Opinion: New York can make history with a Rochester public bank
Legislation would create the first institution of this kind in the U.S. in over a century and lead to solutions that address poverty and inequality.
The Rochester skyline. Roland Shainidze Photography
The Legislature is poised to approve a groundbreaking bill that would bring public banking to New York – a major step toward building a just, transparent, and accountable financial system. Lawmakers must not waver in the face of inevitable backlash from the banking lobby.
The Bank of Rochester Act, sponsored by Senator Samra Brouk and Assemblyman Harry Bronson, would authorize the City of Rochester to establish a municipal public bank. As drafted, the bill contains especially robust provisions that position the bank for success, presenting the most promising opportunity in over a century to establish a full-fledged public bank in the U.S.
Public banks, created by governments to serve the public interest, hold public deposits and reinvest in local economic development. Establishing one in New York would make history; although hundreds of public banks exist around the world, the only one operating in the U.S. is the state-owned Bank of North Dakota, established in 1919.
Like many areas in New York, Rochester urgently needs bold solutions to address poverty and inequality. A recent report by the state Comptroller’s Office found Rochester has the fifth highest child poverty rate of any U.S. city. Another study shows children of color in Rochester are disproportionately affected by poverty.
For decades, commercial banks’ redlining and disinvestment practices have perpetuated racial and economic inequality. Last year, a report by the state Attorney General revealed glaring racial disparities in mortgage lending statewide. During the first year of the pandemic, banks siphoned $1 billion in predatory overdraft fees from struggling New Yorkers, according to our organization’s analysis.
In contrast, a public bank would be mission-driven to serve the public good and be accountable to local communities, not private shareholders. Its governance would include community representation, ensuring the bank’s actions reflect the interests of the public rather than the profit motives of Wall Street. The daily operations of the bank would be run by qualified, independent banking professionals charged with carrying out the bank’s mission.
So what would this mean for Rochester? A public bank would begin to transform the city’s financial system, partnering with responsible lenders to expand access to affordable mortgage loans, finance affordable housing and Black and immigrant-owned small businesses, and invest in renewable energy and sustainable infrastructure. By focusing on community needs, a public bank would help build a just and resilient local economy.
In doing so, a public bank would also strengthen Rochester’s local banking sector. The public bank would provide sorely needed liquidity and other support to small banks and credit unions, like Genesee Co-op Federal Credit Union, with proven track records of meeting community credit needs and helping Rochester residents achieve financial security.
This partnership model has proven successful in North Dakota, where the century-old BND has fostered the highest concentration of local banks and credit unions in the country. During the pandemic, BND worked with local financial institutions to distribute more federal Paycheck Protection Program loans per capita than any other state.
In 2018, New Economy Project launched a powerful grassroots movement that has put public banking on the map in New York state. We have advanced bold legislation, like the New York Public Banking Act, which would create a statewide framework for cities and counties to establish public banks. A majority of the state Senate, a near-majority of the Assembly, the Attorney General, and over 100 local elected officials from 33 cities and counties support the bill. But the deep-pocketed banking industry has continually lobbied to stymie its progress.
The Bank of Rochester Act, modeled on the New York Public Banking Act, is smaller in scale but no less historic. Supported by Rochester Mayor Malik Evans, the City Council, and the state legislative delegation, the bill builds on lessons from California’s 2019 public banking law, establishing the strongest public banking framework in the country and laying a solid foundation for the Bank of Rochester's long-term impact.
It’s time to bring public banking to New York, with Rochester leading the way to a just economy and future.
Andy Morrison is associate director of New Economy Project.