The Case for a Philadelphia Public Bank

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A Public Bank for Public Good
  • A public bank is a bank that is owned by the people through a city, county, state, or nation. It is designed to manage public funds, not the deposits of individuals. Just like other banks, a public bank holds a bank charter and follows rules and regulations. A public bank differs from a for-profit bank in that it is guided by a mission to serve the public good, not to generate profits for private shareholders.
  • A public bank is managed by banking professionals who earn public servants’ wages. It is required to be transparent, truthful, and accountable to the public about the ways it manages the public’s funds. It is designed to follow the public’s mission, independent of political meddling and favoritism.
  • Such a bank can use this pool of public money to fund projects and programs that benefit the public over the long term—the very same projects/programs that are currently being cut from state and local budgets. Rather than entrusting public funds to a bank that may gamble with our deposits, a public bank would make conservative investments in local projects and services that are well supported by the community. Communities with public banks have access to low-interest loans. As the loans are paid off, the interest helps grow the bank’s capacity to invest back into the public it serves; it becomes a new source of public revenue.
  • The Bank of North Dakota, founded in 1919 provides a model in this country for the benefits of a public bank. State assets are used to capitalize the Bank and all the state’s revenues are deposited there. North Dakota was the only state to come through the 2008 recession unscathed. In 2010, it had the lowest unemployment and home foreclosure rates in the country as well as the most community banks per capita. The Bank makes low interest loans to students, existing small businesses and start-ups; supports local governments by buying municipal bonds; has demonstrated its ability to respond quickly to natural disasters; and returned over $300 million to the state’s general fund in the last decade. Hundreds of public banks, managed according to many different models, are providing similar benefits throughout the world.
  • In the United States, most local tax revenues—the public‘s funds—are deposited in large private banks, which charge fees to manage the public’s money, and loan it back at interest for needed projects. Not only is the public essentially paying interest to use their own money, these big banks don’t generally invest locally, and their role in the global economic meltdown of 2008 contributed to widespread suffering and increased public debt burden.
  • In sum, a public bank not only makes sound financial sense, but is also a tool to grow a more resilient, just, and equitable economy. Public banks can drastically cut borrowing costs and bank fees for governments; cut financing costs in HALF for public infrastructure projects by saving on interest payments; support community-based banks; and boost jobs and Main Street. In Philadelphia, the bank can also prioritize building prosperity in unfunded and underfunded communities historically redlined by private banks.
  • The evidence is overwhelming. With everything to gain, and nothing to lose, it’s time for Philadelphia to have its own public bank!