Public Banks and Credit Unions: What’s the Difference?

by Marc Armstrong

Anything that takes control from Wall Street banks is viewed by many as a positive development. Public banks, credit unions, and, to some extent, the new fintech firms all do this: they change the competitive landscape and provide a variety of services that appear to compete with traditional banks. Two of these players, public banks (of which the Bank of North Dakota is presently the only one in the United States) and credit unions, are considered by some to be in the same space, but they are actually quite different. This post will map out some of the key similarities and differences.

Public banks are government owned entities that act in a not-for-profit capacity to finance public goods, with their earnings passed back to the people in the form of lower interest rates on loans or government dividends. Public banks have many measures of democratic control, such as a more participatory form of governance. But since low interest rates on loans and local control are also the hallmarks of credit unions, what are the differences between public banks and credit unions?

The main difference is distinct and important: Thanks to the banking lobby, federal law prohibits credit unions from making commercial loans that exceed 12.25% of their total assets. This is a significant limitation that keeps credit unions out of the core business of banks: issuing credit. Of course credit unions can make consumer loans and mortgages, but this focus on member loans, savings, and other consumer-oriented services places them in the same market as most retail banks.

publicbankingworksPublic banks, on the other hand, are in decidedly different markets: commercial lending and public finance. They can ignore the retail sector entirely and have laser-like focus on generating credit to fund commercial and infrastructure loans. Because there is no need to provide costly retail banking services, an already crowded market in many areas of the country, public banks can be the engine for a state or city’s economic development program by providing affordable loans. Anyone who supports a good idea like renewable energy, worker-owned cooperatives, or effective public transit systems knows that very often the roadblock for each is always the same — lack of money. Without taxpayer funding many of these ideas die or the implementation gets postponed. But with low cost credit, available through a public bank, many of these good ideas can get funded. A credit union does not have the lending capacity of a public bank to fund these kind of loans, many of which run into the hundreds of millions of dollars.

There are other differences. Public banks are owned by government entities, while credit unions are owned by their members, who are the depositors, and with whom credit unions work collaboratively to share resources for convenience and savings. CU Service Centers and the CO-op ATM Network are two examples of this cooperation, something that a public bank as we normally conceive it would not consider (although new forms of public banking are always possible).

Both government-owned public banks and cooperatively-owned credit unions are ways to create more democratic approaches to banking. While their differences are significant, they both move in the same general direction, returning banking to our communities and sharing in the many benefits that come from localized control of banking.

Marc Armstrong is the president of Commonomics USA and co-founded the Public Banking Institute.

What We’re Doing in Laramie

by Matt Stannard

Members of the Laramie Ecovillage Group, myself included, are in the process of creating an intentional, ecologically sustainable, income-sharing community near Laramie, Wyoming. If you share our values (cooperative culture, non-hierarchical economic communalism, deliberative democracy, commitment to personal and spiritual growth), you might consider reaching out to us and join us in committing our lives to a world beyond capitalism.

We consider our effort to be revolutionary in scope. All of us in the group are, in ways both different and similar, economic refugees. All of us are committed to both reducing the adverse impact humans have on the environment, and practicing a personal, radically intimate (while deeply respectful of personal security and space) localized socialism that we believe is conducive to a widespread transformation of economic and political systems. We share the belief that personal and social change ought to be complimentary, and reject the idea that we must choose between mass political change and local community building as “first priorities.”

We are committed to income-sharing because economic insecurity has killed those we love and has whittled away at our own lives. Our community will share in both debits and rewards, and we will practice carefully-planned scaling of costs and community enterprises to take advantage of the basic principles of economic cooperation. We are already forming one cooperative business enterprise and will facilitate more, aided by the plentitude of information about cooperative management from a variety of values-compatible sources.

Presently, we are exploring many land acquisition options, from community land trusts to cooperative or private purchase. We are looking at several pieces of land and have so far received one offer from a seller. Our group includes legal professionals and experienced intentional community consultants–and several people who have previously lived in intentional communities.

Next weekend, we are hosting a retreat, with around ten guests coming from outside of Laramie, for people interested enough in this project to spend the weekend with us discussing cooperative culture and economics, income-sharing, ecological sustainable community, and how people live communally.

