With Wall Street as greedy as it ever was, and the Trump administration seeking to ditch banking restrictions enacted in 2008 to protect the little people, a handful of cities are considering a do-it-yourself alternative: Public banking is just what it sounds like—financial institutions owned and operated by a government entity. Officials in Philadelphia and Oakland, California, are taking a hard look at the idea, and Santa Fe, New Mexico, has done a feasibility study that concluded a city-run bank would benefit the community, socially and economically. If done right, the report found, the bank would create a “robust local lending climate” and bring in millions of dollars per year in revenue.
From 1910 to 1966, Americans could deposit and borrow small sums at US post offices.
There are already successful public banks in France, Germany, Japan, Switzerland, the United Kingdom, and elsewhere. There’s even a robust American model: North Dakota has had a state-run bank for nearly a century. Although created by socialists, the Bank of North Dakota retains ironclad support among the red state’s residents, many of whom credit it for helping North Dakota weather the 2008 financial crisis. Moreover, from 1910 to 1966, US post offices operated as de facto public banks where people could deposit and borrow small sums.
Leading the push in Oakland are progressive City Council members Rebecca Kaplan and Dan Kalb. “Public banking can give us a bank that is more responsive to the needs of the community,” Kaplan told me, “rather than prioritizing the needs of shareholders who don’t live in our community or the needs of corporate profit.”
Kaplan says there are two key reasons Oakland should pursue public banking. The first is that it can help low-income people—and especially people of color who may face discrimination at corporate banks—secure loans at a fair rate. “Oakland has long suffered from redlining,” Kaplan points out,…