Testimony by Christopher Fasano of Legal Services Staff Association, UAW Local 2320 and Mobilization for Justice, Inc.
to the New York City Council Committee on Finance regarding Introductions 2099, 2100 and 2164, and Resolution 1600
April 28, 2021
Good morning Chair Dromm and Members of the Committee. My name is Christopher Fasano. I am a senior staff attorney at Mobilization for Justice, Inc. and a member of Legal Services Staff Association Local 2320 in UAW Region 9A. Thank you for the opportunity to testify today in support of Introductions 2099, 2100 and 2164, and Resolution 1600. These proposals promote vital public transparency about the City’s finances and financial relationships and lay the groundwork for a public bank that will democratize the city’s finances.
Each year, the City of New York collects tens of billions of dollars in revenue, from taxes and other sources, to fund public services. Currently, most of this money is placed on deposit with large, commercial banks that systematically harm New Yorkers and finance fossil fuels, speculative real estate, and other destructive industries. This public money should remain within the public domain. The public, not Wall Street, should decide where it is invested. And that public money should always serve a public purpose. The only way to achieve this end is through a public bank, which is a financial institution created by a public entity – such as city, county or state – that is owned by and accountable to the people.
A public bank wrests control of public money from Wall Street banks and empowers the communities that these banks have historically preyed upon. Local governments would deposit their revenue in the public bank and the bank, in turn, would be required to invest this money in permanently affordable housing, small and worker-owned businesses, community-controlled renewable energy, and more. Those very same communities prioritized by the bank’s underwriting policies—those at the margins of the city’s economy—would serve on its board. The bank would be uniquely positioned to identify local economic development needs while always remaining accountable to the people it is designed to serve.
As a first step, Introductions 2099 and 2100 seek to shine a light on NYC’s financial relationships with commercial banks. These two important bills would require NYC to provide the public with a quarterly summary of its accounts at “designated banks,” including balances and fees charged. Additionally, Introduction 2164 would require the NYC Banking Commission to provide meaningful notice of its public meetings and report to the City Council on its determinations of which financial institutions are eligible to hold the City’s deposits.
As New York City takes key steps to establish the nation’s first municipal public bank, Albany can help. The “New York Public Banking Act” (S1762-A (Sanders) / A5782 (Pichardo)) would create a statewide statutory framework for local public banking—making it easier for cities, counties and regions throughout New York State to establish local public banks. We urge the Council to pass Resolution 1600, which urges the Governor and the New York State Legislature to enact the New York Public Banking Act.
A public bank for NYC would leverage billions of dollars of our public money to reinvest in neighborhood-led development, strengthening our economy and advancing racial justice. In particular, Mobilization for Justice, Inc. and the Legal Services Staff Association see public banking as a critical tool to advance housing and financial justice.
A public bank could address the housing crisis through sweeping measures, including financing the construction of social housing to increase the supply of low- and middle-income units in New York City. It could originate or refinance home loans in impoverished communities. And it could also intervene in a more targeted fashion. For example, since the 2008 housing market crash, federal agencies like the Department of Housing and Urban Development and the Federal Housing Finance Agency have sold hundreds of thousands of delinquent home loans, including many loans here in New York City, to an assortment of private equity firms and hedge funds, who then impose onerous terms on homeowners. I have represented those homeowners, who often felt pressured to accept loan modifications they could not afford to stave off foreclosure. A public bank could have rescued them by using its resources to purchase these loans, writing down principal and offering affordable terms. Although the City, in fact, has the Community Restoration Program to buy delinquent home loans, it has only purchased a few dozen loans, while a single private equity firm, Lone Star Funds, purchased tens of thousands.
A public bank with greater capital at its disposal could do much more. A public bank could also provide basic banking services for the unbanked. The COVID-19 Pandemic underscores the importance of making banking services available to all. In just the past couple of months, the IRS has resorted to sending stimulus payments to nearly 26 million households in the form of paper checks, a costly delay for people who rely on this relief to meet basic living expenses, and a problem that will plague the IRS in the coming months as it advances child tax credits. A modern welfare state functions best if members of the public, and especially the most economically marginal groups, have bank accounts. Historically, public entities have played this crucial role of ensuring that all members of the community enjoy the benefits of banking services. From 1910 to1968, people could open accounts through the United States Postal Savings System, a service particularly popular among immigrant depositors who owned over 75 percent of the postal bank’s deposits shortly after its inception. Nearly 100 years later, the Sparkassen public banks in Germany filled a similar void. Due to an influx of refugees and asylum seekers, in 2015 and 2016, Germany’s unbanked population spiked to nearly one million. Private banks largely turned these immigrants away, but the Sparkasssen banks did not, opening over 250,000 accounts for refugees. What differentiates the private and public banks in Germany is the mandate that public banks promote savings and ensure financial services to all individuals. The absence of similar public infrastructure here in New York City leaves 11.2 percent of the city unbanked and another 21.8 percent underbanked, with those denied access to banking services concentrated primarily in Black and Hispanic communities. Only a public bank can guarantee basic financial services for all New Yorkers.
Mobilization for Justice, Inc. and the Legal Services Staff Association strongly urge the NYC Council to pass Introductions 2099, 2100 and 2164, and Resolution 1600, and to continue working with our organization and others to establish a municipal public bank, as a matter of racial, economic, and environmental justice. Thank you again for the opportunity to testify today. Please do not hesitate to contact me with any questions.