We want to highlight this terrific article in today’s Boston Globe by John Chesto, on the Black Economic Council of Massachusetts and their legislative priorities. Front and center is BECMA’s support for establishing a public bank in Massachusetts.
BECMA is motivated by concerns over the disproportionate effect of the COVID-19 pandemic on Black-owned businesses, which has been compounded by long-standing inequity in access to financing
The article rightly points out that the campaign to establish a Massachusetts public bank isn’t an attempt to privatize or undermine for-profit lenders. Rather, the public bank’s relationship to private lenders would be a collaboration, “additive to the existing ecosystem, as Samuel M. Gebru, BECMA’s policy director, points out. The public bank “is not going to be a competitor.”
A comparison would be Community Development Financial Institutions and Community/Economic Development Corporations. CDFIs and CDCs have established a complimentary relationship with the banking industry, helping to develop small businesses which then transition to being profitable customers of private banks when the businesses’ needs become larger or complex. S.665/H.1223, “An Act to Establish a Massachusetts Public Bank,” has the potential to amplify this model, prioritizing lending in areas where successful projects, whether new or expanded businesses, creation of affordable housing, or infrastructure improvements, will have a “multiplier effect” on local community life and economic vitality.
Other BECMA priorities include legislation to support minority entrepreneurs, provide equity in public contracting and construction, institute wage transparency, improve diversity on public and private boards, institute universal early childhood education and quality childcare, establish access to affordable broadband for families of K-12 students, and legislation improving green infrastructure and promoting environmental justice. The program also highlights budget line items that they will support to advance these goals. You can read the full agenda here.
The article notes that public banking will receive a second lift this week from the Boston Foundation, which will propose it as a solution to disparities in access to credit between white-owned small businesses and those owned by people of color.
And while the article mentions the 2011 state feasibility study, which, on the basis of a report by the Boston Federal Reserve dismissed the necessity of a public bank, BECMA’s chief executive, Segun Idowu, disagreed, noting not only problems that minority-owned businesses have had accessing PPP funds, but the fact that just 1% of venture captial based start-ups are owned by Black entrepreneurs.
“There’s clearly a structural racism problem in the industry,” Idowu said. “I know different leaders are working on trying to correct it at their own banks . . . We all need to transform the entire industry. That’s why the public bank is one of the issues that we’re championing.”
We’re honored to be working with BECMA in building constituent support and coalition strength. Bankers, small business owners, and municipal managers, find out what a Massachusetts Public Bank can do for you! Voters, explore the site, get inspired, and call your state Representative and Senator and ask that they co-sponsor S.665/H.1223, “An Act to Establish a Massachusetts Public Bank.”