Bank of Denver - Public Banking

The Problem

Denver deposits hundreds of millions of taxpayer dollars in Wall Street banks - JPMorgan Chase, Wells Fargo, Bank of America. These banks:

• Charge the city fees and pay minimal interest on deposits
• Use Denver’s money to fund fossil fuel projects, predatory lending, and speculative trading
• Provide minimal lending to Denver small businesses and affordable housing
• Have been repeatedly fined for fraud, market manipulation, and consumer abuse
• Extract wealth from Denver and send it to shareholders in New York

Meanwhile, 4.2% of US households are unbanked and 14.2% are underbanked (FDIC National Survey of Unbanked and Underbanked Households, 2023), with higher rates in communities of color. Check-cashing services and payday lenders prey on low-income communities, charging fees that trap people in cycles of debt.

What Denver Currently Does

Denver deposits its operating funds in commercial banks under treasury management contracts. The city has not publicly disclosed the specific terms, interest rates, or total deposits held with each bank. No Denver councilmember has formally introduced public banking legislation, though Los Angeles, San Francisco, and Philadelphia have all advanced public banking proposals in recent years. California passed AB 857 in 2019 enabling the creation of public banks. Colorado has no equivalent enabling legislation, but Denver’s home rule charter provides broad authority over city financial management.

Our Solution

The Bank of Denver

A publicly owned, city-chartered bank modeled on the Bank of North Dakota (operating successfully since 1919).

How it works:

1. Denver deposits its operating funds, tax revenue, and reserves in the Bank of Denver instead of Wall Street banks
2. The bank uses these deposits to make low-interest loans for: affordable housing development, small business lending (priority: minority-owned, worker cooperatives), green energy and efficiency projects, and community land trust acquisitions
3. Interest revenue returns to the city - not to Wall Street shareholders
4. The bank partners with (doesn’t compete with) local credit unions for retail services

Key Programs:

• Affordable Housing Loan Fund: Below-market interest rates for affordable housing developers, community land trusts, and the Social Housing Authority
• Small Business Lending: Microloans and small business loans that commercial banks won’t make - especially for businesses in underserved neighborhoods
• Green Energy Financing: Low-interest loans for solar installation, energy efficiency, and electric vehicle purchase for Denver residents and businesses
• Financial Inclusion: Basic banking services (checking, savings, debit cards) for unbanked residents - no minimum balance, no predatory fees
• Student Loan Refinancing: Lower-interest refinancing for Denver residents with student debt (where legally permissible)

Governance:

• Board appointed by city council (not mayor alone)
• Professional bank management with banking expertise
• Annual public audit
• Transparent lending data published quarterly
• Community advisory committee with seats reserved for underserved populations

International Evidence: Public Banking Is Normal

Institution	Country	Founded	Assets	Result
Germany’s Sparkassen (400+ public savings banks)	Germany	1800s	€1.4 trillion total	Serve 50 million customers. Largest banking sector in Germany. Legally required to serve the public interest. Profits reinvested locally. Credit to small businesses at rates Wall Street won’t match.
Bank of North Dakota	USA	1919	~$7B+	Only public bank in the US. 100+ years, zero losses, returned $100M+/year to state. ND has lowest bank failure rate nationally. Survived Depression, 2008, COVID.
KfW (Kreditanstalt für Wiederaufbau)	Germany	1948	€546 billion	Government development bank. Funds green energy, affordable housing, SMEs. Key driver of Germany’s Energiewende (energy transition).
Japan Post Bank	Japan	2006 (restructured)	¥224 trillion	Largest deposit holder in the world. Universal access - branch in every community. Financial inclusion for rural and underserved populations.
Costa Rica’s Banco Nacional	Costa Rica	1914	Public/mixed	Largest bank in Central America. Public bank finances development while private banks serve elites.
India’s State Bank of India	India	1955	$635 billion	Financial inclusion for 450M+ account holders. Reaches rural communities that private banks ignore.

Public banking is widespread globally - Germany, Japan, India, Costa Rica, and dozens of other nations rely on public banks as core financial infrastructure. The near-total absence of public banking in the US is unusual among large economies. In Germany alone, public and cooperative banks control more assets than private banks. They serve communities instead of extracting from them.

How We Pay For It

Startup: $50-100M in initial capitalization from city reserves and bonds. This is not spending - it’s moving money from Wall Street banks to a city-owned bank. The money still exists.

Ongoing: Self-sustaining through interest income. The Bank of North Dakota returns $100M+/year in profits to the state of North Dakota. Scaled for Denver, this could generate $20-50M/year in revenue for the city.

Net cost to taxpayers: Negative. The bank generates revenue.

Frequently Asked Questions

“Isn’t public banking risky?” The Bank of North Dakota has operated for over 100 years, through the Great Depression, the 2008 financial crisis, and COVID - without a single year of losses. North Dakota has the lowest bank failure rate in the country. Public banking is boring banking - exactly what you want.

“Can a city run a bank?” North Dakota does. Germany has over 400 public savings banks (Sparkassen) serving 50 million customers. Public banking is the norm in most of the world. The US is the outlier.

“Will this hurt local banks and credit unions?” The Bank of Denver partners with local credit unions, not against them. It provides them with low-cost capital for community lending. It competes with Wall Street, not with community financial institutions.

“What about FDIC insurance?” The Bank of Denver would seek FDIC insurance like any other bank. The Bank of North Dakota is FDIC-insured. Alternatively, the bank could operate under state-level deposit insurance or city-backed guarantees during the startup period. This is a regulatory requirement, not a barrier.

“What if the bank makes bad loans?” The Bank of North Dakota has a 100+ year track record with zero loss years. Public banks are structurally more conservative than private banks because they don’t face shareholder pressure to maximize short-term returns. BND survived the Great Depression, the 2008 financial crisis, and COVID without losses.

References

• FDIC National Survey of Unbanked and Underbanked Households. (2023). (4.2% unbanked, 14.2% underbanked nationally; higher rates in communities of color.)
• Bank of North Dakota. Annual reports and financial statements. (100+ years, zero loss years, $100M+/year returns.)
• California AB 857. (2019). Public Banking Act enabling legislation.
• German Sparkassen (Savings Banks Association). Financial reports. (€1.4 trillion assets, 50M customers.)
• Public Banking Institute. Research and analysis on municipal public banking.