Reps. Tlaib and Ocasio-Cortez Introduce Bill to Create National Public Banking System

Nov 13, 2020Banks & Credit Unions, Congressional Legislation

Last month, Representatives Alexandria Ocasio-Cortez (D-N.Y.) and Rashida Tlaib (D-Mich.), both of whom serve on the House Financial Services Committee, introduced legislation entitled the Public Banking Act, which would create a federally supported public banking system.

“The creation of public banks will also facilitate the use of public resources to construct a myriad of public goods including affordable housing and local renewable energy projects,” said Rep. Ocasio-Cortez in a statement. “Public banks empower states and municipalities to establish new channels of public investment to help solve systemic crises.”

According to The Hill, through the system, the Treasury Department and Federal Reserve would open credit facilities and offer grants to nonprofit banks. Because those banks would compete with commercial banks, they would be prohibited from charging account fees, requiring minimum balances, and levying interest rates of more than 15 percent.

A June 2019 survey by the Federal Deposit Insurance Corp. (FDIC) revealed that nearly 30 percent of individuals without bank accounts do not have accounts due to an inability to meet minimum balance requirements. Roughly 49 percent of those surveyed said that this inability at least contributed to their unbanked or underbanked status.

“Wall Street-run banks put key financial services out of reach for many of my residents who are struggling to make ends meet,” said Congresswoman Tlaib in a statement. “It’s long past time to open doors for people who have been systematically shut out and provide a better option for those grappling with the costs of simply trying to participate in an economy they have every right to—but has been rigged against them.”

The Representatives also noted that the bill is intended to help local governments, small businesses, and community development projects by giving them easier access to loans and federal financial relief programs, as many struggle with the financial hardships of the COVID-19 pandemic.

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