Public Bank

public banking

What is Public Banking? (Question and Answer)

Public banking is banking operated in the public interest, through institutions owned by the people through their representative governments. Public banks can exist at all levels, from local to state to national or even international. Any governmental body which can meet local banking requirements may, theoretically, create such a financial institution.

Public banking is distinguished from private banking in that its mandate begins with the public’s interest. Privately-owned banks, by contrast, have shareholders who generally seek short-term profits as their highest priority. Public banks are able to reduce taxes within their jurisdictions, because their profits are returned to the general fund of the public entity. The costs of public projects undertaken by governmental bodies are also greatly reduced, because public banks do not need to charge interest to themselves. Eliminating interest has been shown to reduce the cost of such projects, on average, by 50%.

When the public interest demands, the mission of public banks is to respond immediately, to assure the long-term prosperity of the community.”
Public Banking Institute – Introduction to Public Banking

With the recent economic crisis many are asking what can be done to prevent another. There has been discussion from both the left and the right about auditing and ending the federal reserve. Fortunately there is a simple, more cost effective solution to saving taxpayers money while furthering public safety and infrastructure, public banking.  Some cities such as San Fransisco, Philadelphia, Chicago and Santa Fe are not waiting for states to enact a state bank and instead are starting their own municipal public bank.

A municipal or state public bank will save taxpayers money, grow the private sector and provide a buffer between the lone star state and wall street. Instead of allowing private banks to play with taxpayers money on wall street, we will instead put our finances in an autonomous public bank away from the whims of politicians.

  • Use the state bank to provide construction loans to local school districts. The Bank of North Dakota is providing school districts with $250 million dollar loans with a 2% interest rate.
  • After a year of residency allow Texans to refinance, consolidate or take out student loans from the Bank of Texas, just like North Dakota. The bank could have a policy that education resources can only be used for public and non-profit schools.
  • The Bank of Texas could offer small loans to fund infrastructure in rural communities where too-big-to fail banks cannot make a profit


  • Fill out the proper financial paperwork with the Texas Department of Banking
  • Cost: Per the Texas Department of Banking we estimate the start up cost to be no more than $5 Million
  • A municipal public bank can be created either through an ordinance or charter amendment. Because the Texas constitution only allows for cities to amend their charter once every two years, we recommend a voter-ratified charter amendment. The hope would be to eventually replace all TIRZ and the entire rebuild program with a municipal public bank.
  • All state banks must have at least one organizer and a minimum of 5 and not more than 25 directors
  • The City of Santa Fe (New Mexico) is suggesting two separate approaches to appointing board members (page 20)
  • The principal means of enforcing compliance with strict underwriting criteria is to mandate regular independent external review of the Bank’s balance sheet and lending practices (page 9)
  • Explore the possibility of codifying into the municipal bank charter amendment the ability to finance affordable housing (page 15)
  • Close corporate loopholes in the state sales tax and use revenue to start a state public bank

Texas constitution
code – local government code
chapter – 105 depositories for municipal funds
section 105.001 – definitions
section 105.031 – qualification as depositor
section 105.034 – condition to acting as a depository

chapter 116 – depositories for county funds
section 116.001 – definitions
section 116.024 – selection of depositories and sub depositories
section 116.051 – qualification as depository or sub depository

code – finance code
chapter – 33 ownership and management of a state bank
section 33.103 – board of directors
section 33.106 – officers

NPR – School District Owes $1 Billion On $100 Million Loan

Public University Debt Per System

ARIZONA STATE SENATE 52nd Legislature, Second Regular Session FACT SHEET FOR S.B. 1301 state-owned bank task force

Bill Moyers – How Wall Street Financial Fees Choke Our Cities

ILSR – How One State Escaped Wall Street’s Rule and Created a Banking System That’s 83% Locally Owned

Business Journal – Seattle needs a public bank

Seattle Public Bank Coalition – Public Banks for U.S. Cities

Texas’ Local Debt Hits $328 Billion — That’s $12,400 Per Person

State of Texas Debt Clock

Wall Street Journal – Shale Boom Helps North Dakota Bank Earn Returns Goldman Would Envy

