NYC: It’s Time to Create a Public Bank!
On April 26th, Mayor De Blasio introduced the largest budget in NYC history totaling $98.6 billion, the vast majority of which will be kept in Wall Street banks. The same week, our City Council members debated a resolution calling on the state legislature to pass the NY Public Banking Act. If I were in City Council now, I would vote in favor of that resolution to pave the way for NYC to create a public bank.
Creating a public bank would advance climate, housing, racial, financial and worker justice. Currently, the majority of the 30 designated banks that keep our money invest heavily in (and profit handsomely from) climate destruction. From 2014–2018, NYC’s designated banks invested over $100 billion in fossil fuel extraction. They also contributed $2.3 billion to the Williams pipeline proposal, which would have built a fracked gas pipeline underneath NY Harbor and the Rockaways leading to devastating consequences had it been approved. In other words, Wall Street banks used NYC’s money to profit from a pipeline that would have actively destroyed NYC’s ecosystems.
Public banking not only allows us to divest from harm, it also offers a financial tool to invest in infrastructure that benefits New Yorkers. Take Germany, for example. Their main public bank, KfW, founded in 1948, is currently the world’s largest public development bank. Nearly a third of their assets are invested in green energy. In the past twenty years, Germany went from harnessing 6% to nearly 50% of their energy from renewable sources. How was this massive infrastructure transition funded? Germany’s public bank provided over 72% of the funds. In addition, KfW supported the weatherization of over two million homes to reduce emissions, and employed over 200,000 people in the process.
In the financial sector, the most obvious recent example of the need to divest from Wall Street was the 2008 financial collapse. Wall Street banks used predatory lending tactics, which led to a tanked global economy, economic devastation for Black and Brown communities, and a taxpayer-funded bailout. Meanwhile, the only public bank in the U.S., the Bank of North Dakota, recorded a surplus for that year; North Dakota as a whole had the lowest unemployment and foreclosure rates in the country.
Public banking can also expand our current crop of truly affordable housing and allow us to invest in Community Land Trusts. When a developer builds affordable housing, they borrow massive amounts of capital from private banks, and incur high interest rates (how banks make money), resulting in higher costs and unaffordable housing. Since public banking centers community wellness, not profit, a public bank could provide low or no interest loans to ensure real affordability. Similarly, a public bank could help finance worker cooperatives, Minority and Women Business Enterprises (MWBEs) and the small business economy at large.
Fortunately, there are many models around the world to draw inspiration from, and New York legislators have begun to pave the way. At the state level, Senator Sanders has introduced the NY Public Banking Act, which would create a regulatory framework for cities in NY state to form municipal banks. Currently, at the City Council level, a package of bills are being debated that would require the Finance Commissioner to create greater transparency over our municipal money — which many consider a first step towards public banking. If I am fortunate enough to serve as District 29’s next council member, I will do everything in my power to ensure NYC gets the public bank it needs to further housing, climate, financial, racial, and worker justice.