Piper French is an independent writer based in Los Angeles.
Gregory Jost noticed the first two bank branches close in the Bronx about six months before the pandemic. They were right next to each other: a Chase and a Bank of America, about three blocks from his son’s school in Norwood, and one day, he walked by and saw they were gone.
When COVID hit, the trend accelerated. “We kept getting more and more updates: Oh, this bank is closing. Oh, this bank is closing. Oh, this bank is closing,” Jost recalled when we talked on the phone in September. He is a community organizer and researcher who works with the Banana Kelly community improvement association. Branches were disappearing right and left, and the reason bank officials gave Banana Kelly was both simple and maddening: It just wasn’t profitable for them to stay. This was happening around the country: 4,000 bank branches shut their doors between March 2020 and October 2021, many in rural areas or low-income communities of color.
Though it is replete with check cashers, pawn shops and other “alternative lenders” profiting off the fact that poor communities of color generally have difficulty accessing their own money, the Bronx was already severely underbanked before the pandemic. To Jost, one Bank of America outpost at the Hunt’s Point subway stop perfectly captures this imbalance — a massive sign visible from blocks away advertises its presence, but it’s just an ATM. And not even a working one: It has a laughable 1.7 stars on Google, where people complain that you can barely get through the door, that it is rarely open during normal business hours, and sometimes when it is, the machine has no cash.
This isn’t the first time that big corporate banks have failed low-income neighborhoods in New York and beyond, in both dramatic and quotidian ways. Jost recalled a similar exodus from the Bronx after the 2008 financial crisis; 1,826 branches shuttered in the years since, according to Bloomberg — 93% in postal codes with household incomes below the national median. In the 80s, as downtown Manhattan was ravaged by the crack epidemic, banks fled: By 1984, there were zero branches within a 100-block area of the city’s Lower East Side.
The infamous practice of “redlining” — denying loans to people in communities of color because property values were supposedly lower in their neighborhoods — began in the 1930s and persists stubbornly into the present despite various attempts to eradicate it. Black homeowners are habitually offered higher interest rates than white homeowners of the same or even much lower income. In January 2023, the Los Angeles-based City National Bank was forced to pay out a $31 million settlement after allegedly refusing to underwrite loans in Black and Latino neighborhoods between 2017 and 2020.
Is there a better way to bank, one that would invest in low-income neighborhoods and communities of color instead of spurning their money? Jost and others are part of a growing movement in the U.S. that seeks alternatives to traditional banking. Their hope is to establish something that may sound like a contradiction to American ears: public banks.
In the broadest possible definition, public banks are financial institutions owned and run by the government. They store money for the state, not individual consumers, and their transformative potential lies in the simple fact that they can have a purpose other than the single-minded pursuit of profit for shareholders. This creates a wealth of possibilities: lower-interest loans, investments in green energy and affordable housing and in the neighborhoods that big banks tend to exploit or ignore. “What we envision is a public institution that would invest in community-controlled economic development that builds wealth rather than extracts wealth,” said Andy Morrison, the associate director of the New Economy Project, which launched New York City’s public banking coalition in 2018. “We see in public banking an opportunity to invest in the communities that the banks have long excluded.”
Enthusiasm for public banking has been building in the U.S. as people confront intertwined social, economic and environmental crises. This momentum “reflects the very real failures of private banks to resolve questions like community poverty and access to financial services, to confront the ecological crisis, to effectively respond to the COVID pandemic at the speed or scale necessary,” Thomas Marois, a political economist and public banking expert affiliated with SOAS University of London, told me.
Public banking proponents have been inspired to join the movement by everything from Occupy Wall Street to Standing Rock to Black Lives Matter. To hear them tell it, public banking could be part of a solution to the underlying problems that sparked those movements, such as private banks’ greed and willingness to fund harmful industries or the chronic underfunding of social services that leaves police operating as untrained mental health and homelessness caseworkers.
At times, organizers’ hopes and dreams for everything that a public bank could accomplish can verge on the utopian. “This is about trimming the fat and cutting out Wall Street as a middleman so that we have money to be able to fund the things we need, whether that’s more community services or social housing or solutions for homelessness,” Trinity Tran, who was integral to kickstarting the public banking movement in California, told me. “This is about mobilizing our public revenue to fund the world that we want and that we deserve.”
