New York City is missing out on thousands of new affordable apartments and billions of dollars in local investments without a publicly owned bank to deposit its cash, according to an analysis by the city’s former chief economist and fellow researchers.
A $6.5 billion deposit in a city-owned bank over five years would quickly send most of that money to local credit unions and organizations focused on community development, according to the assessment by Dr. James Parrott and Michele Mattingly of the New School’s Center for New York City Affairs.
The researchers say the bank — a proposed alternative to the private institutions that now handle the city government’s cash — would provide financing for 17,000 new income-restricted housing units over five years, while making loans to small businesses, fueling more local jobs and saving the city millions on fees.
“That lending is going to take place in the local economy and support the banking needs of consumers and businesses,” said Parrott, who served as New York City’s chief economist from 1992 to 1994. “It’s going to have much more locally experienced economic effect rather than those deposits going to large banks that then operate on a global scale.”
Despite majority support in the state Senate, New York lawmakers failed to pass legislation last session that would allow cities to create their own public banks. But the concept is gaining traction in the Empire State and across the country. Earlier this month, Los Angeles, the nation’s second-largest city, took steps to establish a public bank with lawmakers arguing it would better serve residents of color and low-income Angelenos.
On the national level, U.S. Rep. Alexandria Ocasio-Cortez, a New York Democrat, introduced a bill to ease the creation of public banks in 2020.
New York City currently stashes its money in an array of private institutions approved by a municipal banking commission. Those assets included $60 million that the city had in…
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