Should the city of Austin operate a bank? The municipal council is looking into it

AUSTIN (KXAN) — Next week, Austin City Council members may vote to kick-start a feasibility study for the creation of a “public bank,” which is “owned and operated by a public institution, such as a municipal government,” according to council documents.

Introduced by Councilman Zohaib “Zo” Qadri — and co-sponsored by members Ryan Alter, Vanessa Fuentes and José “Chito” Vela — the resolution calls on the city manager to look at potential legal obstacles and possible models for creating a public bank.

“Local governments pay exorbitant fees to private banks to handle their deposits and payments, and a public bank can provide services and credit ‘at cost’ and return any profits to public coffers to be used for local development and services,” the resolution reads.

If approved, the resolution asks the city manager to come back with that feasibility study by Nov. 1.

Does anyone else do this?

According to Public Banking Institute (PBI)—a nonprofit group that partially tracks legislative efforts related to public banking—North Dakota is the only state in the United States with a public bank in operation. The territory of American Samoa has also created its own public bank as private industry left the territory.

According to Bank of North Dakota website, a group of frustrated North Dakota farmers was behind the early 20th century effort to create the public bank. It has been in operation ever since.

States such as New Mexico, Arizona, Virginia and Alaska have considered public banking through studies, the creation of a task force or the introduction of ballots, according to PBI.

“Philadelphia, San Francisco and LA — I think those are the communities that are really leading the pack right now. But we have places like New Jersey, places like Ohio, Missouri, Florida, all of these are places where public banking has come up in the conversation , says Geeta Minocha, Managing Director of PBI.

While public banking is less prevalent in the U.S., Minocha says roughly 40% of banks globally are public.

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