The Potential of Public Banking to Support Economic Equity

The American banking system is broken, and the evidence is unmistakable. From the recent failure of one of the largest banks in the U.S. to ongoing predatory products blanketing lower-income communities, it is clear that we are at an inflection point. Bank regulators currently fall into the familiar trap of trying to fix the symptoms such as banning certain products, minor regulatory modifications without fixing the root causes of structural inequities. This results in repeated crises usually requiring taxpayer-funded bailouts but no meaningful change of the system. We must find better opportunities to address staggering losses of wealth through failures in the banking system while also building new structures that support economic equity and help build and preserve more local community wealth.

The readiness of the federal government to take on the financial costs of bank failures is a signal that the banking system is already a public trust. Nonetheless it is designed to benefit the wealthy. The time for accountable, transparent public banking at the city, region and state level is now. Public banks are capitalized by local funds and can operate at reasonable profit margins with profits earned recycled back into the local government, helping to support social services and economic development activities such as affordable housing and small business loan equity. They are accountable not only to the regulators, but also to the communities they serve.

On May 24th, Bay Area AFN held an in-person convening at the California Endowment in Oakland. Our conversation focused on:

  • Better understanding the benefits and impact of public banking on communities;
  • Learning about the roadmap to establishing a public bank in the East Bay;
  • Elevating the role multiple sectors can play in advancing public banking; and
  • Understanding opportunities for philanthropic investment to make public banking a reality in California.

Debbie Notkin, Public Bank East Bay (moderator)
Sylvia Chi, California Public Banking Alliance
Paulina Gonzalez-Brito, California Reinvestment Coalition,
Anand Subramian, San Francisco Foundation