If, in the course of reading this, you have found yourself feeling that this is something you’d like to do, if it has spoken to your deep sense that a community like this is possible, necessary, and a place where you would thrive, you should get in touch with us. Joining would follow a careful and conscientious process and a mutual decision between you and the community. You would need to be committed to becoming a better, more cooperative person always, and doing what you are capable of doing to contribute. It’s definitely not for everyone, but it could very well be for you.

What we’re doing isn’t unique. There are thousands of intentional communities, including many income-sharing communities. But we know what we’re doing will make a difference for our membership, and we hope it will help shape a world that desperately needs this kind of re-shaping.

Matt Stannard is policy director at Commonomics USA and a founding member of the Laramie Ecovillage Group.

Paris Agreement Discord Highlights Need for Community-Based Climate Action

by Ma’ikwe Ludwig

“Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing.”
― Arundhati Roy

Today is an important day to listen for that breathing, which can be hard to hear over the justifiably angry buzz that just erupted thanks to President Trump’s pending decision to pull the US out of the Paris Climate Agreement.

And well it should be buzzing: this is a terrible idea. Paris got us a half step down the road of doing what we need to do around climate . . .  not nearly enough, but some tangible progress; pulling us out will be two steps backward as whatever delicate trust was built in that process is dashed on the rocks of Trump’s ego.

The buzz is heavy on depression and panic, both of which are completely understandable responses. Without a real change in how we think about the climate crisis, it does indeed look and feel like the final nail in our collective coffin.

I’ve been tracking climate issues since 1987, and at this point, I’m no longer surprised by the capacity for large governmental bodies to sink their heads in the sand while simultaneously blaming others. (Notably, those “others” are usually poor and brown-skinned. China has been the favorite scapegoat for the last decade, conveniently ignoring that their emissions and other pollution numbers include a significant amount of the manufacturing of the cheap and convenient crap we Americans seem to relish).

20 years ago, I started to pursue a completely different track on environmental and social issues alike: deeply grassroots organizing of the structures and habits of our lives, largely in the form of residential intentional communities. And in doing so, I’ve found a viable option that requires nothing of politicians, a tactic that seems more and more practical and needed every day.

What if Americans could get their consumption and emissions down to about 10% of our current average? The answer is that it would be huge. By my best estimates, 10% is about what we need to be doing if we want to be “sustainable”. On top of that, we also need to start massive carbon sequestration projects, such as tree planting and biochar initiatives.

At least one group of Americans are doing just that: residents of Dancing Rabbit Ecovillage in Missouri. I profile Dancing Rabbit and a number of other community projects in my new book, Together Resilient: Building Community in the Age of Climate Disruption, which focuses on climate solutions that are already technologically viable and effective to reduce emissions, and that are available to all of us right now.

These communities hold potential keys to several of our worst problems: not only climate disruption, but also social isolation, massive income inequalities and other social injustices can be worked on in these deliberate pockets of social, economic and ecological experimentation. The ability to live on less (less dollars, less stuff and less stress) is one of the primary benefits of collectively self-determined, cooperation-based communities.

The pockets of creative solution making are literally everywhere. The Communities Directory lists over 1,300 intentional communities, most of them in North America. Not all of them have incredible carbon stats, but all of them that have been studied have notably better carbon stats. Like the Paris talks, they represent significant steps in the direction we need to go in, even if their potential is not yet fully realized. Unlike the Paris talks, they don’t just evaporate at the whim of politicians.

So to my friends out there who are feeling the cold creeping of increasingly likely disaster, I say this: take heart, and take things into your own hands. Let’s stop waiting for politicians who are deeply in debt to the fossil fuel industry and who can’t think outside of the capitalism box to suddenly see the light. Instead, let’s do this together.

Ma’ikwe Ludwig is a long-time sustainability and cultural change advocate, focused on intentional communities, and the intersection of economic and ecological justice. She is currently executive director at Commonomics USA and previously served in that role at the Center for Sustainable and Cooperative Culture at Dancing Rabbit Ecovillage. 

Poverty and Moral Judgment

How can it be said that anyone deserves their poverty?

What we call “character flaws” are the result of a complex combination of environmental, neurological and cultural factors, plus whatever agency we actually have in dealing with those. To say that anyone deserves poverty isn’t just an unwarranted moral judgment nobody has the right to make, but also an unscientific judgment that misunderstands how humans function.

And, the decisions made by powerful financial actors contextualize where a person making “bad choices” will ultimately land. For example, absent the LIBOR banking scandal, tens of thousands of home foreclosures in Baltimore would not have occurred, even though in the micro-political universe of those individual foreclosures, one could assign any number of individual causal chains as the “reasons” for the foreclosures (X didn’t work hard enough; Y had a drinking problem, etc.).

