Public Banking Around the US

When United States citizens realized stuffing their life savings underneath their mattresses was not a good idea, the opportunity of a public bank came into existence. Banking in the United States of America started in the 1790s and developed into a highly complex system. One of these complex systems is the public bank. The Public Bank is a financial institute in which a state, municipalities, and public actors are the owners. The bank has no shareholders to pay, so the savings are passed onto the customers. Public agencies, local businesses, residents, and students can enjoy the benefits. Borrowers, people who apply for loans, also receive lower rates which are more affordable.


There are around 600 public banks in the United States of America today, and 550 of those 600 are listed on the NASDAQ (the balance being on the NYSE). A public bank is a fantastic institution to strengthen your state. Whatever profits are made, some are reinvested into the community. Money is used towards the protection and aid of local banks. This provides support and services to customers whose needs are not being met by a private bank. There isn’t one primary goal of profits but moving money off Wall Street and back into the city. The three goals for a public bank is to finance student loans, small businesses, and small-scale infrastructure projects. 

An average student borrower from a public bank may save over $8,000 overall because of better financing options, and lower interest rates, while private banks are geared to maximizing only profits, which is their key objective. Another reason is to give the city more control over its own finances. Using a public bank makes the city and surrounding cities stronger and more independent from government funds. 

The Century Old Bank

We cannot have a discussion or conversation about a public bank without mentioning The Bank of North Dakota. The bank is a state-owned and state-run financial institution. This well-known bank is a great model of a successful public bank. Its mission is to help with agriculture, commerce, industry, school student loans, and farm relief in North Dakota. Keep it all in the family is a good expression to explain the pros of The Bank of North Dakota which was founded in 1919. Many states have tried to copy this famous bank, but it seems there is a risk in starting up a public bank, as it costs a lot of money to get it up and running.

US Public Banks

Many states have tried to start a public bank but have had trouble with the legislation. New York filed legislation in the 1970s to start a public bank and was stopped by the opposition of the New York Chamber of Commerce and the New York Stock Exchange. Public recognition came in support of public banks when a New Jersey politician ran on the platform of pro-public banks and won the position of Governor. This started a fad where many cities tried to legislate a public bank in areas such as San Francisco, Los Angeles. Oakland, Santa Fe, and Seattle. The public bank has been a long time coming; and on October 2nd, 2019, in California, Gavin Newsom signed AB 857 into law. 

The AB 857 allows local governments to start their own public banks specifically to authorize the public lending of public credit and authorize public ownership of public stock in public banks for the purpose of achieving cost savings and strengthening and supporting local economies. This movement flowed through the states and now 17 cities have started their own public banks. Since the 1920’s many US states have pushed for public banks, and finally, it is acceptable and legal. California has paved the way for more states to make it easier to make their dreams come true to have a strong flourishing city with little interference from the federal government.

Public banks have been a great benefit to keep cities strong and introduce a good public banking practice, which many American citizens have wanted for quite a long time.