The potential for public banking — or managing taxpayer funds through publicly-controlled financial institutions rather than private banks — first became real to me in the office of my city councilmember in the spring of 2019. We had traveled together through City Hall to discuss the benefits of establishing Philadelphia Public Bank. The staffer we were talking to was new to this idea and became more and more interested. “The Council person would really like this idea,” he said. “It’s good for the common people. It’s good for the city budget. I’m going to talk with her about it. I think she’ll want to support it.” In that moment the concept of public banking, which I found compelling and had been promoting informally for years, became not just another good idea but an attainable goal.
It’s been a puzzle to know how to best organize around economic issues. Once we’ve identified our economic system — and more particularly the financial system — as the root of so many of our problems, what do we do next? The task of transforming the economy is too large to create campaigns around and the number people who can be mobilized solely on ideological grounds is small. While Occupy Wall Street was a great national teach-in on wealth inequality, including a critical understanding of the importance of democracy, it didn’t offer enough focus or program to keep people in motion.
I was open to new possibilities and jumped at the chance to attend the 2012 founding conference of the national bank movement. It was conveniently held in Philadelphia in 2012. It was compelling to think that public money should be kept in the public’s hands and used for public good, not deposited in private banks for private gain. The reality that we have our own public banking model — in the 100-year-old state Bank of North Dakota — was grounding. We were all blown away by a 12-year-old from Canada who told their country’s story: how the creation of a national bank in the 1930s allowed them to build critical social, health and economic infrastructure; how a political change in the early 1970s moved control of that wealth to the private sector; and how billions of dollars that could otherwise have been used for public good have since been siphoned off to private banks.
This is how the United States currently operates. Currently, private banks create all the money in circulation — except for the bills and coins issued by the Treasury — by making loans. The Federal Reserve is a network made up of private banks that have special relationships with the Treasury. Banks that hold Treasury notes are paid interest on the federal deficit. When banks become “too big to fail,” it is our tax dollars that bail them out. It’s clear that we have to address control of the money supply in order to solve a host of social, equity and climate issues. Where can we find the leverage needed to bring about such a dramatic transformation?
The difference between revolutionary and reformist reformsThis is where you can help us. Revolution could be framed as transformation of our money system from one that is privately-managed for profit to a democratically-managed public utility. Visionary federal legislation to achieve this has been proposedHowever, the frame is too abstract for popular support. We can’t get from here to there without some steps in between.
There are many things you can do to make our current economic system less burdensome and fair in the context of the current system. These “reformist reforms” are all important and totally worth doing. Any reform that builds grassroots solidarity helps to create the conditions for more. But in and of themselves, they don’t challenge the power dynamics that are built into a system that privileges the accumulation of private wealth at the expense of all other life on the planet.
A “revolutionary reform” is like a wedge into the power status quo, and I see public bank campaigns as playing this role. They give people a tangible way to organize locally, and they also raise questions about the root issue of power and control. They make people think about the big question: Why should our taxpayer funds be held by private banks? When we have pressing domestic needs? Why should half the cost long-term government borrowing be paid back to private bondholders? Why don’t we have control over our common wealth? A public banking campaign doesn’t go all the way. It doesn’t directly challenge the rights of private banks to essentially own our nation’s money supply. But it’s a clear step in that direction, and one that ordinary people can get excited about taking.
Los Angeles (2018) demonstrated the popularity of public banking as an issue. The story began with an activist campaign to get the city off fossil fuels. Voters approved the measure but it was discovered that all banks large enough to handle the money were complicit with fossil fuel investment. There was nowhere they could move the money. The City Council president decided that summer to place a referendum on the fall election to establish a bank. With only a few weeks to organize, the divestment organization shifted to a full-scale campaign to support referendum. They did outreach and social media marketing and received endorsements by hundreds of civic, labor, and community groups. Measure B received 44 percent of the votes with 430 488 Angelenos voting for a public bank. This was not enough for a win, but an astonishing achievement from a grassroots, volunteer-run campaign with minimal funding — and it laid the foundation for a series of advances in the establishment of a structure for creating public banks throughout California.
As I got involved in the Philadelphia Public Banking Coalition (and started talking to people around the city about the possibility of a bank), I experienced the same feeling of people understanding the concept of a public banking institution. They hadn’t considered there was an alternative. We led an information session with the Philadelphia Urban Coalition, a group of mostly Black church leaders, who resonated strongly with the message that it’s just not right for big banks to use our public money to maximize their profits, when great needs in the city are unmet for lack of financial resources.
A number of us visited our local farmers market on Saturdays throughout the next summer to collect petitions for a bank. Everyone who was open to discussing the idea understood it immediately and was eager to help. The concept was intuitively obvious when we reached to local community groups to offer information sessions.
Our coalition has not only been involved in community outreach, but also worked the inside track at City Hall. We have been able to count on Derek Green as a strong ally since the beginning. Over the years, we have also worked closely with him. One of our members who used to work as legal counsel for City Council actually drafted the legislation that Green introduced in January 2021 with a veto-proof majority — the result of a vigorous lobbying campaign on our part. Since then, we have continued our dual strategy to gather more community support and work with the legal- and financial departments at City Hall on the details. We are particularly focused on establishing a democratic governance structure so that the bank is not only immune from political influence but also rooted in its intended communities.
The public banking movement in the United States has seen a tremendous increase since 2019, and it is continuing to grow. It is now not a question of whether or not there will be another U.S. Bank to join the Bank of North Dakota. But when? Los Angeles and the California Bay Area are joining Philadelphia in a race for our first municipal public bank. After years of hard work, dreaming, and long hours, it seems possible to have legislation in place before 2021.
Of course, that’s not the end of the story. No matter how revolutionary a reform is, it’s still a reform. But it’s more than just an improvement in the conditions of those who suffer under our current deeply inequitable and unjust economic system. It’s an opening wedge, a beginning of a transfer from private to public control of our financial system, a shift in the storyline about who rightfully owns and controls our common wealth.