In New York, growing support for a public bank

Community activists in New York City have launched an all-out bid to establish a public bank in the nation’s largest banking market, and they say they aren’t deterred by recent public-banking setbacks in Seattle, Los Angeles and a number of other cities and states.

Launched a year ago with the backing of three community organizations, the effort now has the support of more than 20 groups, according to its organizers.

The coalition of supporters — including affordable housing advocates, workers’ rights groups, environmental activists and even some credit unions — is seizing on such issues as gentrification and climate change to make the case that New York needs a public bank to hold municipal deposits.

Supporters would like to see the city’s deposits placed in a public bank and used to spur economic development in New York’s neighborhoods, rather than with banks that do business with private prisons, the fossil fuel industries or building owners known for evicting low-income tenants in order to make room for wealthier renters. They argue that a public bank could play an especially critical role in funding affordable housing through participation loans with community development financial institutions and credit unions.

Still, the effort to create a public bank — in a city with no shortage of banking options — undoubtedly faces long odds.

No formal legislation has been introduced, in part because it’s still not clear if the city has the authority to charter its own bank, or if it needs permission from the state, said City Council member Mark Levine, a public-banking supporter.

Moreover, a public banking bid will encounter protests from the private sector, and there are broader concerns about how such a bank would be capitalized, managed and shielded from corruption or political influence.

In Los Angeles, voters last year turned down a ballot measure that would have paved the way for the city to create its own public bank. Opponents of public banking pointed to the results of that referendum as proof that the public believes that private sector banks are adequately serving the city’s needs.

And in Seattle, public banking proponents appear to have scrapped the idea after a group studying the issue concluded that while a public bank might be feasible in the long term, it would not create enough benefits to justify the cost.

In New York, the bid for a public bank is being spearheaded by a year-old group called Public Bank NYC.

Officials with the group say that efforts in other jurisdictions have fallen short because organizers have failed to build a strong base of support. That’s not the case in New York, where officials have spent much of the last year building alliances with a broad swath of community groups.

“You find again and again that when there’s not a broad-based coalition of groups that believes in this, that’s fighting for it, that’s organized and has clear messaging and is doing its due diligence,” said Andy Morrison, campaigns director with the nonprofit New Economy Project, which was a founding member of Public Bank NYC.

Levine, who represents the 7^th district in northern Manhattan, said he came to know the public banking movement through the New Economy Project. Formerly a public school teacher in the South Bronx, in 1996 Levine co-founded the Neighborhood Trust Federal Credit Union in northern Manhattan.

Levine said that his experience founding and running the credit union, which he has since left, had opened his eyes to a host of banking needs that weren’t already being met by the private sector.

“This would be ultimately even more impactful than what the community development credit union movement has been able to achieve, simply because of the potential for scale if you draw upon the assets of the city,” he said.

Recently, Public Bank NYC rallied at a meeting of the New York City Banking Commission, which is made up of representatives from the mayor’s office, the city comptroller and the finance commissioner. Those meetings don’t allow public comment, but public banking advocates said they wanted to draw attention to the fact that some of the banks that hold city funds also finance serial evictors.

“These are really the most powerful people in our city,” Morrison said. “We think it’s important that they know that people are paying attention, and we care about what’s being done with our money and we think there’s a better way forward.”

Despite various setbacks, the issue of public banking persists as states grapple with the bankable status of legal marijuana businesses or calls to divest from banks involved with financing businesses they find objectionable.

For example, there’s currently a bill pending in the California State Assembly that would establish a legal process for municipalities that want to set up their own public banks.

The Maine Legislature also recently considered a bill that would set up a commission to establish a state bank, but the bill was voted “ought not to pass” by the Committee on Health Coverage, Insurance and Financial Services.

Andrea Batista Schlesinger is a partner with the consulting firm HR&A Advisors and was a co-author of the Seattle feasibility study. She said that recent setbacks in Maine, Los Angeles and Seattle are unlikely to discourage public banking advocates.

“There is no doubt that there is more interest in public banks today than I would say even six months ago,” she said. “The idea of local control appeals more and more in this political climate.”