Even if you say “well, that person had a bad rap in life and they nevertheless overcame their bad luck,” whether X overcomes that bad luck is determined by the very same combination of internal and external factors that landed X in a bad situation in the first place.

Perhaps “economic determinism” (if it’s wholistic; dialectical if you will) is the most compassionate, ethically respectful, and epistemologically justified paradigm there is. Understanding the interplay of these factors can help us build systems that will maximize agency and collectively plan ways to account for all the external factors.

Matt Stannard is policy director at Commonomics USA.

Carrier: Workers as ‘Theatrical Props’

With the number of circus acts and sideshows associated with the incoming presidential administration, it’s easy for even significant events to slip through the cracks. But the Real Estate Tycoon’s silly spectacle  of cutting a corporate welfare deal with the Carrier company to relocate only 1000 jobs instead of 2000 has titillated the New York Times and also generated a slew of criticism (of varying levels of coherence) from free marketers. Bernie Sanders’s analysis is far more useful–he rightly points out that these kinds of deals incentivize bad behavior by corporations–but I’m even more interested in how the workers themselves are empowered or disempowered by bourgeois political posturing.

So it was refreshing to see the Institute for Public Accuracy digging deeper and finding critical voices speaking about the way workers are always used as props in the framing of these stunts and stories.

“Firms like Carrier in effect use jobs as a hostage to get a ransom payment from the government,” Morton Marcus, a retired Indiana University economist, told IPA. Marcus goes on to explain that this framework is what allows corporations to offer public goods to policymakers that can have negative long-term consequences.

It happens all the time. A firm says they’re interested in building a new factory, in expanding. They ask: what can you do for us? So, the local government gives them tax relief, gives them other incentives — building roads, sewers, water system for the firm. Governments used to ease the tax burden on their own citizens by taxing firms, but this tax ‘relief’ for firms is being done in the name of jobs. So, a firm leaves a polluting residue, contaminates the water supply, with the locals, decades from now, forced to deal with the consequences.

Tim Lewandowski of Workers’ Project, Inc. in Fort Wayne, Indiana, says workers are never actually involved in these discussions, guaranteeing that their interests (which correspond to most community members’ interests) are never truly represented.

Here in Indiana, Mike Pence made a living attacking workers. But doesn’t matter if it’s a big ‘trade deal’ or a local tax abatement — any kind of economic development involves a government entity and corporation, supposedly working to save jobs. That’s going on all the time. Yet, workers are always excluded from those discussions, at best they’re theatrical props. But if workers aren’t involved in really making the deal, it ends up being more show than go. A big part of the problem is that deals like this are all self-reporting — something Donald Trump is familiar with. They can say they’re going to have X number of jobs at such-and-such a wage, but who’s checking? We almost have a Soviet system, where it’s a handshake and a fantasy economy, simply for photo-ops.

In politically bargaining these particular jobs, both the corporations and the strongman-showman-president-elect are benefitting from the work the workers already did in winning the benefits associated with the jobs. Lewandowski explains: “The jobs Carrier has been threatening to move are good jobs and they’re good jobs because the workers bargained for those jobs for years and made them good. We’re actually drowning in jobs — if you want to work lousy hours, for lousy pay and be disrespected.”

Imagine a world where elected officials had to bargain with the workers themselves.

By the way, the Institute for Public Accuracy is amazing for the depth they open up in their press releases. Support them here–it’s tax-deductable.

Oakland Passes Public Banking Resolution, Reaffirms Oakland As Sanctuary City

OAKLAND, CA – Tonight Oakland City Council unanimously passed Councilmember Kaplan’s Resolution calling for the City Administrator to look into the process of establishing a public bank for the City of Oakland.

Please click here to read the Resolution and accompanying Memo

The Resolution, co-sponsored by Councilmembers Kaplan, Kalb, and Guillen, directs the City Administrator to look into the scope and cost of conducting a feasibility study for public banking in Oakland and possibly the larger region. It also directs City Staff to solicit input from community stakeholders about the feasibility study, including suggestions of potential contractors and funding sources; and makes it clear that the study should cover the legality and feasibility of banking the cannabis industry.

