Researchers at Demos and New Economy Project recently published “Public Banks for Racial Equity: Democratizing Finance to Build Community Wealth,” a study that looks at the history and persistence of the racial wealth gap and the role that public banks can play in building broader prosperity in Black and brown communities.
The study stresses the need for public banks to have inclusive, accountable and independent governance to maintain mission-focused relationships with the communities they serve. Working in partnership with community development lenders, especially community development financial institutions is also necessary to effectively address racial wealth inequities. Finally, public banks need robust capitalization to work effectively, as well as regulation tailored to their unique status as public entities.
Researchers looked at the history of public banking in North Dakota to highlight where traditional for-profit banking has fallen short when it comes to creating broad prosperity.
They also interviewed advocates involved in public bank campaigns in California, New York City, Philadelphia, as well as here in Massachusetts, and detail these campaigns’ different proposals for bringing in community advisers and for dealing with state requirements for collateralization and FDIC insurance.
The result is a terrific addition to a growing body of work emphasizing the power of public banking for growing family and community wealth and making our financial system more democratic and sustainable.