A Cleveland state-owned bank could potentially restore widespread mistrust of institutional financial services, banish unbanked populations, and address the lingering effects of decades of redlining while mobilizing taxpayer funds and channeling them to uses that matter. the most for local citizens – at least, these are the hopes of a local activist.
“Because I grew up in Northeast Ohio and in this very small community in central Florida, I got to see different types of poverty and the different and disparate impacts of the Great Recession,” he said. said Geeta Minocha, a 23-year-old. law student at Columbia Law School. “It prompted me to study health care policy and economics in college. That’s when I stumbled upon public banking. I drank that policy, and I think that it’s fair not only to Cleveland, but the rest of the country. “
In theory, a Cleveland-owned municipal bank could have a potentially transformative impact on a community struggling to lift themselves out of poverty.
It’s a jumping off point for Minocha, who works to spark a conversation about public banking and its possible virtues in one of America’s poorest cities.
But she has a steep slope to climb for her message to resonate with the public.
Minocha published an open letter online about public banking services in the spring. In this, she asks politicians, businesses and various other community stakeholders to sign their names to show their support for forming a group that would simply explore the feasibility of a municipal bank in Cleveland.
It has attracted only 33 signatories so far, after months of campaigning on the effort by itself.
Some said they didn’t want to take a stand until they saw others joining the initiative – a real chicken-and-egg problem.
Others have rejected the idea outright for fear of upsetting their major bank donors.
As a public banking movement gains momentum in pockets across America, according to the Public Banking Institute (PBI), these public nonprofits are extremely rare.
There’s only one in operation in the United States today, in fact. This is the Bank of North Dakota, which is 102 years old and has approximately $ 8 billion in assets, comparable to a sizable community bank.
Being rare makes public banks less understood. A distrust of government also works against the concept.
But while there are legitimate questions to be asked about how a public bank could operate, the good it could do, and the very real risks that come with it – because public banks are not federally insured. Deposit Insurance Corp., taxpayers would bear the liability for loss in the event of failure – surely a bigger obstacle to their existence is the for-profit commercial banking ecosystem, which has a vested interest in reversing anything it might see as a loss. competition for loans and deposits and community goodwill.
“The purpose of a public bank is not to maximize profits or improve the situation of shareholders. Their purpose is in these other kinds of social and economic issues, like local jobs, local businesses, affordable housing. , sustainability, ”said Kevin Jacques, Boynton D. Murch chair in finance for Baldwin Wallace University and former banking regulator. “The big banks will not be in favor of this idea.”