Is a public bank in the financial capital of the world even possible? The way our attitudes around public and common institutions have been going, it seems unlikely that the answer could be a yes. Yet in New York City, a coalition of groups is pushing for just that. With support from students, tenants and workers, Public Bank NYC has launched a campaign to press the city to create a municipal public bank as part of a broader effort toward solutions for economic and racial justice. Ideas like these challenge existing structures — not just who’s in them but how they’re fundamentally designed.
Deyanira del Río from the New Economy Project, Linda Levy of the Lower East Side People’s Federal Credit Union and Enlace’s Cindy Martinez recently joined me for a conversation on the Laura Flanders Show to discuss why a public bank is more needed than ever before and what they’re doing to make it happen. A transcript of our conversation follows.
Laura Flanders: If the 2008 financial crisis taught us anything, it was that private for-profit financial institutions don’t always have their consumers’ interests at heart. Even as the subsequent bailout revealed just how far some politicians are willing to go to help those selfsame investment firms, accountants and banks. Is there an alternative? Well, in the last decade, New York City paid private money managers more than two billion dollars to invest city workers’ pensions funds. Private Wall Street companies kept 97% of the money made off those investments and a whole lot of people think we can do something different.
Today’s guests are part of a coalition kicking off a campaign for a public bank, owned and operated in the public interest. Let’s start with how things happen now. With respect to banking and New York City, how does it work today?
Deyanira Del Rio: On any given day, New York City has billions of dollars sitting in deposit at different Wall Street banks. New York City is legally barred from putting its money anywhere except the big banks. The banks have lobbied pretty consistently over the years to make sure that not a single penny of public dollars can go into credit unions such as the Community Development Credit Union that Linda represents. Instead of reinvesting back into our local economy, public money is being siphoned out by these banks and invested outside of New York City.
What we’re pushing for through the Public Bank NYC coalition is for a really bold vision for what a city-owned, public municipal bank could do if the city peeled off even some of those billions of dollars to put in a bank that it creates for the public good.
Linda Levy: The private banks are taking our money and they’re reinvesting it in places that we have no control over. We’re not talking about the money that the very rich have. We’re talking about pension funds, we’re talking about city workers’ money, we’re talking about your average person who worked hard for this money that is now disappearing from the city.
Give us some examples of where this money goes?
Cindy Martinez: Some of this money is going into investments that fund prisons. For example, these big Wall Street banks provide the money that organizations like CoreCivic and GEO Group need in order to create private prisons, most of these being immigration detention centers. Prisons are being used to lock up our community. Black, Brown, low-wage earners, and immigrant communities are being locked up just so that these private prisons and Wall Street banks can turn a profit.
So how would a public bank work differently?
Del Rio: Our vision in New York City is that a municipal public bank could be chartered specifically to reinvest public money back into real economic needs. Some of those examples include cooperatives or democratically controlled institutions that are really taking root in neighborhoods of color around the city. Worker cooperatives that are creating safe, well-paid jobs for immigrants and others who are routinely exploited in the private job market. We’re talking about community land trusts that are really on the rise in New York City.
So why not, Linda, just use a community development credit union like yours? Why do we need a public bank?
Levy: The credit union has its limitations. For example, we are very, very proud of the fact that in the 30-plus years that we’ve been around we’ve loaned out more than 100 million dollars to our members. And we have been reinvesting in our community. That’s a lot. We are 87% loaned out. We don’t have any more capital to lend. We don’t have any more capital to invest in our community.
Why not just change the law? Why should the city not be allowed to invest its funds into the credit union?
Levy: I guess you should ask Chase and Citi[group] and find out why they think that this law can’t be changed. Every single year since I’ve been on your show, it has been put to the state legislature to change that law and it never ever succeeds.
Del Rio: Right now, there are no credit unions that can take on the scale of deposits that New York City requires. While we certainly think that law should change because it would be of benefit to the credit unions and the work of community development, it’s not going to solve the problem.
So, who has public banks as of now? Where do you look at for models?
