David Brancaccio: In Philadelphia today, there's a conference to urge state and local governments to start "public banks." A public bank could invest idle taxpayer dollars like public employee pension money or government rainy day funds into the local economy. Mortgages, student loans, neighborhood parks, maybe infrastructure -- but, just what is a public bank?
Marketplace's John Dimsdale reports.
John Dimsdale: As someone who didn’t know anything about public banks, I told the Public Banking Institute’s Michael Krauss that he has a semantic problem. A public bank sounds like a government takeover. He agreed.
Michael Krauss: If you call it public banking, automatically you get red flags. In Washington state, they call it the Washington Investment Trust. They don’t use the word “state” and they don’t use the word “bank” in their legislation.
Whatever you call it, Krauss says local governments are beginning to realize they can put pools of taxpayer money to work in the community instead of sending it to Wall Street.
Krauss: In many states, the money goes off to Bank of America or Morgan Stanley, and they never see it again. It gets loaned into other businesses, other countries, other enterprises. It doesn’t come back to that state.
North Dakota has run a successful state public bank that’s been backing local infrastructure projects for 90 years. Chicago just created the first city infrastructure trust. And 17 state legislatures are considering bills to either start or study their own public banks.
In Washington, I'm John Dimsdale for Marketplace.