Lawmakers introduce bill to create national public banking system

Democratic lawmakers Alexandria Ocasio-Cortez (N.Y.) and Rashida Tlaib (Mich.) last week introduced the Public Banking Act, which would allow for the creation of federally chartered and supported public banks.

Why should we care?
Proponents say public banks could reach the more than 20% of U.S. households who are either unbanked or underbanked. The bill, if passed into law, would allow nonprofit banks access to liquidity and credit facilities through the Federal Reserve. Public banks have been getting more attention in recent years, as fintechs, regulators, and consumer groups put pressure on incumbent banks to reduce fees and offer easier access to financial services. The proposed legislation would also allow local governments, community development projects, and small businesses access to loans and federal financial relief programs. Whether public banks would take off is an open question, but a public bank already exists in North Dakota. California also recently passed a law allowing cities and counties to create public banks.