“Mon­ey is a util­i­ty that belongs to all of us,” says Walt McRee. McRee is a vel­vety-voiced for­mer broad­cast­er now plot­ting an auda­cious chal­lenge to the finan­cial sys­tem. He’s lead­ing a month­ly con­fer­ence call as chair of the Pub­lic Bank­ing Insti­tute (PBI), an edu­ca­tion­al and advo­ca­cy force formed sev­en years ago to break Wall Street’s stran­gle­hold on state and munic­i­pal finance.

“We have Tea Partiers and Occupiers in the same room liking public banking. What does that tell you?”

“This is one of the biggest eye-open­ers of my life,” says Rebec­ca Burke, a New Jer­sey activist on the call. ​“Once you see it, you can’t look back.”

This rag­tag group — for­mer teach­ers, small busi­ness own­ers, social work­ers— wants to char­ter state and local banks across the coun­try. These banks would lever­age tax rev­enue to make low-inter­est loans for local pub­lic works projects, small busi­ness­es, afford­able hous­ing and stu­dent loans, spurring eco­nom­ic growth while sav­ing peo­ple — and the gov­ern­ment — money.

At the heart of the pub­lic bank­ing con­cept is a the­o­ry about the best way to put America’s abun­dance of wealth to use. Cities and states typ­i­cal­ly keep their cash reserves either in Wall Street banks or in low-risk invest­ments. This mon­ey tends not to go very far. In Cal­i­for­nia, for exam­ple, the Pooled Mon­ey Invest­ment Account, an agglom­er­a­tion of $69.5 bil­lion in state and local rev­enues, has a mod­est month­ly yield of around three-quar­ters of a percent.

When state or local gov­ern­ments fund large-scale projects not cov­ered by tax­es, they gen­er­al­ly either bor­row from the bond mar­ket at high inter­est rates or enter into a pub­lic-pri­vate part­ner­ship with investors, who often don’t have com­mu­ni­ty needs at heart.

Wall Street banks have used shady finan­cial instru­ments to extract bil­lions from unsus­pect­ing local­i­ties, help­ing dev­as­tate places like Jef­fer­son Coun­ty, Ala. Mak­ing the wrong bet with debt, like the Ken­tucky coun­ty that built a jail but couldn’t fill it with pris­on­ers, can crip­ple communities.

Even under the best con­di­tions, munic­i­pal bonds — an enor­mous, $3.8 tril­lion mar­ket — can cost tax­pay­ers. Accord­ing to Ellen Brown, the intel­lec­tu­al god­moth­er of the pub­lic bank­ing move­ment, debt-based financ­ing often accounts for around half the total cost of an infra­struc­ture project. For exam­ple, the east­ern span of the San Fran­cis­co-Oak­land Bay Bridge cost $6.3 bil­lion to build, but pay­ing off the bonds will bring the price tag clos­er to $13 bil­lion, accord­ing to a 2014 report from the Cal­i­for­nia legislature.

Pub­lic banks reduce costs in two ways. First, they can offer low­er inter­est rates and fees because they’re not for-prof­it busi­ness­es try­ing to max­i­mize returns. Sec­ond, because the banks are pub­licly owned, any prof­it flows back to the city or state, vir­tu­al­ly elim­i­nat­ing financ­ing costs and pro­vid­ing gov­ern­ments with extra rev­enue at no cost to taxpayers.

“It enables local resources to be applied local­ly, instead of export­ing them to Wall Street,” says Mike Krauss, a PBI mem­ber in Philadel­phia. ​“It democ­ra­tizes our money.”

