Legislative Memo: “New York Public Banking Act”

We Support: “New York Public Banking Act”
S.1762A(Sanders)/A.5782(Pichardo)

This bill creates a safe and appropriate regulatory framework for New York cities, counties, and regions seeking to establish public banks. Public banks are financial institutions created by government entities, and accountable to the people. Through public banking, local governments can leverage public money to support local economic development, including affordable housing, green jobs, equitable financial services, and more.

As the COVID-19 crisis exacerbates inequality and poverty in New York, we need bold solutions to ensure a just recovery and future for all New Yorkers. Public banks can help build strong, resilient communities, including by partnering with local lenders to deliver responsible financing and emergency funding to small and worker-owned businesses hardest-hit by COVID-19.

Under current law, localities seeking to establish public banks must apply for a commercial bank charter. This forces local governments to retrofit their public bank business models into a regulatory system that was designed for private, for-profit enterprises. As the public banking movement grows statewide, New York must update its legal and regulatory structure accordingly. S.1762A/A.5782 authorizes the NYS Department of Financial Services to issue public bank charters to New York cities, counties, and regions—paving the way for democratically-controlled financial institutions that meet the needs of New York’s communities.

Public banking is common throughout the world, from Costa Rica to Germany. In the U.S., the Bank of North Dakota has successfully financed public projects and made responsible loans to small businesses, farmers, and others for more than a century. Last year, California enacted legislation intended to pave the way for cities, counties, and regions to establish public banks. It’s time for New York to take action and help usher in socially and environmentally responsible public banks, from Western New York to New York City and Long Island.

New Economy Project’s mission is to build a just economy, based on cooperation, racial, economic, and gender justice, and ecological sustainability. Since our organization’s founding in 1995, we have worked with hundreds of grassroots groups to challenge Wall Street banks and other corporations that harm New Yorkers and perpetuate poverty, inequality, and segregation. We also work with groups to build democratically-structured, community-controlled initiatives, including community land trusts, mutual housing, worker and financial co-ops, and more.

We strongly urge you to support this bill to help advance racial justice and economic democracy in New York. For more information, please contact: Andy Morrison, andy@neweconomynyc.org, 212-680-5100 x 210.