The Resolution generated support from Councilmembers and community members alike. Matt Hummel, Chair of the Oakland Cannabis Regulatory Commission, reported that the commission fully supports the idea of a public bank for Oakland because of its potential benefits for the cannabis industry. Oakland activist Susan Harman said: “As Councilmember Kaplan recently returned from Standing Rock, it is important to note that Chase is one of the funders of the Dakota Access Pipeline. This is just another reason why Oakland should create a public bank – so the City can divest from its relationship with Chase.”

“I was thrilled to see the outpouring of support for public banking,” Councilmember Kaplan says. “Creating our own institutions is a beautiful example of how we can strengthen our community at the local level, and continue to build a more just and inclusive society, even in the face of troubling signs at the Federal level.”

The Oakland City Council also voted to reaffirm that Oakland will remain a Sanctuary City for immigrants, despite President-elect Donald Trump’s threat to cut federal funding to cities that do so. The Resolution prohibits the Oakland Police Department from enforcing Federal civil immigration laws and from using city monies, resources or personnel to investigate, question, detect or apprehend persons whose only violation is or may be a civil violation of immigration law.

The resolution also urges California to become a Sanctuary State.

“I am proud to be part of a City that stands up for justice for all,” Kaplan says, “especially now that the rights of so many are under attack.” Councilmember Kaplan also urged California Assemblymember Rob Bonta to take similar steps at the state level and ask California to identify itself as a Sanctuary State.

Kaplan added, “The most repeated teaching in the Bible is ‘Do not oppress the stranger, for you were strangers in the land of Egypt’ – we have a moral responsibility to protect everyone in our community, including those who are targeted for attack and discrimination.”

Source: Sheng Thao, Chief of Staff for Councilmember At-Large Kaplan

Why Wells Fargo is about to s*** the bed on forced arbitration

by Matt Stannard

“What is the robbing of a bank,” Bertolt Brecht’s character Macheath asks in Threepenny Opera, compared “to the founding of a bank?” What harm can an individual bank robber do, compared to what a bank–particularly a large one–can do?

Banks can do more damage than other big institutions, because financial asymmetry is the core of private banking. Banking for profit makes no sense without it. And because financial asymmetry results in awful consequences for the weaker party, successful banking for profit requires legal asymmetry too. Boilerplate and adhesion contracts can be effective tools for securing that asymmetry.

But history tells us that asymmetry only gets you so far. That’s why, in spite of Wells Fargo having had some early initial success using an arbitration clause to defer the legal consequences of unambiguous fraud, I’m predicting that the ploy has run its course–that not only will courts stop buying it, but that its continued deployment, successful or not, will sink the bank’s effort to clean up its public image.

If you aren’t abreast of this: Wells Fargo was recently caught having opened 2 million fake accounts in their customers’ names. The bank was fined a paltry $185 million, fired 5,300 of its employees, and tossed $5 million back to its customers. Now the bank wants a federal court to dismiss a class-action lawsuit by customers so defrauded, and their motion argues that customers gave up the right to sue for anything when agreeing to the arbitration clause contained in the bank’s complex and dickish customer agreements. In other words, Wells Fargo argues that when customers signed up for their non-fraudulent accounts, they gave up the right to sue for things like having their signatures forged in the opening of fraudulent accounts. What’s more, that argument has already worked for the bank: Among other instances, last year Wells Fargo got Ninth Circuit Court Judge Vince Chhabria to buy it in September 2015, also in a case arising from the bank opening up additional accounts for customers without permission (after this year’s settlement over the 2 million fraudulent accounts, that case was reopened and joined with a similar suit being filed in that district).

Michael Hiltzik’s LA Times piece is the best reading on this absurd, semi-successful legal strategy. I like the article because Hiltzik is sensitive to both the ethics and optics of Wells Fargo’s incredibly condescending attitude towards its customers:.

