Manchester aldermanic committee looks at establishing a ‘public bank’
In March, the Board of Mayor and Aldermen voted to create the Special Committee on Establishing a Manchester Public Bank, based on a suggestion by Ward 4 Alderman Chris Herbert. The committee, consisting of aldermen Kevin Cavanaugh, Ron Ludwig, Dan O’Neil, Bill Barry and Herbert as chairman, held its first meeting on Tuesday.
According to information provided by the Public Banking Institute, “Public banking is banking operated in the public interest, through institutions owned by the people through their representative governments.
Public banks can exist at all levels, from local to state to national or even international. Any governmental body which can meet local banking requirements may, theoretically, create such a financial institution.”
“My motivation is I want to stop bonding through third parties our infrastructure investments,” said Herbert. “I want to start a bank that brings back that money. I am tired of constantly paying out $10 million, $15 million in interest to someone who lives in New York.”
On Tuesday, Herbert presented information from the Public Bank Project, dedicated to “helping local governments pursue innovative policy initiatives to increase public sector investments in areas such as affordable housing, infrastructure, and targeted economic development within low-income neighborhoods and communities.”
According to information provided by Project Director Karl Beitel, over the last two years the Public Bank Project has developed “a basic template for the establishment, funding, and operation of a municipal bank applicable to any of the one hundred and twenty-one charter cities in California.”
While discussing the topic of a public bank, city Finance Director Bill Sanders told committee members, “this will never happen.”
“I know from speaking with the solicitor the laws of New Hampshire will not allow this,” said Sanders. “Enabling legislation would need to be developed. I am very skeptical about this idea. It hasn’t been done anywhere other than in North Dakota.”
According to Beitel, local governments have two options available for establishing locally owned and controlled municipal public banks. Option 1 is to create a full-fledged, state-chartered public bank outright, through either an ordinance or a voter-approved charter amendment. Option 2 is a two-stage process that would first establish a non-depository Municipal Development Corporation to make long-term housing and infrastructure investments, together with a smaller-scale, limited-purpose public bank. Once in operation, the municipality could then expand its operations to establish a locally controlled depository institution that would take over all depository and cash management services currently contracted by the city with private commercial banking institutions.
“A public bank is owned by the taxpayers,” said Herbert. “We had a public bank under FDR, and this financed all the New Deal programs in the 1930s without raising taxes and without much debt.”
Alderman Barry asked Herbert what the process would be to proceed with setting up a public bank.
“That’s a good question. I’m still trying to figure it out,” said Herbert. “At this time, I haven’t talked to the banking department.”
Committee members are expected to research the total dollar amount in assets the city has before proceeding. The committee’s next meeting has yet to be scheduled.
pfeely@unionleader.com