Leg­is­la­tors, Brown says, com­mon­ly object that gov­ern­ments ​“don’t have the mon­ey to lend.” But this mis­un­der­stands how banks oper­ate. ​“We’re not lend­ing the rev­enues, just putting them in a bank.” That is, the deposits them­selves — in this case tax rev­enues — are not what banks loan out. Instead, banks cre­ate new mon­ey by extend­ing cred­it. Deposits sim­ply bal­ance a bank’s books. Pub­lic banks, then, expand the local mon­ey sup­ply avail­able for eco­nom­ic devel­op­ment. And while PBI has yet to suc­cess­ful­ly char­ter a bank, there’s an exist­ing mod­el in the unlike­li­est of places: North Dakota.

Dur­ing the Pro­gres­sive Era, a polit­i­cal orga­ni­za­tion of prairie pop­ulists known as the Non­par­ti­san League took con­trol of the state gov­ern­ment. In 1919, they estab­lished the Bank of North Dako­ta. It has no branch­es, no ATMs, and one main depos­i­tor: the state, its sole own­er. From that deposit base, BND makes loans for eco­nom­ic devel­op­ment, includ­ing a stu­dent loan program.

BND also part­ners with local pri­vate banks across the state on loans that would nor­mal­ly be too big for them to han­dle. These loans sup­port infra­struc­ture, agri­cul­ture and small busi­ness­es. Com­mu­ni­ty banks have thrived in North Dako­ta as a result; there are more per capi­ta than in any oth­er state, and with high­er lend­ing totals. Dur­ing the finan­cial cri­sis, not a sin­gle North Dako­ta bank failed.

BND loans are far more afford­able than those from pri­vate investors. BND’s Infra­struc­ture Loan Fund, for exam­ple, finances projects at just two per­cent inter­est; munic­i­pal bonds can have rates rough­ly four times as high. And accord­ing to its 2015 annu­al report, the most recent avail­able, BND had earned record prof­its for 12 straight years (reach­ing $130 mil­lion in 2015), dur­ing both the Great Reces­sion and the state’s more recent down­turn from the col­lapse in oil prices. A 2014 Wall Street Jour­nal sto­ry described BND as more prof­itable than Gold­man Sachs. Over the last decade, hun­dreds of mil­lions of dol­lars in BND earn­ings have been trans­ferred to the state (although the over­all social impact is some­what com­pli­cat­ed by the bank’s role in sus­tain­ing the Bakken oil boom).

The long march through the legislatures

Brown found­ed the Pub­lic Bank­ing Insti­tute in 2010, after years of evan­ge­liz­ing in arti­cles and books such as The Web of Debt: The Shock­ing Truth About Our Mon­e­tary Sys­tem and How We Can Break Free. Since then, by Walt McRee’s esti­mate, around 50 affil­i­at­ed groups have sprout­ed up in states, coun­ties and cities from Ari­zona to New Jersey.

“I’ve been work­ing against the sys­tem all my life,” says Susan Har­man of Friends of the Pub­lic Bank of Oak­land. ​“I think pub­lic bank­ing is the most rad­i­cal thing I’ve ever heard.” Har­man, a for­mer teacher and a one­time aide to New York City May­or John Lind­say, helped get the Oak­land City Coun­cil to pass a res­o­lu­tion last Novem­ber direct­ing the city to deter­mine the scope and cost of a fea­si­bil­i­ty study for a pub­lic bank — a tiny yet promis­ing first step.

A fea­si­bil­i­ty study com­plet­ed by San­ta Fe, N.M., in Jan­u­ary 2016 found that a pub­lic bank could have a $24 mil­lion eco­nom­ic impact on the city in its first sev­en years. A res­o­lu­tion intro­duced last Octo­ber would cre­ate a task force to help the city pre­pare to peti­tion the state for a char­ter. ​“It’s the small­est munic­i­pal­i­ty inves­ti­gat­ing pub­lic bank­ing,” says Elaine Sul­li­van of Bank­ing on New Mex­i­co, who hopes the task force could com­plete its busi­ness plan by the end of the year. ​“We’re inter­rupt­ing the sta­tus quo.”

