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What Ohio can learn from North Dakota about banking
A conversation with Geeta Minocha, executive director of the Ohio Public Banking Coalition, about what public banking could do for our state.
If I approached the average American and said something like, “You should be able to bank with the Post Office!” They would look at me as if I were speaking an alien language despite banking with the post office being normal in places like France, Japan and China.
But we don’t even have to look to foreign countries for the benefits of public banking. Take North Dakota, which created the country’s only public bank in 1919.
In short, a leftwing movement of farmers fed up with private banks’ control over their industry led to the creation of the Bank of North Dakota. It has turned a profit every year of its existence. It continues to benefit everyday North Dakotans despite Republicans controlling the state for as long as you and I have been alive.
The bank has proved more than capable of weathering crises: It funded recovery efforts after natural disasters, and as the big private banks floundered in 2008, necessitating a costly government life raft, the Bank of North Dakota sailed by — the state even had a sizeable budget surplus at the end of the year. Its structure helped the state withstand the pandemic. “Because of the Bank of North Dakota and the network of financial institutions that are able to thrive as a result of its existence, there was a faster distribution of PPP loans to the right people in the first tranche than like any other state in the entire country,” Syrop told me. Throughout the pandemic, it has remained profitable.
Public banking is still a foreign concept to most Americans as private banking is deeply rooted on both sides of our political system.
But to get an idea of what a public bank could offer Ohioans, even those who are entirely satisfied with their private bank, The Rooster spoke with Geeta Minocha of the Ohio Public Banking Coalition.
Minocha split her childhood between Northeastern Ohio and rural central Florida.
It was Northeast Ohio’s financial disconnect, along with the benefits of public banking in other countries, that spurred her advocacy for public banking when she moved to New York City to attend law school in 2020.
“I immediately recognized some of the parallels between the situations about how public banking has been used abroad and some of the gaps in Ohio,” Minocha said.
While meeting remotely with political candidates, elected officials, non-profits and everyday people, the idea eventually snowballed into creating the Ohio Public Banking Coalition in 2022, with Minocha serving as the executive director.
Minocha said a public bank—“any financial institution that is publicly owned, taxpayer owned and government operated”—would help everyday Ohioans in three significant ways.
The first would be a way to serve unbanked or underbanked populations. Minocha said that is about 30 percent of Ohioans, though she conceded it’s difficult to get an exact number on this issue. With numbers around America ranging from 20 percent to 40 percent, Ohio is in the middle.
“There's an issue of scale when it comes to banking,” Minocha said. “These people, private banks don't want to do it because it's expensive for them, and they don't want to lose out on profits. It's potentially quite risky. So they're not going to step up and do it. That means the government has to step up and do it.”
Minocha pointed out that studies have shown good things happen when you give poor people money.
“We know from a number of case studies, that if you give people money, they know what to do with it. They know best how to use it and how to take care of themselves and empower themselves.
“So banking, the unbanked and underbanked populations is potentially a very powerful tool to spur growth and development in Ohio. And it's also, frankly, morally the right thing to do.”
But public banking wouldn’t just aid financially insecure populations. A public bank would also save taxpayers on massive government projects that are usually funded by the private sector at an extra cost to the public.
“The second really important thing relevant to every person in Ohio and beyond is that public banks act as depositories for government dollars and act as a new revenue generator for local governments,” Minocha said.
“So when local governments want to finance their projects, they turn to the private sector for loans and the bond market, but the bond market can sometimes be unreliable. And so most often you see private obligations on our local governments.”
That means we pay “millions if not billions” annually in interest payments on private sector loans, which Minocha points out is money not spent on things normal people care about like healthcare, education, or waste management—just to name a few.
A public bank would be able to fund those government projects below market rates.
The third windfall, according to Minocha, would be with small businesses.
“Small business owners have a very difficult time capitalizing on their businesses because small business loans are just not profitable for the private sector,” Minocha said.
“They will not give out small business loans if they can help it. If a small business is lucky enough to get out a first loan, they can't get a second, third or fourth bite at the apple to sustain or potentially expand their businesses.”
A public bank, Minocha argued, would prevent many small businesses from going under during their first couple years of operation.
“Public banks can then lend to communities, businesses and enterprises that the private sector might just ignore because it's not profitable for it to actually invest in those enterprises,” she said.
“Wow, this makes a lot of sense,” you might be saying just like I did after hearing Minocha’s elevator pitch.
But what seems like a common-sense position to everyday people is tougher to enact in a political system deeply intertwined with private banking money. That’s doubly true in a state like Ohio with likes of Key Bank, Huntington and Fifth Third all headquartered here.
“I was meeting personally with a major organization … in Northeast Ohio two years ago,” Minocha recalled.
“In this board meeting of a very well-known and respected institution, I was giving this pitch. At the end of it, one of the main directors said, ‘You know what, we like this idea, and it makes a lot of sense. I get what you're saying, and I appreciate what you're saying, but I'm going to be very honest with you: We take a lot of money from Huntington and Key Bank, and they're just not going to go for it.’”
Another problematic issue is the outsized role the predatory payday loan industry plays at the Statehouse and local politics throughout Ohio. This was after many Statehouse Republicans predicted the death of the industry after the legislature passed a modicum of reform in 2018 that lenders have since worked around.
“The payday lending industry, of course, is still very much alive and well, in spite of what people might tell you,” Minocha said. “And so their lobbyists are always popping up from around the corner and fighting against issues like this.”
Lastly, many politicians are like everyday Americans in that public banking is a foreign concept to them.
“The response from elected officials has definitely been mixed,” Minocha said. “I would say that there have been some good faith responses from elected who are just unfamiliar with this, right?
“It seems so new and bizarre to them. They've never heard of it. So they're willing to give it a go, but they don't quite understand how we would begin the process of implementation. And so they're scared of starting something new on the Democratic [Party] side.”
Minocha and her 12-member team at Ohio Public Banking Coalition continue to meet with as many elected officials, political candidates and non-profit groups as they can since the status quo isn’t working for so many in Ohio’s marginalized communities.
“Why not try something different, right? If it doesn't work, it doesn't work, and we can throw up our hands. But at least we can say we tried.”