How To Start a Public Bank

Model: A Public Bank for the City of Oakland, California

by Scott Baker, Senior Advisor & NY State Coordinator for the

Public Banking Institute http://www.publicbankinginstitute.org/

This slideshow is available at: http://www.slideshare.net/ScottOnTheSpot/how-to-start-a-public-bank

You’ve heard all the positive arguments…Now you want to create a Public Bank for your City, County,

State, or Region. What do you do?

!  Ascertain the available assets. This will form the bank’s Capital and Deposits.

!  Decide how big the bank should be to perform its functions (previously established). This will determine Fixed & Startup Costs

!  Calculate and project results - ROE, ROA, Profits, Dividends, Performance, Operating Ratios, Loan Loss Ratios, etc. We will project out 8 years in our model bank.

Note we are using 10% of the pension fund (apx. $50m) to capitalize our Public Bank for Oakland, population 413,000 (2015). Larger entities can commit fewer resources. We will also need about 9 times more ($400m) for deposits. We can’t use more money for capital because there is not enough money for deposits to equal 9 times an increased amount of capital.

Remember: A bank can leverage capital, not deposits. No bank can lend out more than it has in deposits, even though a bank creates money when it makes loans.

The Grand Total Employee + Fixed Costs figure highlighted in pink will be updated on the Returns spreadsheet automatically and is shown there as the Fixed Costs calculation.

The Bldg & equip. Net figure highlighted in green is carried over to the same field on the Returns spreadsheet in the Assets section.

The Sample Spreadsheet showing adequate Operating Ratios and Performance