In Feb­ru­ary 2016, the Philadel­phia City Coun­cil unan­i­mous­ly vot­ed to hold hear­ings dis­cussing a pub­lic bank. Advo­cates are now work­ing with the city trea­sur­er to find funds to cap­i­tal­ize the bank.

PBI has faced a rougher path in state leg­is­la­tures. In Wash­ing­ton, state Sen. Bob Hasegawa (D) has intro­duced a pub­lic bank­ing bill for eight straight years. Despite numer­ous co-spon­sors, the bill can’t get out of com­mit­tee. Efforts in Ari­zona and Illi­nois have also gone nowhere. Cal­i­for­nia Gov. Jer­ry Brown (D) vetoed a fea­si­bil­i­ty study bill in 2011, argu­ing the state bank­ing com­mit­tees could con­duct the study; they nev­er did.

One over­whelm­ing force oppos­es pub­lic bank­ing: Wall Street, which warns that pub­lic banks put tax­pay­er dol­lars at risk. ​“The bankers have the pub­lic so fright­ened that [pub­lic bank­ing] will destroy the econ­o­my,” says David Spring of the Wash­ing­ton Pub­lic Bank Coali­tion. ​“When I talk to leg­is­la­tors, some are opposed to it because ​‘it’s for com­mu­nists and social­ists.’ Like there are a lot of social­ists in North Dakota!”

In Ver­mont the finan­cial indus­try fought a pro­posed study of pub­lic bank­ing, says Gwen Hall­smith, an activist and for­mer city employ­ee of Mont­pe­lier. ​“We don’t have branch­es of Bank of Amer­i­ca or Wells Far­go in Ver­mont, but they have lob­by­ists here.” So Hall­smith got the study done her­self, through the Gund Insti­tute at the Uni­ver­si­ty of Ver­mont. It found that a state bank would boost gross domes­tic prod­uct 0.64 per­cent and cre­ate 2,500 jobs.

The state even­tu­al­ly passed a ​“10 per­cent” pro­gram, using 10 per­cent of its cash reserves to fund local loans, most­ly for ener­gy invest­ments like weath­er­iz­ing homes. Mean­while, Hall­smith helped push indi­vid­ual towns to pass res­o­lu­tions in favor of a state bank— around 20 have now done so. Hall­smith says her advo­ca­cy came at the expense of her job; the may­or of Mont­pe­lier, in whose office she worked, is a bank lob­by­ist. Hall­smith now coor­di­nates a citizen’s com­mis­sion for a Bank of Vermont.

Because of state resis­tance, PBI has encour­aged its sup­port­ers to go local. And sev­er­al issues have emerged to assist. For instance, envi­ron­men­tal and indige­nous activists have demand­ed that cities move mon­ey from the 17 banks that finance the Dako­ta Access Pipeline. But there­in lies anoth­er dilem­ma: Who else can take the mon­ey? Com­mu­ni­ty banks and cred­it unions lack the capac­i­ty to man­age a city’s entire funds, and larg­er banks are bet­ter equipped to deal with the legal hur­dles involved in han­dling pub­lic mon­ey. So divest­ing from one Wall Street bank could just lead to invest­ing in another.

A pub­lic bank could solve this prob­lem, either by accept­ing cities’ deposits or by extend­ing let­ters of cred­it to com­mu­ni­ty banks to bol­ster their abil­i­ty to take funds. Law­mak­ers in Seat­tle have float­ed a city- or state-owned bank as the best alter­na­tive for rein­vest­ment, and Oak­land coun­cil mem­ber Rebec­ca Kaplan has con­nect­ed divest­ment and pub­lic bank­ing as well.

Anoth­er oppor­tu­ni­ty aris­es with mar­i­jua­na legal­iza­tion ini­tia­tives. Because cannabis remains ille­gal at the fed­er­al lev­el, most pri­vate banks are wary of work­ing with licensed pot shops, fear­ing legal reper­cus­sions. This means many of these shops sub­sist as all-cash busi­ness­es. ​“It’s seri­ous­ly dan­ger­ous; peo­ple arrive in armored cars to City Hall to pay tax­es with huge bags of mon­ey,” says Susan Har­man. In Oak­land and San­ta Rosa, Calif., pub­lic bank­ing advo­cates are part­ner­ing with cannabis sell­ers to offer pub­lic banks as an alter­na­tive, which would make the busi­ness­es safer while giv­ing the banks anoth­er source of capital.

