Next week, Austin City Council members could vote to kickstart a feasibility study for creation of a "public bank," which "is owned and operated by a public institution, such as a municipal government," according to council documents.
AUSTIN (KXAN) -- Next week, Austin City Council members could vote to kickstart a feasibility study for the creation of a "public bank," which "is owned and operated by a public institution, such as a municipal government," according to council documents.
Brought forward by Council Member Zohaib "Zo" Qadri -- and co-sponsored by members Ryan Alter, Vanessa Fuentes and José ''Chito'' Vela -- the resolution asks the city manager to look at any legal barriers and possible models for creating a public bank.
"Local governments pay oversized fees to private banks to manage their deposits and payments, and a public bank can provide services and credit 'at cost,' returning any profits to the public purse to be used for local development and services," the resolution reads.
If approved, the resolution asks the city manager to return with that feasibility study no later than November 1.
According to the Public Banking Institute (PBI) -- a nonprofit group that, in part, keeps track of legislative efforts tied to public banking -- North Dakota is the only state in the U.S. with an operating public bank. The territory of American Samoa has also created its own public bank because the private industry left the territory.
According to the Bank of North Dakota's website, a group of frustrated North Dakota farmers were behind the early 1900s effort to create that public bank. It's been in operation since.
"Since its inception, the bank has returned over a billion dollars in profits to the state. That means lower tax rates for the taxpayers there," said Geeta Minocha, executive director of the PBI.
States like New Mexico, Arizona, Virginia and Alaska have considered public banking through studies, the creation of a task force or introduction ballot measures, according to the PBI.
"Philadelphia, San Francisco and LA -- I think those are the communities really leading the pack right now. But we've got places like New Jersey, places like Ohio, Missouri, Florida, all of these are places where public banking has come up in conversation," Minocha said.
While public banking is less prevalent in the United States, Minocha says roughly 40% of banks globally are public.