But public banking is not a magic bullet. It could help finance a global just transition, but it could also end up fueling the same state repression and extractive industries that kickstarted public banking movements across the U.S. in the first place. It may be years yet before public banks are operational here, but the work that will determine whether they usher in new practices of spending and saving money or merely replicate the failures of the existing system is already underway.
The California public banking movement kicked off in 2017. Halfway across the country, Indigenous people defending their ancestral land from the Dakota Access Pipeline (DAPL) and their allies began calling for more scrutiny on the banks financing both the construction of the pipeline and the militarized police crackdown on protestors. Divestment campaigns sprang up across the country.
In Los Angeles, Tran took note. The city then kept most of its money with Wells Fargo, which had furnished DAPL with a $120 million line of credit. It had also recently been exposed for a massive fraud that involved the creation of thousands of fake accounts. Tran and her fellow organizers formed a coalition of Indigenous, environmental and social justice groups, won over many of L.A.’s neighborhood councils, and showed up to give public comment at city council meeting after city council meeting. Within months, the city opted to remove its assets from Wells Fargo’s coffers.
The organizers were then faced with the next question: Where should the money go instead?
“At the end of the day, with a city the size of Los Angeles — the money would move to another large, predatory Wall Street bank,” Tran recounted. (Sixteen other banks funded DAPL construction alongside Wells Fargo.) “So it was obvious to us the only true form of divestment would be to create our own bank,” she went on. “A bank that was owned by the city, accountable to the people of Los Angeles and socially and environmentally responsible.”
Things have moved quickly since then. In 2018, Tran and others ran an unsuccessful campaign to establish a public bank via a local ballot measure. Soon after, they helped launch the California Public Bank Alliance, made up of over 200 organizations. The coalition then worked closely with legislators, fending off bank lobbyists all the while, to produce the Public Banking Act, which Governor Gavin Newsom signed in 2019.
The act is the first of its kind to become law in the U.S. It created a regulatory framework for municipalities across the state to establish public banks of their own, opening the door for up to 10 local public banks in California by 2029.
George Syrop, a recently elected councilmember in Hayward, California, is involved in the effort to open one of the state’s first public banks in the East Bay. In the wake of George Floyd’s murder, Syrop co-founded the Hayward Community Coalition, which is focused on developing alternatives to policing. He realized that generating more municipal revenue would be key to expanding the city’s social safety net, perhaps funding more robust mental health services, drug counseling or interim housing — which, in turn, could leave his hometown less reliant on law enforcement to deal with people experience homelessness, mental illness or other crises. As he told me: “Public banking provides this really enticing opportunity for cities to say ‘OK, well, if we had more control over our finances, the profits that we would reap from those finances could be reinvested back into our community, versus going into the hands of private shareholders.’”
Public banking has become enormously popular among people involved in credit unions and community land trusts. There is a sense of being fellow travelers. These community financial institutions are not public banks, but they are already doing in small ways what public banking could do in a major way: keep money in communities, contribute to local development, prioritize goals other than maximum profit.
At the Genesee Cooperative Federal Credit Union in Rochester, New York, CEO Melissa Marquez works with customers to navigate destabilizing life events: death, disability, divorce. “We’re gonna be here for our members,” she told me. “We try to work through things on a really case-by-case basis to help them get back to a place where they can repay us.”
Public banks could be a robust source of funding for these institutions. A lot of community-focused groups and worker cooperatives struggle to find capital from traditional institutions. Through credit unions, public banks can deepen and expand access to services in low-income communities and communities of color. “There are a lot of worker cooperatives and worker-owners who are in our coalition who are constantly lamenting the challenge of finding access to credit from banks, and Black-owned small businesses who go unserved by mainstream financial institutions or have to pay high interest rates,” said Morrison of the New York public banking effort.
When branches were closing in the Bronx during the pandemic, Banana Kelly couldn’t get them to stay. But Jost and his colleagues eventually persuaded one to fund the Lower East Side People’s Federal Credit Union’s plan to bring a van — a mobile bank — to the area. One of its most popular offerings is a car loan for 3.99% interest: Jost noted that a lot of Lyft and Uber drivers who switch over to the Drivers Cooperative — a driver-owned ride-sharing platform — are looking to get out of high-interest rate car loans. Getting them into a credit union and worker cooperative, he said, inevitably leads to conversations about how public banking could support both models.
