Earlier this year, City Council put Philadelphia on track to be the first big U.S. city to run its own public bank. The plan has stalled, for a very clear reason: the mayor doesn’t want it to happen.
Advocates who believe a public bank can be a tool to reduce discrimination in lending and boost local investment rallied outside City Hall last week to try to change his mind.
“When the mayor doesn’t do his job, what do we do?” Nicole Levy, a member of the Philadelphia Public Banking Coalition, asked a crowd of around 40 people. “We stand up and we fight back.”
City Council voted 15-1 in March to create the Philadelphia Public Financial Authority — that’s the proto-public bank founded at the municipal level in alignment with the Commonwealth’s Economic Development Financing Law. It was championed by former councilmember and current mayoral candidate Derek Green, with an eye towards boosting commercial development for Black and brown entrepreneurs.
There’s just one thing: For the authority to get started, Philly’s mayor needs to appoint board members. Mayor Jim Kenney hasn’t done that — and it’s not in his plans.
“The city does not intend to move forward with the creation or funding of the Philadelphia Public Financial Authority,” spokesperson Kevin Lessard told The Inquirer.
In light of Kenney’s inaction on the issue, the coalition at the rally served a figurative “people’s subpoena,” asserting that he was breaking the law by not moving the authority forward.
Levy, the advocate who spoke at the rally, worked at the Federal Reserve Bank of Philadelphia, the Consumer Protection Financial Bureau, and as a compliance director for fair banking at TD Bank. She believes a public bank will help increase equity for the city’s Black and brown residents.
If you put together all the resident and Philly-based business bank accounts, Levy calculates there’s a total of about $67 billion — with 97% of that sum held by large corporate banks. They aren’t located in the region, she said, and don’t give back to the area.
“We can see in 2020, those banks only invested about $800 million in small businesses in Philadelphia, that is such a small, small number,” Levy told Billy Penn.
When they do grant loans in the region, it’s done unfairly, she noted. Of the $13 billion in mortgage loans made last year to Philadelphians, Levy cited data from the Home Mortgage Disclosure Act showing 47% went to white borrowers, while 18% went to Black borrowers.
“Not only are these banks reinvesting very little of our money back in our community, but they’re redlining with the money that they are investing,” Levy said.
The claim is backed up by other recent examples of how big banks treat residents. Philadelphia in 2019 received a $10 million settlement from Wells Fargo for a suit over “reverse redlining” and recent data from TD Bank also shows a prevalence of lending discrimination in the region.
Whether a sufficient portion of the city would utilize a public bank to make it a bonafide institutional investor on the local level, or if that’s a feasible, beneficial investment strategy, is a far off question. Half a year after it was approved as a lawful body, advocates are still trying to jumpstart the financial authority and make it real.
Mayor Kenney: The PIDC already exists, and your plan is too risky
The ordinance establishing the Philadelphia Public Financial Authority, spearheaded by then-Councilmember Green, notes it would be run with “a preferential directive” towards Black and brown residents.
Green sent Kenney a letter hoping to advance things in early June. The mayor’s response made his antagonistic position clear. Noting that he returned the bill to Council without his signature, Kenney wrote that “existing entities are more than capable of performing the contemplated activity to support disadvantaged businesses.”
Specifically, he named the Philadelphia Industrial Development Corporation “and its entity PIDC Community Capital, along with our other CDFIs” — i.e. community development financial institutions like The Enterprise Center.
Kenney also said he was concerned about how the authority would be funded. His letter notes that the authority would have the power to buy and sell securities, and says that creates “tremendous risk when the only proposed funder for this agency appears to be [the] city.”
Unswayed, Green wrote Kenney a letter in August that included recommendations for the nine-person board of directors for the Philadelphia Public Financial Authority. Curated by Green, his staff, and public banking advocates, the list included:
- David Becker
- John Chin
- Deborah Figart
- Beth Finn
- Nicole Levy
- Jamila Medley
- Muhammed “Mo” Rushdy
- Dina Schlossberg
- Peter Winslow
At Friday’s rally, the Philadelphia Public Banking Coalition and other allies decried the lack of mayoral support. Councilmember Jaime Gauthier, who was a sponsor of the bill establishing the authority, also spoke at the rally.
Gauthier called the lack of action “unacceptable,” saying Kenney is “single handedly preventing progress on urgently needed investment in our neighborhoods and communities in my district — in West and Southwest Philadelphia, and also across our city.”
Suggested board member and banking expert Levy, like Gauthier, hopes to make public banking an issue of note in next year’s mayoral election.
“I don’t think we have a lot of faith that the mayor is going to change his position at this point. But I think it’s so important that this be top of the list for all would-be mayoral candidates to get this done,” Levy said. “To really begin thinking about the financial infrastructure of our city, and reclaiming it back from corporate interests who aren’t adequately invested in our city.”