Nothing demonstrates that more than the bank’s insistence on forcing the victims of its vast fake-account scam into binding arbitration, a system in which customers are at an overwhelming disadvantage . . . the San Francisco-based bank has succeeded in getting several judges to toss fraud lawsuits over the bogus accounts by asserting that, even though the accounts are fake, they stem from legitimate accounts the victims opened, in which they agreed to submit any future disputes with the bank to an arbitrator . . . [to get] a flavor of just how abusive the Wells Fargo arbitration strategy is . . . [California resident Shahriar] Jabbari had opened savings and checking accounts with the bank in 2011, but within two years discovered that he had seven more that he hadn’t authorized. Soon enough, he was getting dunning notices from collection agencies for unpaid fees on those accounts, some of which had been opened with manifestly forged signatures or even no signatures at all. [Kaylee] Heffelfinger’s experience was similar. She opened a checking and a savings account with Wells Fargo in March 2012, the lawsuit says. Wells employees started opening bogus accounts in her name even before that, starting in January. She ended up with seven accounts, some opened with forged signatures and fake Social Security numbers. Wells Fargo demanded in its defense that the case go to arbitration, noting that its arbitration clause was exceedingly broad: Anyone who became a Wells Fargo customer was agreeing to boilerplate in their customer agreements that covered any dispute with the bank whatsoever, including “claims based on broken promises or contracts, torts, or other wrongful actions.”

Wells Fargo’s legal argument isolates the singular decision to open an initial account (which requires agreeing to arbitration) and goes on to argue that the fraudulent opening of an additional account is covered by the same arbitration clause. It’s pretty outrageous that any court anywhere has allowed this to happen, deferring to a membrane of an argument that carries such awful policy implications and whose outcome can only be inequity to any individual plaintiff. The continued use of the already abusive tactic of forced arbitration to dodge fraudulent behavior threatens to unravel the entire shaky regime of forced arbitration altogether, either via regulatory changes or a quick dip in its litigatory success rate. Even if such regulations spark lengthy court battles of their own, that’s money the banks have to spend on legal fees while their public ethos sinks to lower lows. 

That’s why I think Zane Christensen, the Utah attorney representing plaintiffs in the class action at federal court in Utah, is correct in asserting that the tactic has run its course and that courts will soon see the horrendous implications of allowing it. If judges have gone along with it thus far, they’ve done so for two reasons: (1) a desire for “judicial economy” that often overrides concerns for justice, and (2) the classism of many judges, their unwillingness or inability to see the asymmetry between big banks and ordinary people as a question of equity under law. Irrespective of that, I think the jig is up.

I could be wrong. It may be that nothing can truly convince these particular business entities to behave. After all, banks still racially redline certain areas (Wells Fargo has to pay $2.5 million to 1000 African-American and Latino residents in Baltimore for doing so in 2012), making mortgages and automobile loans inaccessible or abusively expensive to people of color. One bank has even been caught reverse redlining–disproportionately giving people of color increased access to their s***ty deals in order to charge them higher interest rates and fees. Perhaps, like the President-Elect, big private banks will just keep running around doing really repugnant, often racist, always classist things, everybody gets outraged, but nobody’s able to stop them.

But I think I’m right. There’s a lot of political anger floating freely about these days–residual frustration from the elections and a growing sense that materially powerful entities truly can get away with anything–and I wouldn’t want to be a big bank right now. With sufficient financial clout, cities can even step in where the feds refuse to go. Los Angeles just dumped Wells Fargo over consumer abuse. The L.A. city council also asked “the city attorney’s office to draft an ordinance that would amend the city’s responsible banking ordinance to include more protections for whistle-blowers who report suspected illegal bank activity to authorities.” That’s a big deal because, although Santa Cruz County’s decision last year to dump five criminal banks carried a lot of symbolic value, L.A. carries considerably more financial weight. It’s even more important because if enough cities and counties got together, they really could disempower big banks–culminating, as Saqib Bhatti of the Roosevelt Institute hopes, in the creation of municipal public banks, providing even further incentive for private financial institutions to actually change their terms and practices.

If I’m wrong, and Wells Fargo continues to prevail by arguing that fraud is covered by a boilerplate arbitration clause, I promise to open an account there in your name.

Matt Stannard is policy director at Commonomics USA and previously served on the Public Banking Institute’s board of directors.

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The 2016 Elections: 6 Takeaways for the Economic Cooperation Movement

by Matt Stannard

1. Because capitalism. The election of America’s most prominently parasitic and malicious real estate capitalist to Chief Executive says “this is what happens, Larry.” An economic system based on predatory finance, making money through exploitation of labor, extraction of the planet, and the financial leverage of money itself, gets us mass immiseration, deep cultural divisions, irrationality-as-ideology, fake populism, incipient fascism. The 2016 election was an indictment of extract-and-exploit capitalism, not a vindication of it. Breathe deeply knowing that. Keep talking about it. More and more people will want to talk about it.

