Private-sector banks provide extensive service that eliminates any need for the city of Philadelphia to take on the taxpayer risk of starting a public bank, American Bankers Association President and CEO Rob Nichols argued in a Philadelphia Inquirer pro-con op-ed yesterday. Nichols was responding to efforts by the Philadelphia City Council to study public banking there.
Unlike American Samoa, where a public bank was recently launched because the island territory was on the verge of being completely unbanked, Philadelphia “is served by 38 banks with 291 branches, according to an American Bankers Association analysis of FDIC data,” Nichols wrote. “Twelve of those banks are headquartered in Philadelphia.”
In addition to elevating the risk of politically motivated lending, Nichols cautioned, launching a Philly public bank would cost millions, “tying up resources that could be better used to fund projects such as infrastructure enhancements and community development instead of offering financial services already provided efficiently by private-sector banks operating in a highly competitive marketplace.”