The Green Party candidates for State Comptroller and Governor said it was time for New York to follow the lead of North Dakota and create a public bank.
“Unfair monetary and lending practices by the banking system are a major cause of economic problems. All too often small business and community initiatives including worker cooperatives are unable to raise the capital needed to finance their work or are forced to pay usurious rates. New York should create a state-owned bank to target investment into the new technologies and businesses of a sustainable green economy,” noted Dunlea.
The Green Party candidates, including Howie Hawkins for Governor, said the state should conduct a feasibility study on how to best set up and operate the bank.
Hawkins said, “A public bank for New York State will bypass the fees and commissions charged by big bank middlemen. The interest on loans will come back to the public treasury, not out to Wall Street. We can lower the costs of financing private businesses and public infrastructure and target our investments to meet public priorities.”
Support for public banks has been growing nationwide following the financial crisis of a decade ago. New Jersey Governor Murphy, a former Goldman Sachs executive, has proposed legislation to create a public bank and Los Angeles voters this fall will decide on whether or not to move forward with a public bank.
A New York public bank would take state government funds now deposited in accounts with large commercial banks and use them to back low-interest loans for public infrastructure, private businesses, and consumers. It would keep loans within the state. It would also lower borrowing costs for local governments and school districts. A state bank would also help provide funds for the growing marijuana industry in New York, which is unable to secure credit through banks under federal regulation.
Capitalization could also come from the state pension as it presently does with the NYS Business Development Corporation and Instate Private Equity Program. Funds could also be raised by halting the $14 billion rebated annually from the Stock Transfer Tax and by the state recapturing some or all the Trump federal corporate tax cut windfall going to corporations.
A coalition of groups recently called for the creation of a public bank for NYC. The bank would make equitable investments that support low-income housing, union and living wage jobs for residents, democratically-controlled clean energy, public infrastructure, cooperative ownership, and small businesses, prioritizing minority and women-owned businesses and locally-based enterprises. The bank would work with community banks and credit unions to offer high-quality, affordable financial services to low-income people, immigrants, and communities of color.
For nearly 100 years the state of North Dakota has operated a public bank that provides, in partnership with community banks, low-cost financing for farms and businesses, home mortgages and student loans, and public infrastructure projects. It offers basic checking and savings accounts and other retail banking services to North Dakota residents
North Dakota has the lowest foreclosure rate in the country, the lowest credit card default rate, the lowest unemployment rate, and more locally-based community banks than any other state by far. It has no debt at all, and it has had no bank failures at least in the last decade. The bank has been extremely profitable, providing significant revenue to the state budget.
Unlike private banks, which are legally bound to think first of the profits of their shareholders, the Bank of North Dakota is obligated to serve the community.