idea, a big idea was set in motion on Monday for the City of Philadelphia.
Following a unanimous vote by City Council on a resolution introduced by
Council members Curtis Jones, Jr., Derek Green and Helen Gym, a hearing was
held to begin the process of forming a public bank for the city, modeled on the
hugely successful Bank of North Dakota (BND).
The City Council resolution said in part:
"The creation of a public bank offers the possibility of achieving multiple policy objectives, including stimulating economic development, spurring job creation, reducing municipal debt service, and expanding the tax base, through direct, long-term local lending at below-market rates."
Similar proposals are now being discussed in more than three dozen city councils, county commissions and state legislatures across the nation. Only weeks before, the city of Santa Fe, NM and an independent citizens committee each released a study affirming the benefits of such a bank and supporting its creation for that city.
The Philadelphia proposal is supported by a broad coalition of civic, business and neighborhood organizations whose members testified before City Council.
Anlin Wang, a recent graduate of the Temple University Fox School of Business, spoke of his perspective as a Millennial who now lives and works in Philadelphia, saying that a public bank "can provide the affordable credit to help start-ups, businesses and entrepreneurs; and the affordable credit for people to buy homes in their neighborhoods and not be priced out by the so-called 'gentrification'."
Wang warned that, "without serious action, Philadelphia risks becoming an 'Apartheid City,' that leaves countless Philadelphians locked out of the future of their own city."
Veteran bankers Jeffry D. Beck and Dr. Emma C. Chappell cited the loss of community banks in the city and pointed to the success of the Bank of North Dakota in strengthening the local banking industry in that state to compete with the mega banks of Wall Street.
They pointed out that a public bank partners with local financial institutions, working within their existing underwriting standards to increase the supply of affordable credit in the local economy, create jobs and build the tax base.
The City Council resolution also noted that from their profits, public banks provide an annual and sustainable source of non tax revenue to the general fund of the people whose government created the bank.
The Rev. Carol Duncan, speaking on behalf of the interfaith group, Philadelphians Organized to Witness, Empower and Rebuild (POWER) suggested one mission of the proposed bank should be to support the public schools with its annual profits.
Public banks have a low cost business model, different than commercial banks: no branches, tellers, mega salaries, ATMs or costly retail advertising. These saved cost, said Pennsylvania Project Director, Frank Nuessle, "Fall to the bottom line. Profits are substantial and will grow over time."
In one recent year alone, the BND contributed $94 million of non tax revenue to the state's general fund.
immediate impact of a public bank that many City Council members found
attractive is the reduction of public debt and the resulting debt service paid
by taxpayers, allowing more of municipal budgets to fund productive public
purposes -- like schools, infrastructure, health and public security.