2. These Herberts won’t solve anything. The new (deeply incompetent and crony-driven) administration will push poorly-planned, graft-heavy infrastructure and other mega projects. It will continue to promise to bring back coal jobs and manufacturing jobs. All of the administration’s economic initiatives will likely be ecologically indefensible and not truly beneficial to the local economies they’ll purport to target. We have to keep emphasizing public and community finance, local protection of the commons, and the economic viability of cooperative communities.

3. Local politics matters now more than ever. We already know how fossil fuel giants manifest their politics via controlling state legislatures, and pro-carbon state-level politicians came out ahead in the 2016 elections. ALEC-like entities will continue to influence state and local governments. But this is also where we have the greatest chance of resisting bad policies and carving out exceptional, even revolutionary, communities. We must run for local offices and support legal efforts to increase municipal autonomy.

4. We are transpartisan. Democrats are demoralized, but many are eager to build a tycoon-proof society. Some Republicans are bright enough to see the reality of what they have created, ready to reject hate politics, and amenable to the localist component of our vision. Greens, Socialists, and others are still struggling for national relevance but have always had valuable knowledge of and commitment to cooperative economics (and those groups have run some great local campaigns that align with our values). A hell of a lot of people are unaffiliated and/or didn’t vote. Economic cooperation must be politically ecumenical in precisely the ways that bourgeois, corporate media-driven politics can never be.

5. Materiality intersects. We need to work on class, race, gender, sexuality, disability, indigenous rights, and other oppression points in our unique way: emphasizing the material components of identity-based oppression where activists inhabiting the conventional political economy cannot. While others are arguing about whether poor whites are more white than poor or more poor than white, let us create spaces where economic insecurity no longer sparks, exacerbates, or obfuscates identity-based prejudices. There will still be bigotry, but we can make it easier to fight it.

6. We are building the alternative. We have to keep building, building, building. Keep creating and converting worker-owned cooperatives. Keep creating and strengthening eco-villages, income-sharing communities, and community land trusts. Keep reminding cities and states that public banks offer independence from a federal government owned by Wall Street. Keep fighting every attempt to privatize the commons. Keep building cooperative culture, local currencies and time exchanges, strong social service networks and resource-sharing programs. Every time we demonstrate that cooperation works, the forces that gave us President-elect Trump lose. A cooperative economy is a material base against exploitation and fascism. Whatever the importance of other activism, this is the importance of ours.

Image: Union Cab workers in Portland, Oregon. Photo credit: NW Labor Press

North Dakota’s Public Bank Is Funding Police Repression at Standing Rock

by Matt Stannard

The brutal repression of indigenous and allied protesters at Standing Rock has shocked the conscience of fair-minded Americans, particularly those advocating economic and ecological reform. Although the protesters had in some cases been encroaching on “company land,” they had done so peacefully, and their chief modes of political action have been prayer and nonviolent civil disobedience. The crackdowns of the last few weeks have seen attack dogs and rubber bullets causing bloody injuries to protesters, detention and malicious prosecutions, and other dehumanizing behavior from the cops and soldiers deployed there by North Dakota Governor Jack Dalrymple.

For those of us in the public banking movement, used to holding up the Bank of North Dakota (the nation’s only public bank) as an example of how promising public banks are, the recent news that Dalrymple and an emergency spending panel voted to add $4 million in additional credit onto a $10 million line from BND, to fund law enforcement expenses at Standing Rock, is troubling. It means BND is using its heralded public power over fractional reserve banking to pay for those rubber bullets and a host of logistical expenses involved in arresting and evicting protesters the federal government has refused to evict, citing free speech concerns.

This financing is part of one of BND’s core functions: providing emergency loans. A more positive deployment of that function happened in 1997, when BND provided emergency loans for the Grand Forks flood, at a time when communities desperately needed loans before receiving slow-moving FEMA reimbursements. Unlike the need to abuse peaceful protesters, the flood was a real public emergency–the flooding caused structure fires and destroyed dozens of buildings via fire or water. Property losses in Grand Forks topped $3.5 billion. There were 50,000 evacuees. BND provided over $70 million in funds for relief.

The Bank of North Dakota was conceived a century ago in the molding of distinctly American, agrarian-socialist populism. North Dakota farmers were in trouble, getting cheated by the big banks and big grain companies headquartered in Minneapolis and Saint Paul. Those entities knew they had farmers at their mercy, and so all the interest rates were double-digit, all the loan terms were unfavorable (and less favorable to those who relied on them the most), and as the grain companies operated every grain elevator along the railroad route; those companies offered farmers destructively low prices, often cheating on tonnage because the farmers had nowhere else to go.

