New York Public Banking Act
[Sanders S1754 / Hunter A3352]
Public banks are created by local governments and chartered to serve the public interest—not Wall Street. This legislation paves the way for public banking in NYS by establishing a regulatory framework.
WHY NEW YORK NEEDS PUBLIC BANKING
➔ Public banking is an important strategy to address long standing inequities in our financial system and economy and further racial and economic justice—not line the pockets of Wall Street executives.
➔ Public banking is a proven model, and common throughout the world. In the US, the Bank of North Dakota, founded in 1919, has successfully financed public projects and made critical loans to small businesses, farmers and others—even helping the state to weather the financial impact of the pandemic.
➔ In recent years, 28 states in the United States have taken steps to establish public banks. California passed a law in 2019 allowing municipalities to establish public banks.
➔ Currently, New York localities must apply for a commercial bank charter in order to establish a public bank. This forces local governments to retrofit their public banking business models into a regulatory system designed for private, commercial banks.
➔ Public banks will work with, rather than compete with, local banks/credit unions, promoting responsible lending and increasing access to affordable financial services in areas that have been historically discriminated against.
WHAT THE BILL DOES
➔ Requires the Department of Financial Services to establish a regulatory framework to allow New York cities and counties to establish a local public bank in a safe, responsible and appropriate manner.
➔ Creates strong protections to ensure the safety and stability of these banks, which would be regulated by DFS, and strict governance standards promoting diversity and accountability to the public.
➔ Public Banks could:
◆ Fund local projects at a reduced cost and generate profits for local government to hold the line on taxes
◆ Refinance student debts and provide low cost student loans
◆ Provide access to credit for small businesses and MWBEs, and financial assistance to farmers
◆ Exist in communities that have little to no access to banking services