What's driving the push for more public banks
Call it Bank of North Dakota envy.
Whenever they are frustrated with the services provided by traditional banks — or lack thereof — public officials will float the idea of creating a government-owned bank that, similar to Bank of North Dakota, would accept deposits from local governments and school districts and then lend the money back into the communities it serves.
So far, the efforts have yielded little more than feasibility studies; the 99-year-old Bank of North Dakota, which makes student, small-business, agriculture and economic development loans in its home state, is the only public bank operating in the United States.
Yet the public bank concept does seem to be gathering some momentum. New Jersey’s new governor, Phil Murphy, a Democrat, campaigned last year on the promise of creating a public bank while officials in California and Massachusetts have floated the idea of creating public bank as a means to serve cash-reliant legal pot industries in their states.
Bankers counter that private-sector banks are more than capable of handling public deposits, particularly in states like New Jersey that already have scores of banks and credit unions. In other cases — where legal marijuana is concerned, for example — bankers contend that public banks would run into many of the same issues that prevent the private sector from serving that industry.
These are legitimate counterarguments, but public-banking proponents remain undeterred. Here’s a look at some of the reasons supporters are pushing public banks — and where those arguments are catching on.