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Michael Miller


By Michael Miller
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New Yorkers Need A Public Bank

We can liberate that money we send in to the tax office. We can transform it into the missing mechanism we need to control our fiscal destiny and begin addressing the future instead of pretending it isn’t there.

We need to consider the creation of a publicly-owned bank. Support for public banking as a solution to opening up credit to governments, small businesses and the public at large has been percolating for some time. With many now resigned to the idea that no help will be coming from Washington, probably ever, the idea is now geysering up. There are bills in at least eight states to create a state-owned bank (or a trust or public authority with banking powers) and bills in at least eight more states to direct some agency to study the possibility and report back.

In Albany, where the bank buildings along State Street are taller than the Capitol building, a bill to create a study commission has been introduced by Member of Assembly Sandy Galef of Westchester County (bill A.1696). Since the 2012 session, it has jumped from two co-sponsors to nine. By the next session, there should be a lot more.

North Dakota is the only state enjoying consistent, comfortable budget surpluses, and it has the lowest rates of personal default and unemployment in the country. One reason is that North Dakota has a public bank.

The Bank of North Dakota is owned and operated by the state. It was designed over 90 years ago as a bank with a mission. It makes low-cost credit available to start-ups and other small businesses, farmers and students (as of last week, 1.78 percent APR on student loans). BND buys municipal bonds, ensuring favorable rates for local governments. BND doesn’t replace private banks, and BND partners with them to provide secondary markets for mortgages. There is plenty of room for the privates, but in North Dakota they aren’t the only option when critical functions and priorities are at stake.

In 2012, BND enjoyed its ninth consecutive year of record profits with $81 million in net earnings on $463 million in capital. That’s a return of about 17.5% for North Dakota, which has a little less than half the population of Nassau County, and a fraction of our wealth and potential.

This is why it isn’t just state governments thinking about this. There are legitimate grassroots groups organizing petition drives and publishing newsletters urging local governments to create a public bank in Miami-Dade County in Florida, Sonoma County in California’s wine country and Berks County, one of Philadelphia’s wealthier suburbs.

My local school district, medium-sized, has budgeted $951,000 to pay off debt in 2013-2014. Significant reductions in interest payments for our schools and local governments could help sustain, maintain and modernize worthwhile services and programs.

A public bank, a bank with a mission, could offer us a realistic way to begin addressing our infrastructure problems, like the county’s nightmarish sewage treatment system, or the 13 bridges in this county that the federal government rates as structurally deficient. Business-as-usual isn’t working. Nothing is “usual” anymore.

Our economy and our governments run on credit, even if we sometimes use different words for it (such as borrowing, debt or bonding). Credit is tight and we need other options.

A public bank would be similar to a credit union in that it would be not-for-profit and pay dividends to members. The public is the membership of a publicly-owned bank.

At the state and local level, we’re just about out of gimmicks. A public bank is just one tool, but it can help make the difference.

Michael Miller is a freelance writer, designer and strategic consultant who has worked in state and local government. Email: