Why Shouldn’t the People Own the Banks?

Even as the pandemic devastated New York City, megabanks like JPMorgan Chase and Bank of America continued to do a roaring trade. And now those financial behemoths are set to manage the funds that New York City and other municipalities will be deploying for the recovery. But financial justice advocates want to see the City move its money from the Wall Street titans to a public bank, owned and operated by the people.

A municipally chartered public bank would enable the city government to place its deposits into an institution that is not beholden to a commercial banking sector notorious for fueling the Great Recession, saddling working-class communities of color with toxic debt, and imposing predatory and discriminatory lending on the most vulnerable households. Advocates say the bank would operate as a public utility and invest in public interest projects, from renewable energy infrastructure to affordable housing—and no taxpayer dollars would feed into the financial corporations exploiting communities.

Linda Levy, executive consultant of the Lower East Side People’s Federal Credit Union, one of dozens of members of the Public Bank NYC campaign, told me a public bank could help support credit unions like hers and democratize the development process. Organizations that want to seed affordable housing developments or green-energy projects could bypass the big banks that would likely see them as too small or too risky to invest in.

“The concept that we have in the public bank coalition,” she said, “is that rather than having people who are not in the community, who don’t really know what’s needed, making the decisions about these kinds of loans and investments…the credit union would actually be one of the organizations or institutions that would sort of figure out, ‘OK, well, what would be a good affordable housing project? Where do we need that? Which part of our community could use this development? Who are the developers that we trust to really come through and provide us with the kind of projects that we want?’”

Public banks vs. Wall Street

To establish independent City-run public banks in New York, advocates have been pushing the New York Public Banking Act, a state Senate bill that would allow any municipality in the state to charter a bank governed by an independent advisory board made up of community representatives appointed by elected officials. While the bill stalled in the last legislative session, the New York City Council is also considering a suite of bills that could help lay the groundwork for public banking, including legislation to make the city’s dealings with financial institutions more transparent and a resolution in support of a public bank that “would ensure that tax revenues will stay in the possession of the taxpaying public.”