Public Bank on Pennsylvania County's Agenda
Council vice president thinks move would be ‘start of a financial recovery’
by Jennifer Learn-Andes
from the Times Leader, Wilkes-Barre, PA
January 25. 2014 12:12AM
Will Luzerne County get into the banking business?
Luzerne County Council Vice Chairman Edward Brominski sent an email to his council colleagues this week introducing a potential financial relief concept he is researching: creation of a county-owned bank.
“I believe from first impression that this could be the start of a financial recovery for our county. I will release this to the press in the next few days,” Brominski said in the email.
Brominski told council he has scheduled a breakfast workshop to discuss the topic that will include a presentation by Mike Krauss, a director of the Public Banking Institute and chair of The Pennsylvania Project, a non-partisan public policy advocacy organization.
Krauss, a former executive director of the PA Republican State Committee, has been advocating creation of public banks in Pennsylvania as part of a nationwide public banking movement.
Public banks are established and owned by citizens within a government boundary, such as a city, county, state or nation. North Dakota has operated a state bank for almost a century.
Under the plan, public funds such as tax revenue, investments, cash reserves and employee pension funds within a government jurisdiction — in this case the county — would be deposited in the public bank instead of outside institutions, according to The Pennsylvania Project’s website.
These funds are held and leveraged to generate credit that can be loaned at low interest rates to governments within the bank’s boundary lines for capital projects or to cover operating or disaster-related expenses when reimbursements are delayed, the site says.
Lower interest rates?
The change would eliminate the need for “unproductive, ‘rainy day’ accounts” and slash interest payments when local governments must borrow to pave roads and construct buildings, the site says.
Public banks also can partner with community banks to provide affordable credit and increased lending for new and existing businesses, home buyers, students and farmers, the site says.
The banks “return their profits to the people” and put local revenues and assets to work locally instead of for Wall Street and out-of-state financial institutions, the site says.
Public banks must comply with banking requirements and regulations, and a county bank also could cover municipalities and authorities within its borders, such as transportation and housing authorities.
Large public banks have operated “with great success” in other countries and in North Dakota, the site says.
Around 20 states, not including Pennsylvania, are considering legislation involving the creation of state public banks, the Public Banking Institute reports.
Published reports say advocates for a Vermont Public Bank have launched a grassroots effort at local government meetings across the state.
The institute also stresses public banks are run by salaried public servants — not bank executives who earn bonuses, commissions or fees for generating loans.
Fresh idea
Brominski said Friday the proposal is part of his pledge to propose fresh ideas to increase revenue and reduce expenses.
He declined to discuss specifics about the bank, saying he is awaiting the presentation. He said he will announce details about the workshop in several days.
The email said he also will invite state and federal legislators, mayors of the county’s four cities, business leaders and representatives of local colleges, universities and chambers of commerce.
Brominski said he has been working with a local financial advisor researching the “unique idea.”
Doug Hill, longtime executive director of the County Commissioners Association of Pennsylvania, said he was not familiar with a push for public banks or any discussions to start them in Pennsylvania counties.
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