The Divest movement continues to fuel momentum for public banking as climate-conscious cities face the need for alternatives to big out-of-state and multinational banks, which have persisted in funneling $1.9 trillion in loans since 2016 toward expanding fossil fuel extraction. As observed in a recent article for In These Times, Aaron Fernando describes how public banking could enable needed financing for renewables.
“Public banking has already been implemented to great success in Germany, where the third-largest bank is state-owned and has underwritten energy efficiency upgrades for more than 3.5 million homes. … In New York City, ‘financing is a big barrier’ for solar conversions, says Noah Ginsburg, director of the Here Comes Solar program at Solar One, a nonprofit provider of technical assistance for local solar projects. This is because of the ‘shortage of mission-aligned financial institutions.’ Transitioning a multi-family building to solar can still cost as much as $100,000, Ginsburg says, more than an affordable housing provider may be able to finance, even if the system pays for itself in five years.”
Fernando explains the benefits that could come to a city like NYC:
“New York City’s ‘short-term deposits are sitting in big Wall Street banks making low returns,’ says Stephan Edel, project director of New York Working Families, a member of Public Bank NYC. In a public bank, that money could reap higher returns at lower fees and go to work for the common good. Edel adds that a public bank could eventually take investments from the city’s $200 billion pension fund, and even help fund the transition to a zero-carbon economy—which will require billions in public investment—without raising taxes or adding on more government debt.
“This is because of the unique ability of banks, under our financial system, to multiply their deposit money, explains Edel: ‘If a bank has an average of $30 million in capital, the bank can lend out several times that amount.’”
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