It’s time for public banking in New York

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Few crises in American history have exacerbated inequalities to the extreme like the Covid-19 pandemic has. This is especially true in New York City, where the wealth of billionaires has increased just as more than a million people are out of work and thousands of small businesses have been forced to close.

The scale of this crisis demands bold action and a break with financial practices that for decades have marginalized low-income neighborhoods and communities of color.

Now is the perfect time for New York City to start a public bank.

Every day, the New York City government has billions on deposit in commercial banks, money that is too often used by these institutions in ways that are contrary to our values ​​and interests. It’s public money, but Wall Street banks use it to fund fossil fuel extraction, private prisons, gunmakers, and other harmful industries.

Bad behavior in the banking industry is nothing new. From the redline to the foreclosure crisis to high interest payday loans, traditional financial institutions have long exacerbated racial inequalities. And in this current crisis, the big banks were responsible for directing most Payroll Protection Program (PPP) loans to their established clients, leaving small businesses in communities of color far less than their fair share of that desperately funded funding. necessary.

The public bank offers a better way. A bank created and controlled by our municipal government would not be motivated by profit, but by the public interest. It would provide an alternative deposit option for some of the city’s own funds, funds that could be used to support the types of public interest projects that are too often excluded from lending by traditional banks. A public lender could support affordable housing developers, MWBEs, worker co-ops, renewable energy projects, community land trusts, and other equitable economic development initiatives.

A public bank could be a huge boon to New York City’s existing community development financial institutions, providing them with interim financing to expand their lending to small businesses, new homeowners, and unbanked families. Our city is home to several community development credit unions that would be strengthened and extended by this type of support, including Neighborhood Trust FCU, Brooklyn Cooperative FCU, and Lower East Side People’s FCU. In the mid-1990s, City Council member Levine helped found Neighborhood Trust FCU because he knew it could fill the void that left many working class people and local businesses in Washington Heights and Inwood without. access to loans and credit. The organization has continued to do what major financial institutions refuse to do: invest in communities of color.

The idea of ​​a public bank is not new to America. For more than a century, the state government-owned Bank of North Dakota (BNK) has been a source of funding for critical infrastructure and underserved businesses. During the Covid-19 crisis, BNK was credited with helping secure more PPP funds, relative to the size of the state’s workforce, than its competitors in any other state. Although the Bank of North Dakota was originally founded by grassroots populists, today it enjoys determined support across the political spectrum.

It is therefore not surprising that the public banking movement is gaining momentum nationwide. Enabling legislation has been introduced in more than two dozen states and municipalities. California enacted a landmark law last January giving local state governments the power to create such institutions.

Here in New York City, a growing grand coalition has brought together grassroots groups, labor unions and civil rights organizations to work to create a city-owned bank. Enabling legislation has already been introduced in both houses of the state legislature. Levine recently introduced bills to city council that would require the city to disclose details of its current banking relationships, in order to assess the extent of deposits available for a public institution.

We must seize this moment and act boldly to tackle the deep inequalities exacerbated by this pandemic. A return to the status quo is not an option. Now is the time to create a banking institution that will do what Wall Street has not and will not do: invest public money to advance economic, racial and environmental justice in New York City.

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