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State-owned bank would be a risky experiment

A Bank of America branch in Boston.David L. Ryan

While the Globe believes that Massachusetts should be a “pioneer” and experiment with public banking, the Massachusetts Bankers Association believes that this move would put state taxpayer monies at risk (“To close racial wealth gap, open a state-owned bank,” Editorial, May 8). By our calculation, Massachusetts is one of the most well-banked states in the nation, with nearly 275 depository institutions and numerous nonbank financial firms serving our communities.

We also have a robust system of public and quasipublic agencies that provide financing to small businesses, affordable housing efforts, municipalities, and economic development projects throughout the state. Massachusetts Growth Capital Corp., MassDevelopment, the Massachusetts Housing Partnership, and MassHousing are only a few of the numerous state agencies helping entrepreneurs, local officials, and homebuyers. These agencies have a track record of providing technical assistance, loans, and grants to serve the very businesses mentioned by supporters of the public bank.


Proponents of a public bank rarely discuss the serious risks for taxpayers and municipalities. While no bank makes a loan expecting the borrower to default, unfortunately some loans are not repaid. If borrowers at the state-owned bank default, that leaves the Commonwealth, and ultimately the taxpayers, responsible for covering these losses.

The editorial also notes that the public bank could serve the cannabis market. However, even though the current legislative proposals on Beacon Hill would require the bank to lend to 16 different industries and sectors, there is no mandate to serve the cannabis industry. Several local banks already serve state-licensed cannabis businesses, and the Massachusetts Bankers Association strongly supports efforts in Congress to expand the protections for institutions seeking to provide banking services to these businesses.

Our member institutions believe that enhancing existing programs, broadening their outreach, and providing technical assistance to help entrepreneurs access the traditional banking system are better uses of the hundreds of millions of dollars needed to establish a public bank. Public banking is simply a risky experiment the Commonwealth cannot afford.


Kathleen M. Murphy

President and CEO

Massachusetts Bankers Association