Public banks — those are the ones that are open to the public, right?
Yes . . . and no. Although people may casually refer to a “public banking system,” they are really talking about a network of private banks that profit by managing loans to, and investments from, individuals, businesses, and governments.
This is not the kind of “public bank” of particular interest to the world of affordable housing.
Those public banks are owned by the public. In a sense they are community-owned. Credit unions are also community-owned savings and lending institutions much like banks (and becoming more like banks in many countries as time goes on). But credit unions are owned by members who are linked in common interest, such as a shared national heritage, or employment in a particular industry.
Public banks are owned by all-inclusive communities: in other words, different levels of government. A terrific article on the purpose and history of public banks can be found at the Public Banking Institute: Introduction To Public Banking
Some affordable housing advocates feel that truly responsible local investment in affordable housing can only come from a bank that puts the community first. That may not ever happen with privately-owned banks, which are first and foremost responsible to a collection of profit-driven shareholders. That group may approve arms sales in the Middle East as the best place to invest the money you deposit when you walk through the door or go on line to feed your account.
In contrast, housing advocates’ idea of a public bank is one committed to the profitable development of, and within, the particular community which owns it. That includes support for affordable housing.
For a recent story on what might be achieved by a new publicly-owned bank, read more in the Huffington Post: What If Banks Were Publicly Owned? In LA, This May Soon Be A Reality.
For another take on the importance of public banks, with further information on both America’s sole public bank, as well as a well-regarded (by some) German public banking system, try: American Cities Need Public Banks That Make Local Investments Where Private Banks Won’t