Bank2 – Chickasaw Bank Holding Company

Chickasaw Nation bank aims to grow Finance, firm has no loans to tribe

Indian-Owned Bank 7th nation wide in Mortgages

A Sovereign (And Successful) Chickasaw Nation

Switzerland – Cantonal Banking

Wikipedia – Switzerland Cantonal Banking

Oklahoma legislator explores creation of central state bank

Hawaii Needs a Public Bank

State Bank Concept Takes Hold in Hawaii

Public Banking – Part 5: San Diego Could Benefit From a Public Bank

Colorado needs a public bank

22 states have been looking into starting state-owned banks, similar to the Bank of North Dakota

Pennsylvania Public Bank Project

Arizona Public Banking

California Legislature Passes Bill to Study State-owned Bank

Wall Street Journal – San Francisco Municipal Bank

Philadelphia Mayoral Candidates Propose Municipal Bank

New York Times – Public Banks Are Essential to Capitalism

New York Times – What North Dakota’s Public Bank Does for Small Businesses

New York Times – Yes, Bernie Sanders Knows Something About Breaking Up Banks

Public Banking in Costa Rica: A Remarkable Little-known Model

Vermonters Lobby for Public Bank—And Win Millions for Local Investment Instead

Chicago Mayoral Candidate Amara Enyia Calls for Public Bank

Demos – How State Banks Can Reduce Student Debt

New York Times – Many States See the Potential of Public Banking

Is it time for a new way to finance state development?

Demos – Putting Oregon’s Money To Work For Oregon: Introducing The Virtual State Bank

Seattle Public Bank Coalition – Public Banking for U.S. Cities

S&P affirms credit ratings for Bank of North Dakota

Alternet – How State-Owned Banks Can Help Americans (And Stick It to Wall Street, Too)

Alternet – A New Way American Cities Can Free Themselves of Wall Street’s Control

Why is public banking important for social change?

World Bank – Financial Sector Assessment, Costa Rica

Competition Policies in Emerging Economies: Lessons and Challenges from Central America and Mexico

Structural Adjustment in Central America: The Case of Costa Rica

INSEAD – Subprime Crisis and Board (In-)Competence: Private vs. Public Banks in Germany

Private banks have failed – we need a public solution

Comparison Between Private Bank and Public Bank

Truth Out – Remaking the Federal Reserve, Building Public Banks and Opting Out of Wall Street

Truth Out – Swimming With the Sharks: Goldman Sachs, School Districts and Capital Appreciation Bonds

Truth Out – Prop. 51 vs. a State-Owned Bank: How California Can Save $10 Billion on a $9 Billion Loan

Truth Out – Washington State Joins Movement for Public Banking

Are State Owned Banks the Antidote to the Too Big To Fail Epidemic?

New York Times – Should States Operate Public Banks?

Wikipedia – Landesbank: German Public Banking

German Banks in the Global Economy: Global Pressures and Public Sector Banking

Alternet – What We Can Learn from Germany: How Countries With Publicly Owned Banks Do Better Than America

Levy Institute – Why Does Brazil’s Banking Sector Need Public Banks? What Should BNDES Do?

U.S. News – Can Public Banking Finance the New Economy?

Agricultural Development Banking: Lessons from Latin America?

Inter American Bank – Public Banks in Latin America: Myth and Reality

International Monetary Fund – Germany: Technical Note on Banking Sector Structure

ILSR – A Tool to Find Banks that Invest in the Local Economy

Big banks broke America: How to achieve the ultimate revenge against them now

Treasurer-elect Deb Goldberg open to establishing public bank

Should Seattle Bypass Big Commercial Banks And Set Up Its Own Public Bank Instead?

Business Journal – City Council Member Nick Licata: Seattle needs a public bank

A Municipal Bank In San Francisco? City Explores Revolutionary New Model

Iceland Bank Íslandsbanki to be State-Owned

Harvard Center for International Development: “State-Owned Banks Do They Promote or Depress Financial Development and Economic Growth?”

