"An Act to Establish a Massachusetts Public Bank"

The last legislation regarding the Massachusetts Public bank was H.1114, “An Act to Establish a Massachusetts Public Bank”, filed in the House by Representatives Mike Connolly and Tony Cabral. An identical bill, S.736, was filed in the Senate by Senator Jamie Eldridge. The bill was sent to study in the 2026 legislative session.

Why a public bank?

A Massachusetts public bank will put state funds to work for local economies, rather than anonymous international banks. It will help provide cost-effective financing for small businesses and municipalities, land trusts and cooperatives, and projects for climate change adaption and remediation. A public bank is uniquely strong because of both words: the public and the bank.

Why should a public bank be public?

It puts public money to work for the public good. When the state deposits a portion of revenues into the public bank, it enables our tax dollars to work for our communities many times over. That’s because those deposits allow the bank to be part of the larger banking system of loans and deposits which serve to expand the money supply. Our state revenues will stretch much further by being part of this system.

Currently much of the state’s funds are deposited in the Massachusetts Municipal Depository Trust (MMDT), which invests nationally and internationally. The Massachusetts public bank will bring some of those dollars home to work for our communities many times over. The state will not draw out funds deposited in Massachusetts-based banks.

The bank will be established by having the Legislature transfer $50 million a year for four years to capitalize the bank as required by the law. After that initial transfer, it will hold $1.6 billion of state deposits currently held in the MMDT.

The public bank provides financing where others won’t. There are many sound borrowers in Massachusetts that may not meet the collateral or timeline requirements of the private market. The bill specifically assists:

• Cities and towns seeking an affordable and flexible alternative to the bond market for infrastructure projects
• Very small, small and medium-sized businesses paying livable wages, especially in underserved and rural communities
• Worker-owned co-ops, land trusts, and other entities with nontraditional ownership structures
• Small farms and agricultural co-ops

The public bank promotes fair and sustainable economic growth. The public bank will have the explicit mandate to:

• Address past and present inequities experienced by women and communities of color, their neighborhoods, businesses, and organizations working to address economic injustice
• Support initiatives to mitigate the dangers of climate change and to promote substantial reductions in greenhouse gas emissions
• Increase opportunities to build affordable housing across the state by partnering with existing state agencies
• Promote sustainable agricultural production by local farms and helping to address food insecurity

The public bank increases the capacity of existing community banks, CDFIs, and credit unions in Massachusetts. Through participation loans, the public bank will partner with local financial institutions, bringing more Massachusetts residents into the banking system.

• It strengthens our local state-chartered banks by joining with them to make loans benefiting our local communities.
• It broadens the reach of Massachusetts Community Development Financial Institutions (CDFIs) and Community Development Corporations (CDCs) by increasing their financing.

The public bank is professionally run. The legislation provides for both robust, independent, professional staff supervising the bank’s day-to-day operation and public input into the bank’s mission.

• The bank operates under the oversight of an independent chief executive officer and professional staff.
• The Governor and Treasurer will appoint professional, experienced members of the board of directors.
• Mission-driven partners, such as municipalities, small businesses, CDFIs, farms, environmental justice organizations, and organized labor, will provide input through a board of advisors.
• The bank will also maintain an online public comment portal (just like federal agencies) to ensure community input.

Why should a public bank be a bank?

Banks play a unique role in our financial system because they take deposits. Because banks can offset their liabilities between each other, they grow the money supply and enable transactions that wouldn’t be possible with just cash. A bank is self-sufficient once capitalized, and puts its deposits to work growing the local economy. There’s a reason banks are the gold standard for wealth management: they’re the most efficient way to grow wealth. It’s time that Massachusetts harnesses that power for the public good.