Philadelphia Public Banking Coalition Comments on Study by HR&A Advisors
Today, 9/30, the City Treasurer announced the release by HR&A Advisors of a report on the Philadelphia Public Bank Feasibility Study they conducted for the City.
- City Press Release: https://www.phila.gov/2020-09-30-philadelphia-public-bank-feasibility-study-released/
- HR&A Study: https://www.phila.gov/media/20200930101919/Philadelphia-Public-Bank-Feasibility-Study_-FINAL_Sept-2020.pdf
The Philadelphia Public Banking Coalition provides the following comments pertaining to the HR&A Study:
The Philadelphia Public Banking Coalition (PPBC) welcomes the Public Bank Feasibility Study prepared by HR&A Advisors for the City of Philadelphia. This Report confirms the desirability and feasibility of establishing a municipal authority as a Philadelphia Public Bank that gives the City autonomy over its financial resources and provides financial support for economic development with job creation to lift up our people. It’s high time that Philadelphia brought its money home to serve Philadelphians, not the high-rolling clients of the Wall Street banks that almost toppled our economy just a decade ago.
The Report identifies why Philadelphia needs a public bank. Drawing on data from the US Census and the Federal Reserve, HR&A estimates an $840 million “lending gap” for small businesses in need of funding but unable to obtain it from existing financial institutions. A Philadelphia Public Bank can help fill this lending gap, as well as many other unmet credit needs of our people.
The scope of the HR&A Study was limited. The focus of the Study was directed to support of small businesses that are currently underserved by traditional banks. Specifically, the Study confirmed that businesses owned by Blacks and Latinx do not have equal access to loans, noting that “In Philadelphia, 88% of small businesses in low- and moderate-income census tracts are not receiving any loans.” Although the PPBC takes issue with some of HR&A’s approaches, assumptions, methodologies, and conclusions, the Study provides a useful, static analysis of how a Philadelphia Public Bank can address these inequities in access to funding.
We note our specific disagreement with the legal conclusions presented in the study as incomplete and, to a great extent, plainly wrong. We do not believe any legislative or constitutional changes are needed to create the Bank. As a Home Rule City, we have full capacity to do this, particularly via the mechanism of a public authority.
Needed, but beyond the scope of the Study, is a strategic business plan, the identification of programs, assignment of priorities, and development of an implementation roadmap. Direct benefits to the City to reduce its costs of borrowing and facilitate its priorities were not addressed by the Study. We urge the City to make note of the Study as it moves forward towards establishment of a Philadelphia Public Bank.