[“A public bank would be a catalyst for the type of economic
development that we frankly see too little of in New York City and
cities around the country.” — Andy Morrison]
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1.6 BILLION REASONS WHY ACTIVISTS SAY NEW YORK CITY NEEDS PUBLIC
BANKING  
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Glenn Daigon
November 24, 2021
WhoWhatWhy
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_ “A public bank would be a catalyst for the type of economic
development that we frankly see too little of in New York City and
cities around the country.” — Andy Morrison _

Bank, by 401(K) 2013 is licensed under CC BY-SA 2.0

 

New York City, once the epicenter of the COVID-19 pandemic in the
United States, is bouncing back. Broadway
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reopening its doors, international tourists are arriving, and workers
are returning to jobs
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But not all the way. According to the New York City Recovery Index
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the city is still just about 80 percent “back.” Hotels are still
running deficits
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office vacancies
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at a 30-year high, and small businesses — hundreds
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which closed in 2020 and 2021 — are facing long roads to recovery.

What’s slowing Gotham down? According to critics, the pandemic laid
bare the city’s systemic inequalities. COVID-19 infection and death
rates were highest in working-class, non-white neighborhoods. Not only
did private, for-profit banking aggravate those inequalities, but
during the pandemic, JP Morgan Chase also extracted $1 billion in
overdraft fees
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working-class New Yorkers, according to research from the New Economy
Project, a nonprofit organizing around issues of equity and racial
justice. 

“As New Yorkers struggled, banks smuggled massive sums in predatory
fees out of hard hit communities of color,” said Andy Morrison
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an associate director at the organization. 

“A public bank would be a catalyst for the type of economic
development that we frankly see too little of in New York City and
cities around the country.” — Andy Morrison

Meanwhile, those same commercial banks — which by city law must
handle the nearly $100 billion in public funds that flow through New
York’s public coffers in the form of sales and property taxes,
revenue bonds, and federal stimulus cash — pay only “modest”
interest rates for holding all that public money, Morrison argued in
an analysis
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by the New School’s Center for New York City Affairs.

Unequal access to resources like capital has long been a problem for
working-class and minority communities. White households average
nearly eight times the net worth of Black households, and banking
practices are one reason why, a Brookings Institution analysis found
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According to critics like Morrison, this hard reality and New York’s
slow recovery all create momentum for New York City to finally set up
an alternative to private banks.

Savage Inequalities

JPMorgan Chase, with which New York City does most of its banking, is
the worst offender but not alone. Banks have charged New York
customers more than $1.6 billion in fees
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the pandemic began, mainly through overdraft fees but also in ATM fees
and monthly “maintenance” fees, as Public Bank NYC
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promoting public banking, announced last summer.

[New York, bank fees, chart]
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Photo credit: New Economy Project
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Before the pandemic hit, more than 25 percent of households
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the New York metro area were unbanked or underbanked due to expensive
bank fees or inequitable access. Activists assert that public banking
would go a long way toward addressing those issues and feel that their
time has come.

Public Investment: Filling the Void

Though public banks exist in much of the rest of the world, in the
United States, the century-old Bank of North Dakota is the only
government-run general bank. That may finally be changing. New state
laws in California are allowing advocates in San Francisco and Los
Angeles to pursue a public option for banking. 

In New York, supporters are focused on passing two pieces of
legislation. One is the statewide New York Public Banking Act
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Albany, which would greatly streamline the process for local
governments to set up public banks. The bill is sponsored
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Senator James Sanders (D), chairman of the Committee on Banks, and is
currently under consideration by that Committee.

In addition to assessing predatory fees, the present private banking
system neglects the credit needs of lower-income and minority
communities, according to critics. Public banking would solve both
problems, they say.

“A public bank would be a catalyst for the type of economic
development that we frankly see too little of in New York City and
cities around the country,” Morrison said. “We want to see
bottom-up economic development.” 

“Bottom-up” economic development would mean funding for worker
cooperatives, small businesses, firms owned by immigrants and
minorities, as well as lending to underserved neighborhoods neglected
by the private banks. It would also mean ready financing for
community-based solar energy projects, according to Morrison — who
argues that the COVID-19 pandemic reinforced the need for public
banking.

“This [lack of private investment] has been a problem throughout
COVID-19 where small and worker-owned businesses have struggled to get
the kind of financial support that they need,” he said.
“Particularly, Black-owned, immigrant-owned businesses are already
not served by the big banks in challenging times. We think a public
bank should be a solution; it would be dedicated to serving small and
worker-owned businesses.”

Statewide legislation is not the only focus for banking reformers in
New York State. They are focused on passing the People’s Bank Act
currently before the New York City Council, sponsored by
councilmembers Helen Rosenthal
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inequality a centerpiece of their careers.

Private Divestment: Doing No Harm

Under current New York City law, an obscure city body called the
Banking Commission selects the commercial banks that handle the
city’s business. According to public bank advocates, the selection
process is opaque. There is no disclosure of the fees these banks
charge New York for public accounts. 

And banks are selected with little transparency. In May, after an
11-minute Zoom meeting with no public input, the Banking Commission
redesignated Wells Fargo, which agreed to pay billions in restitution
for its fake accounts scandal, as an official city banking partner.

Critics assert that not only is the public hurt by the high fees that
these banks charge for city deposits, but these banks invest in
projects that are harmful to the public interest as well.

Private investment in fossil fuel projects
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prisons
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cited as destructive to the lives of New York City residents.
The People’s Bank Act
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greatly increase the transparency of where the city banks and where it
invests the public’s money. It would require the city to publicize
a quarterly summary of its bank accounts
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including balances and fees charged. 

The city’s Committee on Finance held hearings
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the legislation in April. It is still listed as being considered
by the Committee
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Bullish on Reform

New York Gov. Kathy Hochul (D), who worked as a banking executive
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her political career, has not made a public statement about whether
she supports the New York Public Banking Act. Nor has Mayor-elect Eric
Adams (D) indicated whether he supports the People’s Bank Act
(though he has spoken highly of opening up New York to cryptocurrency
and has said he will accept his first three city paychecks in Bitcoin
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But backers remain upbeat, in part because of New York’s slow
COVID-19 recovery.

“The momentum is building,” Morrison said. “We are really
excited about it, and we think this is the year for sure. There is
definitely a groundswell.”

When asked if he would bet money that the next public bank would be in
New York State, Morrison did not miss a beat.

“I would be all in. We would be all in. In fact, we are all in on
this campaign.”

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