What We Can Learn from Germany: How Countries With Publicly Owned Banks Do Better Than America

Rolling Stone – Five Economic Reforms Millennials Should Be Fighting For

But Governor, You Can Create Money! Just Form Your Own Bank

Ellen Brown – Public Sector Banks: From Black Sheep to Global Leaders

Demos – How State Banks Can Reduce Student Debt

A View From Germany – How the three-pillared German Banking System has gotten through the crisis

OECD – The German Banking System – Lessons from the Financial Crisis

Next City – Why a Philly Mayoral Candidate Wants the City to Run a Public Bank

Next City – What U.S. Cities Can Learn From Puerto Rico’s Crisis

Philadelphia Magazine – Should City Hall Lend Money to Small Businesses?

Philadelphia Magazine – Op-Ed: Don’t Be Afraid of a Municipal Bank

Why Do Banks Want Our Municipal and State Government Deposits? Hint: It’s Not to Make Loans.

U.S. News – Can Public Banking Finance the New Economy?

San Diego Free Press – US Mayors Fed Up With Paying Wall Street Interest and Fees

San Francisco Gate – Cities and states paying millions in secret fees to Wall Street

The Nation – How Wall Street Caused a Water Crisis in America’s Cities

El Pais – Madrid mayor drops campaign promise of a local public bank

Washington Times – Bank of North Dakota reports record $130.7 million profit

Time – Are State-Owned Banks the Antidote to the Too-Big-To-Fail Epidemic?

Brookings – The Future of State-Owned Financial Institutions

Brookings – Breaking up the big banks won’t stop another financial crisis

Jacobin Magazine – Socialize the Banks

Roosevelt Institute – Municipal Banking: An overview

Huffington Post- A Municipal Bank In San Francisco? City Explores Revolutionary New Model

Huffington Post – Bank of North Dakota Soars Despite Oil Bust: A Blueprint for California?

Texas Observer – Texas Bullion Depository the Stuff of GOP Dreams — For Now

Star Telegram – Gold depository could soon be on its way to Texas

Portland Press Herald – Maine should have a state-owned bank; it’s working well enough for North Dakota

Grand Forks Herald – Grand Forks eligible for $15 million Bank of North Dakota loan

Grand Forks Herald – State-owned bank launching $300 million loan program for North Dakota farmers

Grand Forks Herald – State bank partners with Realtors on student loan refinancing

Bismarck Tribune – Bank of North Dakota profits could be included in budget shortfall fix

Bismarck Tribune – Grand Forks committee wants economic development funds for child care

Bismarck Tribune – Bank of North Dakota posts 12th year of record earnings

Bismarck Tribune – Bank of North Dakota earnings continue climb: $94.2 million profit

Yukon News – The case for a northern infrastructure bank

Governing – North Dakota’s Oil Boom is a Blessing and a Curse

Governing – Hawaii Seeking to Create the Nation’s Second State-Owned Bank

Governing – The Case for a State-Owned Bank

Stanford – Boomtown Bankers in North Dakota: What to Do With All That Money?

Yes Magazine – How State Banks Bring the Money Home

Yes Magazine – More States May Create Public Banks

Yes Magazine – How the Bailout Killed Local Lending—And How Some States Hope to Bring It Back

Chicago Magazine – Is Chicago Really Broke?

Democracy Now – From Occupying Banks to City Hall: Meet Barcelona’s New Mayor Ada Colau

School gets $10 million Bank of North Dakota loan for High School

Gov candidate Murphy: Public ‘Bank of N.J.’ would save pensions, rev economy

The Guardian – The truth is out: money is just an IOU, and the banks are rolling in it

Washington Times – North Dakota mulls idea of tax-supported nest egg for newborns

Huffington Post – What a State-Owned Bank Can Do for New Jersey

City Council Committee To Vote Tuesday On $100K Appropriation For Public Bank Study

Chloe Eudaly Wants to Look Into A City-Owned Bank

Mother Jones – Donald Trump Wants to Gut Protections for Bank Customers. Here’s How to Fight Back.

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