Testimony: New York Needs Public Banks to Combat Discrimination in Lending

Testimony: New York Needs Public Banks to Combat Discrimination in Lending

Hilary Wilson

Thank you, Senator Sanders, for the opportunity to testify today. My name is Hilary Wilson, and I am a Senior Policy Analyst at the Community Service Society of New York (CSS). Founded nearly 180 years ago, CSS uses research, advocacy, and direct services to expand economic opportunity for low-income New Yorkers. As a recent report by the Office of the Attorney General makes clear, discrimination in mortgage lending is not just a thing of the past - it persists in New York today.^[1] My testimony will focus on why we at CSS believe public banking must be part of the solution.

For the last two decades, CSS has conducted an annual survey of New York City residents to gauge how they are doing economically and to assess what policies they believe will help them get ahead. In 2024, we expanded our survey to the state level, surveying a representative sample of all New Yorkers.^[2] In addition to asking respondents about hardships, employment, benefits access, housing struggles and education, we asked them about their experiences with the financial system and financial security.

Importantly, we asked survey takers whether they would support the creation of government-chartered public banks in their communities with a mission to serve the public good. We found that New Yorkers support public banking legislation by a margin of 4 to 1.^[3] The idea of public banking is particularly popular among Black and Latino New Yorkers, with 69 percent of Black residents and 64 percent of Latino residents expressing support. Regionally, support was highest in Western New York, which includes Rochester and Buffalo, and New York City - both home to strong local movements pushing for public banking.

These findings are not surprising given our unjust financial system. Discrimination in mortgage lending occurs in the context of broader discrimination, predation, and abandonment by the banking industry. Research shows that people of color who gain access to conventional credit pay more in interest and fees.^[4] At the same time, they are more likely to lack access to mainstream banking services, forced to rely on more costly alternatives like check cashers, pawn businesses, and a host of new tools like buy now, pay later and earned wage advance apps. Making matters worse, the unchecked consolidation of the financial industry is leading to a new wave of bank branch closures disproportionately affecting New York's low-income communities of color, a trend detailed in a recent op-ed by CSS President and CEO David R. Jones.^[5]

We know that people of color are paying more to access credit, but with what consequences? Our survey shows that while New Yorkers from all racial and ethnic groups carry debt at similar rates, people of color are more likely to experience hardships because of it (see Figure 1). Black, Latino, and Asian residents are more likely to have their credit scores lowered and to struggle to make debt payments. They are also twice as likely as white residents to delay their education because of their debt.

All New Yorkers deserve a financial system that helps them build wealth and thrive financially. Fortunately, mission-driven lenders like credit unions and community development financial institutions (CDFIs) are stepping in to fill the gaps, but they lack the capital to reach all of those being left behind by Wall Street. Public banks would change that. By partnering with these trusted institutions, public banks could help them expand affordable lending and promote financial stability and well-being. Public banking is a proven model and New Yorkers support it.^[6]

Figure 1

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Notes

1. New York Office of the Attorney General. (2023). Racial Disparities in Homeownership. https://ag.ny.gov/press-release/2023/attorney-general-james-highlights-deep-racial-gaps-homeownership-across-new-york.

2. The 2024 CSS Annual Survey of Housing and Economic Security sampled 4,789 New York State adult residents reached through a combination of online panels, cell phones, landlines, text messages, digital targeting, and in-person intercepts from August 16 through October 17, 2024. The survey was designed by CSS in collaboration with Seven Letter Insight and conducted in English, Spanish, Chinese, Haitian Creole, and Russian. We oversampled low-income residents; public housing residents; and residents of New York City, Long Island, Buffalo, Albany, Yonkers, and Syracuse. The margin of error for the entire survey is +/- 1.42 percent at the 95 percent confidence interval. For those making under 200 percent of the Federal Poverty Level statewide, the margin of error is +/- 2.53 percent at the 95 percent confidence interval. The margin of error for respondents in New York City and for those outside of it is +/- 1.96 percent at the 95 percent confidence interval.

3. For more detailed findings, see Community Service Society. (2025). New Yorkers Support Public Banking for the Public Good. https://www.cssny.org/publications/entry/new-yorkers-support-public-banking-for-the-public-good.

4. Gdalman, H., Falgout, M., Celik, N., & Greene, M. (2024). FinHealth Spend Report 2024: Record Spending on Credit Services Puts Pressure on Vulnerable Households. https://finhealthnetwork.org/wp-content/uploads/2024/08/FinHealth-Spend-Report-2024-FHN.pdf.

5. Jones, David R., (2025). A Public Bank Could Boost Access for those Left Behind by Wall Street. Amsterdam News. https://www.cssny.org/news/entry/a-public-bank-could-boost-access-for-those-left-behind-by-wall-street.

6. On the highly successful Bank of North Dakota - the only existing public bank in the U.S. - see Rapoport, A. (2013, April 1). How did deep-red North Dakota end up with the nation's most populist financial institution? The American Prospect. https://prospect.org/power/people-s-bank/.

Issues Covered

Economic Mobility & Security

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