Public bank advocates urge Mayor Jim Kenney to act on legislation
When the City Council in March voted 15 to 1 to approve a bill to create a new Philadelphia Public Finance Authority to boost disadvantaged businesses, proponents of creating a public bank in the city believed that they had won their first great victory.
But that victory remained elusive as Mayor Jim Kenney refused to establish authority by funding it or appointing members to its board of directors.
“This is an affront to the democratic process as well as an act of extreme indifference regarding the state of economic injustice in our city,” said Susan Windle, organizer of the Philadelphia Public Banking Coalition.
READ MORE: Board member Derek Green hopes to create a public bank for Philadelphia. Here’s how it might work.
Windle and about 40 other public bank supporters staged a rally outside City Hall on Friday and issued a symbolic “people’s subpoena” compelling Kenney to act on the legislation.
But Kenney spokesman Kevin Lessard said Friday that the city “does not intend to move forward with the creation or funding of the Philadelphia Public Financial Authority.”
“Existing entities are more than capable of performing the activity envisioned to support disadvantaged businesses,” Lessard said in a statement. “The city is fortunate to have great partners like the Philadelphia Industrial Development Corporation (PIDC) and its PIDC Community Capital entity, as well as our other [community development financial institutions] who work every day to provide access to capital for small businesses.
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Public banks are state-owned financial institutions that hold and invest tax revenues and can provide loans. They are rare: the Bank of North Dakota is the only major public bank in the continental United States, although many others have closed in the past.
Supporters say they are preventing taxpayers from having to pay fees to Wall Street banks that typically hold the city’s money, while also allowing the city to prioritize lending to underserved businesses that have often struggle to access traditional banking systems, including small businesses and minority-owned businesses.
The creation of the Public Finance Authority was not intended to establish a public bank in Philadelphia because state law prevents the city from doing so directly, said the bill’s author, the former board member Derek Green. Instead, the authority, which would be a separate government entity from the city, would serve as a springboard that could help create a public bank.
And in the meantime, the authority would try to help underserved businesses itself, for example by supporting their efforts to obtain loans from traditional banks by issuing letters of credit.
Green resigned in September to run in next year’s mayoral race, and the fate of state-owned banks in Philadelphia could hinge on whether he wins the May 2023 Democratic primary to replace the time-limited Kenney.
Several other mayoral candidates who served on the council in the spring voted for Green’s bill, but there is no guarantee they would prioritize public banks if they become mayors.
Green said that despite Kenney’s assertion that other financial institutions provide public service-oriented banking services, the fact that black and brown-owned businesses still struggle to access capital shows that there remains a great need.
“There are entities that could also do this type of work, but they don’t,” Green said in an interview. “We wanted to at least start that first step to help grow the businesses.”
After the Council approved the legislation with a non-vetoing majority in the spring, Kenney allowed the legislation to become law without his signature. But it can only move forward if the administration approves the authority’s spending and appoints board members to run it.
Council Chairman Darrell L. Clarke said it was “pretty frustrating not to have passed something” after the Council approved it.
“I would like it to be implemented, but the [Philadelphia Home Rule] The charter establishes a certain process,” Clarke said Thursday. “We have tried from time to time to force the establishment of programs. The courts have told us that this is simply not within the jurisdiction of the municipal council.