Episode 2: The National Picture
PRESS RELEASE
Philadelphia Public Banking Coalition
March 30, 2021
Councilmember Green discusses the Philadelphia Public Banking Authority
This public conversation addresses issues about establishment of a Philadelphia Public Bank.
PHILADELPHIA—On Tuesday, March 30, 2021, from 4:30 to 5:00, the second program in the “Financing Philadelphia’s Future with Councilmember Derek Green” series was presented by the Philadelphia Public Banking Coalition. The general public is invited to participate in this series of ½-hour programs about a prospective public bank for Philadelphia, held at 4:30 on the last Tuesday of each month. The programs are moderated by Vanessa Lowe, on Zoom at https://us02web.zoom.us/j/85835928783 and livestreamed on the Facebook and Instagram accounts of Councilmember Green and Philadelphia Neighborhood Networks.
Walt McRee, spokesman for the Public Banking Institute, was our guest. McRee produces and co-hosts the bi-weekly radio program “It’s Our Money with Ellen Brown” and hosts PBI’s TV program “The Public Bank Solution.” He provided an overview of national activities to advance public banking and a perspective about Philadelphia’s efforts within the broad context of such activities.
Green reported, “the City will soon be selecting legal counsel to provide advice concerning the establishment and operations of a prospective public bank for Philadelphia. Such legal expertise will enhance the capacity of the City’s Law Department to inform both the city council and the Administration with respect to technical matters. We expect a contract will be in place in April.” Some of the questions outside counsel will be asked to address are: “Can we as a non-member of the Federal Reserve go to the discount window to borrow? Regarding recent changes to the Community Reinvestment Act, could we receive financial support from traditional banks as investments?”
Green introduced Bill #210005 on January 28, 2021 to authorize organization of the Philadelphia Public Banking Authority. This Bill is currently before the City Council Finance Committee.
McRee highlighted the “California Public Banking Option Act,” Bill AB#1177, that was introduced in the California Assembly today (3/30/21). The Act would create the “BankCal Program” “for the purpose of protecting consumers who lack access to traditional banking services from predatory, discriminatory, and costly alternatives, by offering access to voluntary, zero-free, zero-penalty federally insured transaction account and debit card services at no cost to account holders.” As the Public Bank Feasibility Study for the City of Philadelphia conducted by HR&A Advisors, Inc. stated in its September 2020 report, Philadelphia “faces the highest rate of unbanked and underbanked residents of all large cities across the United States.” (Page 5)
McRee noted, “New technologies, digital currencies, digital platforms for accounting… All of this is now in front of us as we look at how to design the public bank of the future.”
Green agreed that “we are hearing many creative ideas in other jurisdictions with reference to ‘fin-tech’ and other technologies that can be used for this initiative.” Looking at local opportunities, Green cited SEPTA’s Key Cards as a form of digital quasi-currency that could be connected to a public bank.
McRee went on to state, “We are seeing around the country that phasing-in a public bank makes a lot of sense from the standpoint of expense, the need for assembling talent, the time required, the regulatory overhead that’s required for being a depository, chartered bank.”
Green recounted the wisdom of his mentor, former Councilmember Marian Tasco: “You don’t want to move in haste and repent in leisure.” Based on research conducted by HR&A Associates, he reported, “It takes a lot of capital and resources to take an entity to become a state chartered bank. And, once there, you are operating within the regulatory perspective and with the additional financial burden of a state chartered bank.” In the prior experience of Dr. Emma Chappell when starting the United Bank, Green recalled, “The goal was to provide lending to as many people as possible. But, a lot of the regulations as a traditional bank hampered their ability to pursue some of their initial goals. So, that’s what has led us to choose a municipal authority approach.”
Green noted that, “As a result of the American Rescue Plan signed into law by President Biden, the City of Philadelphia will receive about $1.4 billion – 50% within 60 days, the balance next year. Some of these dollars can be used to help small businesses, particularly businesses of color where there is a history of having challenges getting access to credit.”
Green referred to how the traditional lending practices of some banks can result in obstacles or difficulties for them providing financing for worthwhile projects, just because such projects are being pursued by “hard to lend to entities” or are for “hard to lend to activities,” citing cooperatives as an example of such an entity and energy efficiency as an example of such an activity. A public bank structured as a municipal authority rather than a chartered bank may be the best way to help close such credit gaps in our financial ecosystem.
The next program in the series will be held on 27th. Councilmember Green and a representative from the Philadelphia Area Cooperative Alliance (PACA) will be discuss the problems encountered by cooperatives in obtaining access to credit and the ways a public bank could empower cooperative development.
McRee and Green gave tribute to Dr. Emma Chappell, a beloved mentor and colleague who was a banking pioneer and friend of public banking.
A recording of the program is available on YouTube at https://youtu.be/HHMdDs3q4gM