Though public banking was more common in the U.S. during the 1800s, only two state banks remained by the turn of the 20th century. Both soon folded. But in 1919, amid frustration over the inadequacy of big banks to meet the financial needs of the state’s rural farmers, a nascent party founded the Bank of North Dakota.
The bank has proved more than capable of weathering crises: It funded recovery efforts after natural disasters, and as the big private banks floundered in 2008, necessitating a costly government life raft, the Bank of North Dakota sailed by — the state even had a sizeable budget surplus at the end of the year. Its structure helped the state withstand the pandemic. “Because of the Bank of North Dakota and the network of financial institutions that are able to thrive as a result of its existence, there was a faster distribution of PPP loans to the right people in the first tranche than like any other state in the entire country,” Syrop told me. Throughout the pandemic, it has remained profitable.
Public banks of all shapes, sizes and structures exist globally. Some are more democratically governed than others, and they focus on a range of goals. ATB Financial in Canada aims to produce equal or better returns than traditional financial institutions, while many Nordic public banks have no profit mandate. Germany’s Sparkassen focus heavily on green energy, while Argentina’s Banco Ciudad de Buenos Aires provides financial assistance for small businesses and services to under-banked communities.
Marois, the public banking expert, considers the Banco Popular in Costa Rica as the most democratic public bank in the world. It’s owned by workers from a wide range of sectors, including labor, artisans, co-ops and the informal economy; it is partially run by an Asamblea de Trabajadores, or Workers’ Assembly, a 290-person governing body that represents the bank’s 1.2 million customers. Though the Banco Popular was created in 1969, the assembly didn’t come into being until 1986, when the bank was at a crossroads. “The easy option would have been to shut it down — or maybe privatize it,” said Karina Valverde Salas, who works for the assembly. “But there was political will to keep it public.” The president at the time, she said, was a strong advocate for creating this worker’s assembly — which “remains unique, something that can’t be found at any other bank in the world.”
One of the assembly’s principal functions is to define the strategic course of the bank, Valverde Salas went on, “to ensure that it doesn’t stray from its fundamental purpose.” She praised the bank’s efforts to advance gender equality — both the assembly and board of directors must be at least 50% women — but thinks the bank could do even more to center the needs of working people.
Today, the fight for public banking in the U.S. is being waged in state legislatures and city governments across the country. In New York, advocates are trying to pass a bill that would allow municipalities to establish their own public banks. It’s modeled on California’s public banking act, but opposition is fierce. “The banking lobby, I mean, they have dozens of lobbyists that are like, camped in Albany,” said Morrison. “They’re one of the most powerful lobbies in the state, and probably more powerful in New York than anywhere.”
In Pennsylvania, Republicans dominate the legislature, but cities benefit from a home-rule charter, so public banking organizers kept the fight local. They got the Philadelphia City Council on board, establishing a Public Financial Authority in March 2022 — but have encountered a stone wall of opposition from the mayor, who refuses to appoint anyone to the authority’s governing board and has blocked funding for it.
Still, they’re pressing forward. “We have work to do,” said Peter Winslow, a longtime public banking advocate who’s one of the city council’s nominees for the governing board. “We have to think about our governance structure. We have to think about our statement of values, vision and mission, our theory of change. … All the things that we would need to do if we had been appointed by the mayor, we’re doing them anyway. We’re not losing any time.” The mayor’s term is up on January 1 next year, and Winslow and his fellow advocates are currently pressing the candidates who want to replace him on their support for a public bank, hoping to vote in a less hostile successor.
The fact that public banks are flexible on governance structure and the need for profits creates space for many possibilities. But it also leaves them vulnerable to being captured by private interests with a deep attachment to conventional financial models. This presents a conundrum for organizers: The more a public bank deviates from a traditional bank structure, the more it threatens the status quo — and the harder it is to get past legislatures replete with skeptical politicians and bank lobbyists. “That, I feel, is a major tension,” said Mohit Mookim, a Stanford law student who is active in the solidarity economy movement and has worked with the Public Bank NYC Coalition (PBNYC). “How close to business as usual will it operate?”
For proponents who hope that public banking can advance social and environmental justice, the Bank of North Dakota is just as much a cautionary tale as it is encouraging evidence. During Standing Rock, when Wells Fargo and others were financing the pipeline, the Bank of North Dakota funded the law enforcement response, providing almost $10 million in loans to local police. A public bank essentially paid for the water cannons that officers trained on unarmed protestors, a cruel rejoinder to their rallying cries.
