Q: What problems do public banks solve?

A:

City and state governments pay billions of dollars to banks and investors in interest on loans issued for public purposes. Fifty percent of the cost of infrastructure, on average, goes to interest. Public banks can make below-market loans to state and local governments, saving them millions or even billions of dollars.

Without that alternative, state and city governments today routinely cut programs that benefit low-income citizens and students to close “budget gaps” that appear on a regular basis, leaving many unmet needs for roads, bridges, public transit, energy, housing, education, water, and telecommunications services. If interest payments on infrastructure, housing, economic development, and student loans were going to the public instead of private shareholders, we could lower taxes and create the money to meet basic needs.

Public banks can also reduce the interest paid by consumers and businesses on student loans, home loans and business loans, and they can provide banking services to the un-banked and under-banked.

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