Government Banks Would Be a Dangerous Tool for Progressive Ideologues
Last month, Democratic Congresswomen Rashida Tlaib and Alexandria Ocasio-Cortez proposed a bill that would allow the incorporation of financial institutions controlled by states and municipalities. These banks would be not-for-profit, tightly regulated, and given special government subsidies. The Congresswomen claim that public banks are necessary because the private sector has been “rigged” against “those grappling with the costs of simply trying to participate” in the economy. “The Public Banking Act ends the era of privileging unaccountable private banks over the public interest,” said Michael Brennan, a progressive lobbyist.
Calling private banks “unaccountable” is more than a bit disingenuous. Financial institutions are among
the most heavily regulated businesses in the country. Not only must they answer to federal and state regulators, but they’re also subject to market forces. However, public banks, as envisioned by Tlaib and Ocasio-Cortez, aren’t beholden to the market at all; they’re more like quasi-private government agencies. The mandates for these public banks laid out by the Democratic Congresswomen make it clear that they’ll primarily be used to promote and finance leftist causes: “environmental justice, tenant protections, labor standards, democratic governance.”
Far from establishing more accountable and consumer-friendly financial institutions, the creation of public banks would give a blank check to politicians who would use and subsidize the banks to advance their own ideological agendas.
Tlaib and Ocasio-Cortez’s bill is a rehash of their 2020 Public Banking Act, which failed to pass the House. But even with th
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