While Don­ald Trump hasn’t for­mal­ly intro­duced a long-dis­cussed infra­struc­ture bill, his empha­sis on fix­ing the nation’s crip­pling pub­lic works has also bol­stered the case for pub­lic bank­ing. Ellen Brown main­tains the coun­try could save a tril­lion dol­lars on infra­struc­ture costs through pub­lic-bank financ­ing. That’s prefer­able to Trump’s idea of giv­ing tax breaks to pub­lic-pri­vate part­ner­ships that want big returns.

From the Great Plains to Trenton

“All it’ll take is the first domi­no to fall,” says Shel­ley Brown­ing, an activist from San­ta Rosa. ​“Towns and cities will turn in this direc­tion because there’s no oth­er way to turn.” And PBI mem­bers think they’ve found an avatar in Phil Mur­phy, a Demo­c­rat and for­mer Gold­man Sachs exec­u­tive lead­ing the polls in New Jersey’s guber­na­to­r­i­al pri­ma­ry this year.

Mur­phy has made pub­lic bank­ing a key part of his plat­form. ​“This mon­ey belongs to the peo­ple of New Jer­sey,” he said in an eco­nom­ic address last Sep­tem­ber. ​“It’s time to bring that mon­ey home, so it can build our future, not some­body else’s.”

Derek Rose­man, a spokesman for Mur­phy, tells In These Times that Bank of Amer­i­ca holds more than $1 bil­lion in New Jer­sey deposits, but only made three small busi­ness loans in the entire state in 2015. Trou­bled state pen­sions could help cap­i­tal­ize a state-owned bank, and would earn more while pay­ing low­er fees.

Murphy’s pri­ma­ry oppo­nent, John Wis­niews­ki, chaired the Bernie Sanders cam­paign in the state, while Mur­phy raised mon­ey for Hillary Clin­ton. Some believe Mur­phy is sim­ply using pub­lic bank­ing to cov­er his Wall Street back­ground — and on many issues, Wisniewski’s pol­i­cy slate is more pro­gres­sive. But Brown thinks Murphy’s past primed him to rec­og­nize pub­lic banking’s pow­er: ​“It’s always the bankers who get it.”

The first new state-owned bank in a cen­tu­ry, char­tered in the shad­ow of Wall Street, could shift the land­scape. What’s more, blue-state New Jer­sey and red-state North Dako­ta agree­ing on the same solu­tion would high­light pub­lic banking’s biggest asset: transpar­ti­san pop­ulist sup­port. ​“We have Tea Partiers and Occu­piers in the same room lik­ing pub­lic bank­ing. What does that tell you?” asks PBI’s Mike Krauss.

“Regard­less of declared con­ser­v­a­tive or pro­gres­sive affil­i­a­tions,” says state Sen. Hasegawa, ​“reg­u­lar folk … almost unan­i­mous­ly grasp the con­cept.” He is work­ing with Washington’s Tea Par­ty­backed trea­sur­er, Duane David­son, to advance pub­lic bank­ing. ​“I go to east­ern Wash­ing­ton, … they get the whole issue about inde­pen­dence from Wall Street and cor­po­rate control.”

In fact, Krauss is him­self a Repub­li­can. ​“The biggest thing going on in Amer­i­ca, peo­ple decid­ed we don’t have any con­trol any­more,” he says. ​“Whether it’s Bernie’s peo­ple or Trump’s peo­ple, they’re artic­u­lat­ing the same thing but dif­fer­ent­ly. … They want con­trol of their mon­ey — and it is their money.”