Op-Ed by Sadiya Hoque, Michael Kink and Will Spisak
This budget season, there’s been a lot of talk about investing in New York’s future. Citing better-than-expected tax receipts and a wealth of federal stimulus funds, Gov. Kathy Hochul recently declared, “This is a once-in-a-generation opportunity to make thoughtful, purpose-driven investments in our state and in our people that will pay dividends for decades.”
Albany should put its money where its mouth is and adopt a state budget that promotes racial justice and keeps stimulus dollars circulating in communities hardest hit by the pandemic for many years to come.
That’s why there’s no better time to bring public banking to New York.
Public banks are created by governments, owned by and accountable to the people, and chartered to serve the public interest. More than 900 public banks have long operated in diverse countries and economies worldwide, including here in the U.S. with the century-old Bank of North Dakota. They take the billions of dollars local governments currently deposit with Wall Street banks, and reinvest in community needs, like small and worker-owned businesses, permanently affordable housing, renewable energy, and more.
Momentum for public banking is growing across the country. Here in New York, a diverse coalition of more than 150 groups — including labor unions, community development financial institutions, and community-based organizations — and dozens of state and local legislators have thrown their weight behind the New York Public Banking Act, sponsored by Senate Banks Chair James Sanders Jr., D-Queens, and Assembly Banks Chair Patricia Fahy, D-Albany, which creates a special-purpose charter for local public banks.
New York has an opportunity to take action right now, in this year’s state budget.
Congress provided billions of dollars to state and local governments through the American Rescue Plan, in large part to address long-standing inequities that have “contributed to more severe impacts of the pandemic among low-income communities and people of color.”
That is precisely what public banking would do for New York — and in a big way.
According to an analysis by New Economy Project and the Public Bank NYC coalition, every dollar in stimulus funds used to seed public banks in New York would yield $6 in new lending for equitable economic development in underserved communities.
But the math gets even better. New York can further stretch stimulus dollars by creating a state-based fund that would provide matching capital grants to local governments to help them get public banks off the ground.
With just $100 million — less than 1 percent of the federal relief aid New York has received, and less than 0.05 percent of the governor’s proposed budget — in matching funds for local public banks, the state can generate $15 billion in new economic activity and create 47,000 jobs over the next decade.
In this way, local public banking will lay the foundation for a truly just recovery.
Unlike the Payroll Protection Program, in which Wall Street banks doled out funds to big corporate customers and left small Black- and immigrant-owned businesses in the lurch, local public banks would direct resources to communities hardest hit by the pandemic and most in need of stimulus money.
Furthermore, as cities like Albany explore ways to ensure that banks holding public deposits invest locally and reverse decades of damage caused by redlining and predatory mortgage lending, public banks would offer them a direct route to invest in communities.
Imagine publicly accountable financial institutions that have an explicit mission to serve people and neighborhoods that banks have historically redlined. Public banks would invest in community land trusts and other forms of social housing. They would finance sorely needed renewable-energy infrastructure, like community solar. And they would partner with local credit unions and other responsible lenders to channel capital to small businesses, including minority- and women-owned business enterprises and worker cooperatives.
Hochul and legislative leaders must heed the growing calls for public banking and seize this opportunity to ensure a just recovery and future for all New Yorkers.
Sadiya Hoque is chairperson of the New York Public Interest Research Group (NYPIRG) and a student at Brooklyn College. Michael Kink is executive director of Strong Economy for All. Will Spisak is senior program associate at New Economy Project.