Should Seattle Bypass Big Commercial Banks And Set Up Its Own Public Bank Instead?
In the wake of the financial meltdown of 2008, some cities have started exploring the idea of bypassing commercial banks by creating public banks. This Wednesday, a forum will explore the idea of Seattle creating its own lending institution.
Most cities keep their deposits at big commercial banks. The city of Seattle, for example, banks at Wells Fargo and pays fees for that. Wells Fargo, in turn, can make money off of the city’s deposits through short-term investments and by making loans.
But what if Seattle created its own bank? It could make loans here in the city at lower interest rates for things the city wants to prioritize, such as affordable housing.
Dennis Ortblad worked for the State Department in Berlin and is now one of the proponents of a public bank in Seattle. He says public banks are widely used in Germany.
"Over 400 cities each have their own individual nonprofit, public bank which is there to serve their locality with small business loans and lending, and infrastructure," Ortblad said.
Public banks are not common in the U.S. The state of North Dakota is an exception — it’s had its own bank for almost a century.
Now some cities besides Seattle are exploring the concept, including Santa Fe, New Mexico, and San Francisco. Washington state Sen. Bob Hasegawa is also pushing the idea at the state level.