So what’s the difference between a public bank that’s accountable to community needs and demands and one that’s basically indistinguishable from a traditional bank? In short: who’s in charge and how much power they have.
Public banks, Marois wrote in a 2021 paper, are fundamentally contingent on the goals of the people running them — or those who are invested in making them run differently. Seen in this light, the Bank of North Dakota’s activities aren’t surprising: Its advisory committee is appointed in its entirety by the North Dakota governor, and the state’s bylaws stipulate only that a few of the committee members be bank officers. There is no built-in mechanism for community participation or accountability. Moreover, North Dakota’s economy is heavily reliant on fossil fuel extraction. “If an economy depends on an extract-and-exploit mentality, governments can use public financing to subsidize those destructive operations,” the journalist Matt Stannard wrote about the Bank of North Dakota and Standing Rock in Yes! Magazine.
To marshal public banks in service of transformative change, Mookim says it’s important to make it explicit from the beginning what the bank will fund, and to make certain the terms of its loans are not extractive. It’s critical, he said, “to ensure that the public bank is sufficiently accountable to the community groups that fought for it.” Every public bank in the world may be contested in some way, but Valverde Salas told me that the Banco Popular has proven more resistant to cooptation than Costa Rica’s other public banks precisely because of its democratic structure, its identity as a worker’s bank and its relative autonomy from the government. “The Bank of Costa Rica is under explicit threat of privatization right now,” she said. “The difference is that, while the Banco Popular is also a public bank, it’s not a state bank, so the state has no power to interfere directly.”
Public banking movements across the U.S. are taking note, putting this advice into practice in creative ways. In Philadelphia, the home-rule bylaws require the mayor to appoint the Public Financial Authority’s governing body, but the city council also created a policy board that will act more autonomously and could function as a check on its counterpart’s power. “We’re a creature of the city and answerable to the mayor at the governing level, but independent from the mayor, the city council and every other government entity on the policy board side,” Winslow said, describing the two boards as Janus-faced.
Meanwhile, Friends of the Public Bank East Bay, which Syrop estimated is about a year or two from getting a public bank up and running, opted for a nonprofit structure in order to be able to fundraise and develop a governance proposal independently from the city. “At the end of the day, the agencies are going to have to approve or reject the structure that we suggest,” said Syrop. “But by shepherding the process ourselves by fundraising ourselves, we have a little bit more input into what the product that we present to these agencies looks like.”
PBNYC is an expansive collection of community organizations, labor unions, legal services and local financial institutions. It makes decisions by consensus, Morrison said, and has centered the pursuit of racial justice. “We don’t want to create a public bank for its own sake,” Morrison told me. “We don’t want to recreate systems that are unjust. And so we want to see a public bank that is explicitly dedicated to investing in community-controlled development in Black and brown neighborhoods.”
That mission and structure make PBNYC a direct and vocal challenge to the status quo — right where the status quo’s power is concentrated. “Regulators might not like to see a very accountable-to-the-community public bank because it might not look like a typical white, male, business-school-educated crowd,” said Mookim.
The involvement of Wall Street types can lend public banks legitimacy in the short term but turn out to be a trap in the future. New Jersey Governor Phil Murphy, a longtime Goldman Sachs higher-up, has been one of the only proponents of public banking at the executive level. In 2019, he established a state public bank via executive order, enacting with a flourish of his pen what has taken years of struggle to build elsewhere. But the people he appointed to lead the bank have undercut it at every turn. “His implementation board is wedded to the status quo, which relies on private banking to fulfill New Jersey’s financial needs,” wrote Labor Institute director Les Leopold in a recent editorial.
In the short term, the qualities that define PBNYC have no doubt made the uphill battle it’s fighting even steeper. But in the long term, those same qualities may keep whatever bank ends up resulting from the effort more accountable to the community’s needs and desires. To Syrop, that trade-off is well worth it. “Sometimes folks might get impatient and want this bank to happen tomorrow, but we want to make sure that we’re doing this right,” he said. “And if that means one or two extra years in the grand scheme of things, that’s a small price to pay for making sure this institution is actually serving folks the way we imagine that will.”