Posted by Andy Morrison
Today, an obscure public body, the NYC Banking Commission, will decide the fate of billions of public dollars when it meets to select which banks may hold the city’s cash for the next two years. The big question before the Commission is whether the city should resume banking with Wells Fargo after cutting ties with the scandal-ridden bank in 2017.
Though stakes are high, transparency is low. This consequential meeting was announced with only a week’s notice, and the Commission, alarmingly, does not allow public comments during proceedings.
So, we will make our comments here.
The Commission, made up of the Mayor, Comptroller and Commissioner of Finance—three men on a Zoom—will predictably toe the line, but the answer is clear: Wells Fargo must not be permitted to hold, let alone profit from, municipal deposits.
The bank’s misdeeds and scandals are too numerous to list, but here are some lowlights. For years, Wells Fargo executives squeezed employees to meet aggressive and unrealistic sales quotas, leading them to create millions of fraudulent accounts without customers’ consent. Wells Fargo is also the world’s leading funder of fracked gas pipelines, driving climate chaos and trampling on indigenous people’s rights. According to FDIC filings, the bank has extracted $1.3 billion—and counting—in predatory overdraft fees from struggling people during COVID-19.
And let’s not forget that thousands of Black and brown New Yorkers lost their homes to Wells Fargo, the poster bank for egregious racial targeting in the years leading up to the financial crisis.
That city officials are even considering putting our public money in Wells Fargo demonstrates how entangled New York City’s finances are with Wall Street—and the extent to which big banks call the shots in our city.
We need a public option for the city’s financial holdings. We need a public bank.
Public banks are owned by and accountable to the people. Rather than being driven solely by profit, a public bank would be mission-driven and chartered to meet the needs of the city, particularly historically-redlined Black and brown neighborhoods.
A public bank would give NYC a powerful new tool to help ensure a just recovery and strengthen our ability to withstand future crises. It would partner with community-based lenders to deliver responsible financing and emergency funding to small and worker-owned businesses hardest-hit by COVID-19.
Around the world, public banks have responded quickly and effectively to economic devastation caused by the COVID-19 pandemic, shoring up small businesses and other critical infrastructure. That’s because public banks specifically invest in sectors that provide direct economic, social and environmental benefits.
Here in the U.S., the century-old Bank of North Dakota played a key role in helping many North Dakota small businesses stay afloat during the pandemic. An analysis of PPP loans nationwide credited the Bank of North Dakota with helping small businesses secure “more PPP funds, relative to the state’s workforce, than their competitors in any other state.”
We can bring that success here, with a New York twist.
Through public banking, New York City can support permanently-affordable housing, small and worker-owned businesses, green infrastructure, and other equitable development in Black and brown neighborhoods—and divest from Wall Street banks that are actively harming New Yorkers, our economy, and the planet.
Instead of taking a step backward and resuming business as usual with Wells Fargo, the city should move forward to establish the country’s first municipal public bank. The broad-based Public Bank NYC coalition has charted a path for the city to follow.
First, the NYC Council must advance “The People’s Bank Act,” a transformative legislative package that lays groundwork for the creation of a public bank. The Mayor should work with the Council to establish a public bank capitalization fund.
Albany need not feel left out. Leadership in the NYS Senate and Assembly must pass the “NY Public Banking Act” this session, paving the way for cities and counties across the state to pursue public bank charters.
Reopening the door to Wells Fargo would signal that city officials have not learned the lessons of the past year. In the face of New York’s severe affordable housing shortage, climate devastation, and extreme racial wealth inequality—all exacerbated by COVID-19—we need bold action.
A public bank would build wealth and power in communities hardest hit by the pandemic. Its time has come.