We field a lot of great questions via the website, and this one got a personal response from Howie, which we think is worth sharing. — H20 Staff
I am a Freshman at Cornell (fellow ivy leaguer!) and I just had a quick question about one of your campaign promises: Under the ecosocialist new deal page, you mention nationalization of big banks but also talk about democratic coordination of the economy. What exactly does President Hawkins want to do with banks? Does he want to turn them into democratically controlled, decentralized credit unions, or make them public-owned corporations like the postal system? Is the ideal vision some blend of the two?
Thank you for your time!
Power to the people!
I envision a blend of federal, state, and local public banks, credit unions, and traditional banks, especially locally-owned community banks.
The public banks would participate in lending for projects that correspond to their jurisdiction. So the federal public banks would finance large-scale national project, while state and local public banks would finance local and regional projects.
I think the biggest national banks should be socialized, at least the top six with assets approaching a trillion and more. They are too big to fail, or jail when they do wrong. They should be democratically accountable to the people. I envision their democratic governing structure as a federation of locally-elected public banking boards that in turn elect state boards, which in turn elect the federal board.
I think the state and local public banks can be created as new banks in most cases rather than by taking over existing state and local private banks. The public banks would serve as a yardsticks to measure and regulate the performance of private banks under the conditions of imperfect competition, which prevail under the market domination of the big banks.
The public banks would help finance the projects that the Ecosocialist Green New Deal would plan and develop through the public sector, including electric power production, a digital smart grid, freight and passenger rail systems, and clean manufacturing machinery.
The public banks would also partner with credit unions and private banks in the private sector for business, mortgage, and consumer loans.
The 100-year old State Bank of North Dakota partners with community banks and credit unions on all kinds of business, farm, home mortgage, and consumer loans. Because North Dakota community banks and credit unions have the Bank of North Dakota as their partner, they have been able to thrive without being bought out to become local branches of the big banks. North Dakota has far more community banks and credit unions per capita than any other state in the nation.
The community banks and credit unions are better at assessing risk than the national bank branches because these local institutions know their customers better. They know the factors that don’t show up on financial statements, such as whether or not the customer is a hard worker, persistent, and honest. Branch banks of the big banks generally require their local loan officers to go strictly with financial templates to make loan decisions, which ignore the character factors of the borrower that might lead to different and better decision than the strictly financial factors
A mix of banking options also gives customers more choice, which makes the banks provide good service to get customers’ business.
I hope that answers your questions.