With state and federal budgets strained, cities and states across the country are looking for ways to stretch their tax dollars and leverage resources to address multiple needs, including funding infrastructure, local business development, affordable housing, and other needs, while also addressing the impacts of climate change (like the recent wildfires) and emergencies (the COVID-19 pandemic). In recent years, states from New York to California have explored creating public banks at both the municipal and state levels. Several states, including Oregon, have introduced or approved public bank bills, and Californians are now moving forward with establishing public banks in several cities.
In Oregon, public banking would allow cities and other municipalities to:
- fund infrastructure, affordable housing, and other public-benefit projects at lower interest rates and fees than conventional Wall Street financiers—saving taxpayers across Oregon hundreds of millions of dollars.
- invest the bank’s profits locally rather than sending it out-of-state to private shareholders
- partner with community banks and credit unions to increase their lending capacity and programs—particularly to historically underserved communities
Stretching our Tax Dollars & Keeping Bank Profits Working at Home
Oregon cities and counties pay hundreds of millions of dollars annually in interest and fees on loans and accounts from U.S. Bank, Wells Fargo, and other big banks. Most of that money ends up lining the pockets of their CEOs and shareholders, preventing it from working for the good of the community it came from. With a public bank, that money would be kept in Oregon and reinvested in Oregon’s communities.
Cutting the Cost of Infrastructure by 40—50%
Our analysis of Milwaukie’s 2018 SAFE infrastructure bond indicates that funding through a public bank would have saved that city around $5M in interest, plus provided another $3M in income that would have increased the bank’s assets. That’s $8M that a public bank could have made available for other infrastructure projects or economic development needs in the city of Milwaukie alone. If cities around Oregon had access to less expensive bonds and loans, Oregon cities could collectively save hundreds of millions of dollars.
Supporting a More Robust Bank Environment
Public banks serve an important role for economic resilience and stability. Prominent examples include the Reconstruction Finance Corporation that funded New Deal job programs and helped pull the country out of the Great Depression, and the public Bank of North Dakota, which has given rise to one of the most robust banking environments of any state and helped that North Dakota weather economic downturns and recessions better than other states.
Partnering with Credit Unions & Local Community Banks
A public bank will increase credit unions’ capacity to make commercial loans in the aggregate by purchasing commercial loans from credit unions. It will also allow credit unions to originate larger loans by being a participant in loans that exceed the credit union’s commercial lending authority. While credit unions already engage in loan participation practices, a public bank will be a ready and agile partner in this process to increase credit unions’ commercial lending capacity.
Providing Lending Programs that serve Community Values
A public bank isn’t driven to make a profit for shareholders, so it can create lending programs administered by local community banks and credit unions that reflect community values, such as low-interest loans for cooperatives, locally-owned farms, small businesses, minority-owned businesses, and affordable housing projects, as well as home loan programs for traditionally red-lined communities, low-interest students loans, and other lending that for-profit Wall Street banks don’t find profitable.