By Michelle Chen
A campaign is underway in New York to take money out of Wall Street and put it into the hands of the city.
New Yorkers are known for speaking their minds, but can they put their money where their mouth is? A new campaign is underway to make one of the richest cities into the world reclaim local wealth and make the banking system work for people who actually live here, by putting people over profits.
Community banks and neighborhood credit unions have been around for decades as a way for communities to build assets, launch mom-and-pop businesses, and help keep money in the hands of working people, rather than lining the pockets of international financial institutions. But what if a city as a whole decided to create its own bank? The Public Bank NYC campaign calls for a full-fledged bank, owned and operated by and for the city, which could serve as a public trust invested in social justice, accountable to the public.
Right now, billions of the City of New York’s dollars are being held in commercial banks. That’s a problem, because it’s those same banks that make decisions about whom to lend to, and at what rates—not just on Wall Street but in everyday Main Street businesses and neighborhoods as well. Those banks are also the same big financial institutions that were deemed “too big to fail” during the last financial collapse, and were only kept afloat during the Great Recession with a huge bail-out, ultimately funded by public money.
A public bank for the city, on the other hand, would be a publicly operated financial institution that would hold funds belonging to the city and disburse them across public projects and community-based organizations based on citizens’ actual needs. Its lending decisions would be undertaken through a transparent, City-run authority, accountable to taxpayers. By managing all city taxes, fees, and local revenues (which are currently spread around various accounts with corporate banks), the public bank would aim to provide an alternative, socially oriented financial resource for the city’s economy.
The public bank envisioned by advocates would also work to increase banking options for all New Yorkers, by providing loans and funding for community credit unions, local development associations, and other community-oriented enterprises. Guided by principles of social justice, the investments would seek to “support low- and extremely low-income housing, union and living-wage jobs for New York City residents, democratically controlled clean energy,” and maybe help fix up the streets through community-driven small-scale infrastructure financing. The potential redistribution of resources would help remedy the financial damage of the recession, which sacrificed generations of Main Street wealth to Wall Street’s speculative feeding frenzy.
Driving the campaign is a broad coalition of community economic stakeholders, including the cooperative advocacy organization Working World and the local economic-justice group New Economy Project (NEP), along with several community credit unions and environmental, labor, and civil-rights organizations.
Although a public bank for New York would be unprecedented among US municipalities, New Mexico, San Francisco, and other areas have explored the concept in recent years. The Bank of North Dakota has operated and managed public funds for about a century, and internationally, Canada, China, India, Germany, and even Switzerland have public-finance institutions that provide socially inclusive investments, often in communities underserved by standard corporate banks.
According to Andy Morrison, campaigns director for NEP, though the details on the governance structure of the bank have not been established, it would chiefly handle funds belonging to the city, through deposits of “revenue, taxes, fees, and other earnings,” and the guiding principle is to “be owned and controlled by the City of New York and chartered to serve the public interest, rather than to maximize profits for shareholders and executives.”
The home of Occupy Wall Street would be a fitting place for a public bank to start disrupting global capital—just when rage against big banks is once again cresting. In response to high-profile financial-corruption cases, such as the massive Wells Fargo scandal, or controversies over financial institutions’ links to maligned industries like private prisons, firearms, or fossil fuels, many cities and organizations are already planning to “move their money” by divesting their assets from corporate banks.
And in the wake of the Trump administration’s push for massive financial deregulation, there’s even more reason for skepticism about mainstream banks.
“As the Trump administration’s morally repugnant policies make it even easier for banks and other corporations to exploit low-income people, immigrants, and people of color,” Morrison adds, “the need for local action has never been clearer.”
There are brilliant projects in need of cash across the city, from the food-cart vendor looking to start a delivery business, or a tenant organization trying to convert their building to a co-op, and a public bank’s support could give them just enough leverage to lift their enterprise to the next level of development, eventually becoming self-sustaining and giving back a local return on investment.
Linda Diaz, who recently launched a worker cooperative, Brooklyn Stone & Tile, spoke at a rally last week at Wall Street about how public finance could support more initiatives like hers, which was enabled by investment backing from Working World. After her last workplace shut down, Diaz joined with her coworkers to create a new, cooperatively run business: “By making finance accessible to workers, to worker cooperatives, and other community wealth-building institutions,” Diaz said, “a New York City public bank could save jobs, build wealth in our own struggling communities, and help to build a more just economy that works for all.”
The impact of a public bank could be far-reaching: “When you think about the $90 billion budget that the city has,” said Basma Eid of the community advocacy group ENLACE, told The Nation, “the impact goes beyond NYC, right? The money that’s going into these banks has a global impact on communities of color across the globe…. We could really set the standard of what community control of our resources would look like.”
As long as New Yorkers have to live in the shadows of Wall Street, public banking could offer an enlightened way to recapture capital for the common good.