Wall Street bull by htmvalerio, Flickr (CC BY-NC-ND 2.0)
By Eric Tegethoff, Public News Service | February 3, 2021
Oregon lawmakers want cities to be allowed to put their cash in banks other than large, for-profit institutions. Bills in the Legislature — Senate Bill 339 and House Bill 2743 — would enable municipalities to create public banks, which are owned and run by a state or municipality.
James Davis, who chairs the Oregon Public Bank Alliance, said cities then could deposit their reserves somewhere besides big banks. He said that would create the capacity for public municipal banks to provide bigger loans and bonding for cities when they want to build infrastructure, such as buildings and bridges.
“The kind of interest that cities currently pay to the big for-profit Wall Street banks – it’s exorbitant and it can be cut almost in half when working with a municipal bank,” he said. “That cuts the cost of building a school dramatically, which stretches our tax dollars quite a bit.”
Davis said lawmakers are looking at legislation that clarifies language allowing cities to create public banks because there is some question about the legality under the Oregon Constitution of creating a state bank.
Davis noted that these wouldn’t be brick-and-mortar institutions. He said public banks create the capacity for other institutions to provide assets such as business loans at lower interest rates than big banks.
“That’s because the credit unions and the community banks are going to be the public face for those loans,” he said. “So, it’s not a competition model, it’s really a cooperation model. It really benefits our local banks and credit unions.”
One prominent model for public banking is the Bank of North Dakota, which has been around for more than a century. Davis said that bank has weathered financial crises such as the Great Recession of 2008 well and helps provide such benefits as low-interest student loans.
“That’s the power a public bank can create for our communities,” he said, “when we design economic systems that kind of keeps the money in the community and helps to build a more resilient banking infrastructure here.”
