade in the making. PETA and our international affiliates have crashed Prada's catwalks with anti-fur signs, held eye-catching demonstrations all around the world, and sent the company loads of information about the fur industry. In 2018, actor and animal rights advocate Pamela Anderson sent a letter on PETA's behalf urging Miuccia Prada to commit to leaving fur out of all future collections, and the iconic designer has finally listened.

Read More Show Less
Amer Ghazzal / Barcroft Media / Getty Images

If people in three European countries want to fight the climate crisis, they need to chill out more.

That's the conclusion of a new study from think tank Autonomy, which found that Germany, the UK and Sweden all needed to drastically reduce their workweeks to fight climate change.

"The rapid pace of labour-saving technology brings into focus the possibility of a shorter working week for all, if deployed properly," Autonomy Director Will Stronge said, The Guardian reported. "However, while automation shows that less work is technically possible, the urgent pressures on the environment and on our available carbon budget show that reducing the working week is in fact necessary."

The report found that if the economies of Germany, Sweden and the UK maintain their current levels of carbon intensity and productivity, they would need to switch to a six, 12 and nine hour work week respectively if they wanted keep the rise in global temperatures to the below two degrees Celsius promised by the Paris agreement, The Independent reported.

The study based its conclusions on data from the UN and the OECD (Organisation for Economic Co-operation and Development) on greenhouse gas emissions per industry in all three countries.

The report comes as the group Momentum called on the UK's Labour Party to endorse a four-day work week.

"We welcome this attempt by Autonomy to grapple with the very real changes society will need to make in order to live within the limits of the planet," Emma Williams of the Four Day Week campaign said in a statement reported by The Independent. "In addition to improved well-being, enhanced gender equality and increased productivity, addressing climate change is another compelling reason we should all be working less."

Supporters of the idea linked it to calls in the U.S. and Europe for a Green New Deal that would decarbonize the economy while promoting equality and well-being.

"This new paper from Autonomy is a thought experiment that should give policymakers, activists and campaigners more ballast to make the case that a Green New Deal is absolutely necessary," Common Wealth think tank Director Mat Lawrence told The Independent. "The link between working time and GHG (greenhouse gas) emissions has been proved by a number of studies. Using OECD data and relating it to our carbon budget, Autonomy have taken the step to show what that link means in terms of our working weeks."

Stronge also linked his report to calls for a Green New Deal.

"Becoming a green, sustainable society will require a number of strategies – a shorter working week being just one of them," he said, according to The Guardian. "This paper and the other nascent research in the field should give us plenty of food for thought when we consider how urgent a Green New Deal is and what it should look like."

Amazon Employees for Climate Justice held a press conference after the annual shareholder meeting on May 22. Amazon Employees for Climate Justice

Amazon shareholders voted down an employee-backed resolution calling for more aggressive action on climate change at their annual meeting Wednesday, The Los Angeles Times reported.

Read More Show Less