Could the public banking movement take root in Cleveland?

A Cleveland public bank could possibly rebuild the widespread distrust in institutional financial services, bank unbanked populations and address the lingering effects of decades of redlining while leveraging taxpayer funds and steering them toward uses that matter most to local citizens — at least, those are the hopes of one local activist.

“Because I grew up in Northeast Ohio and this tiny little community in central Florida, I was able to see different kinds of poverty and the different and disparate impacts of the Great Recession,” said Geeta Minocha, a 23-year-old second-year law student at Columbia Law School. “This drove me to study health care policy and economics in college. That’s when I stumbled upon public banking. I drank this policy up, and I think it’s right not just for Cleveland, but for the rest of the country.”

In theory, a Cleveland-owned municipal bank could have a potentially transformative impact on a community struggling to lift itself out of poverty.

That’s a guiding start for Minocha, who is working to spur a conversation about public banking and its possible virtues in one of the poorest cities in America.

But she has a steep hill to climb to get her message to resonate with the public.

Minocha posted an open letter online about public banking in the spring. In that, she asks politicians, businesses and various other community stakeholders to sign their names to show support for the formation of a group that would merely explore the feasibility of a municipal-owned bank in Cleveland.

She’s drawn just 33 signatories so far, after months campaigning on the effort by herself.

Some have said they don’t want to take a stance until they see others come on board with the initiative — a true chicken-and-egg problem.

Others have outright rejected the idea out of fears of upsetting their large bank donors.

While a public-banking movement is gaining steam in pockets across America, according to The Public Banking Institute (PBI), these government-owned, not-for-profit institutions are exceedingly rare.

There is only one in operation in the U.S. today, in fact. That is the Bank of North Dakota, which is 102 years old and boasts roughly $8 billion in assets, comparable to a good-size community bank.

Being uncommon makes public banks less understood. A distrust of government also plays against the concept.

But while there are legitimate questions to be asked about how a public bank might operate, the good it could do and the very real risks that come with them — because public banks are not insured by the Federal Deposit Insurance Corp., taxpayers would bear the loss in the case of a failure — a greater hindrance to their existence is surely the for-profit, commercial banking ecosystem, which has a vested interest in quashing anything it might see as competition for loans and deposits and community goodwill.

“A public bank’s purpose is not to maximize profits or make shareholders better off. Their purpose is in these other kinds of social and economic issues, like local jobs, local business, affordable housing, sustainability,” said Kevin Jacques, Boynton D. Murch chair in finance for Baldwin Wallace University and a former bank regulator. “The big banks won’t take kindly to this idea.”