In 1915, led by a struggling farmer named A.C. Townley, a group of North Dakotans formed the Nonpartisan League to push back against those powerful grain and banking interests. The NPL ended up taking political power in the state, creating both the Bank of North Dakota and the North Dakota Mill and Elevator. Today, those two public utilities are the only institutions of their kind under any state government in the U.S. They’ve long outlived the NPL, whose inexperienced political leaders were subject to constant attacks and red-baiting from big business interests, exacerbating NPL infighting and corruption, culminating in the recall of Governor Lynn Frazier, alongside whom the state legislature had created one of the most progressive state agendas in American history.

Since then, for understandable reasons, BND has been militantly apolitical. BND President and CEO Eric Hardmeyer has explicitly repudiated arguments that the BND ought to be a model, despite his effective touting of its successes. The Bank exists to help the state and its businesses function well and to maintain liquidity and economic stability. BND created the infrastructure for North Dakota’s oil boom, and if the state were to commit to a truly proactive transition to renewable and clean energy (it has taken baby steps), the BND would make it happen financially–with an efficiency that would put the rest of the country to shame.

But in the present political reality, cops and soldiers are brutally cracking down on Standing Rock protesters, and BND is funding it, and that makes BND not truly apolitical, but a facilitator of injustice. Public banks are tools, not sources of virtue in themselves. In the hands of bad policymakers, they can prop up bad policies.

So what do we do with this unfortunate knowledge, besides continuing to support the Standing Rock protesters, calling the governor regularly (if you do, please mention that using BND to finance repression is shameful), and pushing for a just and sustainable transition to clean energy (including economic support for energy sector workers and their families)? What do these unfortunate events teach us about our movement?

First, the awful actions in North Dakota don’t undermine the idea of public banking. If anything, they’re more evidence against private ownership and shareholding in both fossil fuels and the financial sector. In financing those rubber bullets and smoke bombs, BND is paying the security costs of private corporations, subsidizing the worst of big oil capitalism. But as my colleague, Ira Dember, pointed out to me yesterday, North Dakota is rich in wind and is building wind farms. That four million dollars could have been better lent to develop additional wind resources and technology, and to train workers to transition from oil fields to wind farms and more. That depends on a larger movement, which I’ll talk more about below.

Second, the actions illustrate the folly of pushing for state and local control without accompanying universal human and environmental rights. Economic and environmental justice advocates have long promoted local autonomy as a bulwark against big corporations and their puppets in national and state government. But local governments (often pushed by state legislators and governors) can do violence to indigenous communities just as they have enforced segregation and lynchings in the South. Human rights and environmental protection must be encoded in national and international norms and these norms need to have a complimentary and non-oppressive relationship with local communities. That makes our coalition-building and policy-making tasks bigger and more challenging. It makes allies and communication more important, and demands clarity about various movements’ and organizations’ ethical frameworks.

Third, you can’t keep people you disagree with ideologically out of single-issue movements. Sometimes this can be frustrating: There are all sorts of people in the public banking movement, including a few supporters who aren’t committed to ending fossil fuel consumption, and even weirder and more disturbing, a tiny handful of extremists who want to take down big private banks because they associate banking with Jews. Thankfully, those toxic forces don’t show up in any significant numbers (and the Public Banking Institute has explicitly repudiated them). While the movement is primarily white and bourgeois, there are powerful non-white, non-bourgeois voices in it, and its alignment with the New Economy Coalition and other economic justice coalitions helps considerably. It matters who you do your activist business with.

Finally, whatever your own organization’s commitment to justice, the policies and institution your movement creates, if it is lucky enough to create them, will only be as socially positive and ethically correct as the people working inside of them, and the communities overseeing them. Public banks can fund a post-carbon, sustainable energy transition–but only if people successfully demand a post-carbon, sustainable energy transition. Public banks can create safe and prosperous communities for all, but only if that’s what communities are already committed to.

Public banking advocates, in particular, ought to emphasize the ways public control of state and municipal finance can fund new structures of work and production that neither exploit nor extract. That has always been the most powerful argument for public banks: that they can produce justice because as community-controlled entities, we can make them just.

Matt Stannard is policy director at Commonomics USA and was formerly on the Public Banking Institute’s board of directors, but the views expressed in this post are entirely personal.