Del Rio: There aren’t many models in this country. There are certainly more cities that are looking at public banking. We’ve heard from cities all over the country that say they want to divest from certain banks because of their investments in pipelines and fossil fuels, in private prisons. Progressive city councils don’t want public money to be supporting the caging of human beings and our ecological destruction.
So, what about states? Didn’t Phil Murphy in New Jersey just run on a platform of a public bank?
Del Rio: The public bank bandwagon is pretty interesting. There are differences I should say. Not every public campaign has the same vision. There is one state bank in North Dakota that has existed for about 100 years, but it was created in a different context, in a very different financial landscape than the one we have in New York City. While that has been a model that can make the case and has proven to be very successful in certain ways, we don’t want to romanticize any one model. That bank invested in the Dakota Access Pipeline, for example.
What about that concern that something that was publicly owned by publicly elected officials could just be a vehicle for corruption and yet more influence by politicians?
Levy: It’s definitely a concern. One of the things that our coalition is still working on is coming up with a model structure of governance for the bank that is really of the people, the grassroots. The public needs to have control over this.
We’re building a pretty broad coalition. That’s an approach that I don’t think other places have taken and it’s really important to us for accountability purposes. Also, we need to build a base of support. We have no illusions that this is going to be an easy battle, we know what is ahead. Here in New York, the banking lobby pretty much comes out swinging for even the very basic demands that they be more transparent in disclosing the kinds of investments they make.
We know what we’re up against and we think building a broad coalition very deliberately is going to be really key to our success. We have labor groups, we have community organizations, we have divestment focused organizations, we have community development lenders. Right now, we have worker co-ops growing around the city, and the city of New York itself has invested in them. We have strong community development credit unions like the Lower East Side. But they’re operating as kind of oases in this broader system of capitalism and exploitation.
It is true that when a lot of people tried to move their money, they found that in many of the cities like Seattle and Oakland and others, there really wasn’t a good place to move it to.
Levy: I think that there is definitely still a “move your money” conversation to be had. It is problematic when you’re talking about large institutions like a city or a university because the most attractive places to move your money to would be community development credit unions and other community development financial institutions. As Dey was describing, we can’t really accept huge deposits like that. So, where to put the money? There is nowhere.
And this is a very critical moment in the sense that a lot of money is about to be divested from fossil fuels, for example, let alone hybrid prisons. We had the city people involved in that divestment campaign on the show recently. They are talking about hundreds of millions of dollars needing a new home.
Del Rio: New York City right now has over two dozen banks that it designates as depositories. That is where the city is allowed to put its money. There’s a billion dollars almost alone in just Chase from New York City deposits. Last year, the city of New York also announced that it was going to divest some of its business from Wells Fargo in light of the millions of fraudulent accounts and also because Wells Fargo did something that is really hard for banks to do which is it got a really low rating on its community reinvestment exam. That was kind of like a legal hook on which the city could say we’re not going to renew certain contracts with Wells Fargo.
A major goal of our campaign is public education around municipal finance. How much money is New York City paying to Wall Street for the privilege of holding and managing its deposits? What else could that look like?
What can people actually do right here right now, now that we’ve got more jazzed about a public bank?
Del Rio: People can go to publicbanknyc.org to learn more about the campaign and how to get involved. We’re continuing to build out the coalition. If you are part of an organization that would like to get involved here in New York City, they can reach out. Again, it’s base building community groups. Many others around the city and individuals can also sign on for more information and to be informed of upcoming action.
We got our cameras to the launch of this campaign. Do you want to describe what happened June 5th?
Del Rio: Sure. So, on June 5, our coalition, Public Bank NYC, went down to pay a visit to Wall Street and we were in front of the New York Stock Exchange holding a teach-in, a kind of a rally debuting our campaign and really describing why we need a public bank for New York City and what kinds of investments a public bank could make that could advance racial and economic justice and economic opportunity for New Yorkers rather than continue the status quo of New York City placing our public money in banks that are not serving our neighborhoods, not serving our local economy and investing in things that most New Yorkers and certainly our elected leaders claim that they do not want to be supporting.
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