Tonya Bah, an activist with Philadelphia Neighborhood Networks, criticized Mayor Jim Kenney for declining to establish the Philadelphia Public Finance Authority, which City Council authorized in March.
When City Council in March voted 15-1 to approve a bill to create a new Philadelphia Public Finance Authority to boost disadvantaged businesses, advocates for establishing a public bank in the city thought that they had won their first major victory.
But that win has remained elusive because Mayor Jim Kenney has declined to establish the authority by funding it or appointing members of its board.
“This is an affront to the democratic process as well as an act of extreme indifference concerning the state of economic injustice in our city,” said Susan Windle, an organizer with the Philadelphia Public Banking Coalition.
Windle and about 40 other public banking supporters on Friday held a rally outside City Hall and issued a symbolic “people’s subpoena” compelling Kenney to act on the legislation.
But Kenney spokesperson Kevin Lessard said Friday that the city “does not intend to move forward with the creation or funding of the Philadelphia Public Financial Authority.”
“Existing entities are more than capable of performing the contemplated activity to support disadvantaged businesses,” Lessard said in a statement. “The city is fortunate to have terrific partners like the Philadelphia Industrial Development Corporation (PIDC) and its entity PIDC Community Capital, along with our other [community development financial institutions] who work every day to provide access to capital for small businesses.”
Public banks are government-owned financial institutions that hold and invest tax revenue and can make loans. They are rare: The Bank of North Dakota is the only major public bank in the continental United States, although many others have folded in the past.
Supporters say they prevent taxpayers from having to pay fees to Wall Street banks that typically hold city money, while also allowing the city to prioritize lending to underserved businesses that often face difficulties accessing traditional banking systems, including small and minority-owned businesses.
The creation of the Public Finance Authority was not intended to establish a public bank in Philadelphia because state law prevents the city from doing so directly, said the bill’s author, former Councilmember Derek Green. Instead, the authority, which would be a separate governmental entity from the city, would serve as a stepping stone that could help create a public bank.
And in the meantime, the authority would work to help underserved businesses itself, such as by supporting their efforts to get loans from traditional banks by issuing letters of credit.
Green resigned in September to run in next year’s mayoral race, and the fate of public banking in Philadelphia could hinge on whether he prevails in the May 2023 Democratic primary to replace Kenney, who is term-limited.
Several other mayoral hopefuls who were on Council in the spring voted for Green’s bill, but there’s no guarantee they would prioritize public banking if they become mayor.
Green said that, despite Kenney’s assertion that other financial institutions provide public service-minded banking, the fact that Black- and brown-owned businesses still struggle to access capital shows significant need remains.
“There are entities that could also do this type of work, but they don’t do that,” Green said in an interview. “We wanted to at least get this first step started to help grow businesses.”
After Council approved the legislation with a veto-proof majority in the spring, Kenney allowed the legislation to become law without his signature. But it cannot move forward unless the administration approves spending on the authority and nominates board members to lead it.
Council President Darrell L. Clarke said it was “quite frustrating not to have something enacted” after Council approves it.
“I’d like to see it implemented, but the [Philadelphia Home Rule] Charter establishes a certain process,” Clarke said Thursday. “We have attempted from time to time to force the implementation of programs. We’ve been told by the courts that that’s just not within the purview of City Council.”