Feds’ Theft of City Funds Fuels Call for Public Bank
By Phyllis Eckhaus
NYC Comptroller Brad Lander. Photo by Marc A. Hermann / MTA.
“Highway robbery.”
That’s how city comptroller and mayoral candidate Brad Lander characterized the actions of the Trump administration mid-February, in clawing back approximately $80 million dollars in federal migrant funds already expended by the city—funding approved by the Biden administration and recently disbursed to a municipal Citibank account.
According to Lander, whose team discovered the stealth money-grab, the city had already moved the money out of its Citibank account. Still, Citibank maneuvered to hand the money over to the feds without notifying the city, except by charging the city an additional $15,000 as an “overdraft” fee.
Prodded by Lander, the Adams administration has promised to sue the feds to try to get the city’s money back.
But what about Citibank, is it complicit in the alleged heist?
“Citibank just proved why we can’t trust private banks with public dollars,” Andy Morrison, Associate Director of the New Economy Project, declared to The Village View, asserting that a New York City public bank would “safeguard” public dollars. He described Citibank’s tactics as “unprecedented,” and especially disturbing given that “the city puts hundreds of millions if not billions on deposit with Citibank every year.”
Morrison and the Project are leaders of the Public Bank NYC Coalition, a group of more than 50 neighborhood, tenant, advocacy and other organizations pressing for city and state legislation to establish a New York City public bank. Members include the Cooper Square Committee and the Lower East Side People’s Federal Credit Union.
The coalition condemned the clawback as a “brazen act” that “urgently” compels the city to “reassess the bank’s status as a municipal depository.”
A public bank would hold the billions of dollars the city currently has on deposit with commercial banks and “reinvest in local economic development—as a proactive solution to persistent racial and economic inequality. A public bank would give New York City greater control over its funds, protecting them from federal overreach and ensuring they serve the public good,” the coalition contended.
Advocates also argue that a public bank—not beholden to private shareholders—would be more stable than private banks, asserting it would lack incentive to engage in the risky speculation that triggered the failures of Silicon Valley, First Republic, and Signature banks in 2023.
Although there are public banks worldwide—holding a quarter of global banking assets—currently, the only public bank in the United States is the Bank of North Dakota (BND) founded in 1919 when the state’s fed-up farmers rebelled against commercial banks that represented out-of-state profiteers.
The Wall Street Journal has touted BND as more profitable than Goldman Sachs—and by charter, BND’s profits support North Dakota’s public interest. Those profits have underwritten public school teacher salaries during the Depression, launched the first federally-insured student loan program, assisted flooded-out farmers with recovery, and lowered state taxes.
In New York City, tenant advocates argue that a public bank could underwrite truly affordable housing and promote accountability.
Jodie Leidecker, lead organizer with the Cooper Square Committee, has sought unsuccessfully to pressure commercial banks to act against the “egregious landlords” to whom those banks have loaned money. She drew a link between Citibank’s “feckless” behavior toward the city and its role in underwriting the “harassment and displacement” of rent-stabilized tenants. A public bank, Leidecker said, would offer “a shining ray of hope in a financial system that drains wealth from working people to enrich the already well-off.”
New York State Senator James Sanders, Jr.—representing the 10th District in Queens—has introduced public banking legislation in Albany. The bill, which would authorize the chartering of municipal public banks, has majority support in the State Senate and near-majority support in the Assembly.
In addition to supporting Sanders’ bill, the coalition has called on city officials to work with the state legislature on “home rule legislation” that would help make a New York City-specific public bank a reality.
Great article. This is crazy and sounds like Citibank sure is complicit. Adams is compromised and Trump hates NY. Bring on a NYC public bank- we are fed up!