State lawmakers in New York want to lay down the regulatory framework for municipalities to create local public banks in order to extend and expand access to communities of color in the post-COVID-19 economy.
The bill, sponsored by Sens. James Sanders and Victor Pichardo, is also backed by community and organized labor groups in the state. The measure is meant to create publicly held banks that would have written into their charter the goals of promoting racial justice, community-backed development and sustainability.
In essence, the bill would end the requirement in state law that public banks must apply for commercial charters. California has similar regulations in place for public banks.
"The coronavirus pandemic has devastated New York's economy," Sanders said. "Public banks offer a way to rebuild and prevent businesses, especially small businesses, from closing. Public banks also benefit underserved communities that have been, and continue to be, denied financial resources due to redlining. It gives long-suffering communities the chance to thrive and gain relief from debilitating debt."
The bill comes as the pandemic and subsequent recession has hit low-income communities and communities of color the hardest, both economically and disproportionately infecting Black and Latinx New Yorkers.
And prior to the pandemic itself, banking access for these overlapping groups was already strained.
"It is absolutely critical that we pass the New York Public Banking Act. Not only will it help our communities, especially underserved communities of color, recover economically from the toll brought on by the pandemic, but it will also address and combat the inequality found in our financial system,” Pichardo said.