By Brett Wilkins
Citing the failure of Wall Street banks to adequately serve the needs of working people, Democratic U.S. Congresswomen Rashida Tlaib and Alexandria Ocasio-Cortez on Wednesday reintroduced their Public Banking Act, which if passed would facilitate the establishment of state and local public banks.
The legislation, an updated version of a bill introduced by the two “Squad” members in 2020, would create a “robust federal regulatory framework, grant programs, and financial infrastructure to promote public banks and ensure their success.”
The bill also “mandates minimum standards for public banks relating to environmental justice, tenant protections, labor standards, democratic governance, and consumer data privacy.”
In a statement, Tlaib (Mich.) contended that “Wall Street-run banks are failing to serve many of my residents who are struggling to make ends meet. It’s long past time to open doors for people who have been systematically shut out.”
“We must provide a better option for those grappling with the costs of simply trying to participate in an economy that has been rigged against them with discriminatory and predatory practices,” she added. “We need a financial system that is democratically accountable and puts the livelihoods of our residents ahead of private profits.”
Ocasio-Cortez (N.Y.) asserted that “public banks are uniquely able to address the economic inequality and racial wealth gap exacerbated by the banking industry’s predatory practices and discriminatory policies.”
“The creation of public banks will also facilitate the use of public resources to construct additional public goods, including affordable housing, and local renewable energy projects,” she added. “Public banks empower states and municipalities to establish new channels of public investment to help solve systemic crises.”
If passed as written, the Public Banking Act would:
- Provide federal charters for public banks;
- Provide public banks a pathway to membership at the Federal Reserve, allowing public banks additional access to capital and loans;
- Establish a “Public Bank Primary Liquidity Facility” that provides liquidity to public member banks;
- Establish a public banking grant program, to facilitate bank formation, capitalization, and operations, among other purposes; and
- Establish a public banking incubator program for technical assistance and start-up support.
The revived Public Banking Act comes as an increasing number of state legislatures are working to pass state-level community banking measures.
Tousif Ahsan of the New Economy Project, which coordinates the Public Bank NYC coalition—a supporter of the bill—said that “for too long, the big banks have maintained a lucrative monopoly on public deposits, making obscene profits as they continue to perpetuate racial and economic injustice.”
“With public banking, we can start to flip the script, taking back our public deposits and reinvesting in low-income communities and communities of color,” Ahsan added.