Busting the Bankers’ Club: The Case for Public Banking and Democratizing Finance

Economist Gerald Epstein discusses the advantages and challenges of public banking as a means to democratize finance and challenge the power of the wealthy elite.

The current banking and financial system has undeniably tilted the scales in favor of the rich, eroding democratic institutions and exacerbating inequality. To address this issue, renowned economist Gerald Epstein presents a compelling case for public banking in his groundbreaking book, “Busting the Bankers’ Club: Finance for the Rest of Us.” In this exclusive interview, Epstein explores the benefits of public banking and its potential to create a financial system that works for everyone.

The Advantages of Public Banking

Epstein argues that public banking offers numerous advantages over the current system. While some define public banks as government-owned institutions, Epstein takes a broader view, including any financial institution that prioritizes a social mission over profit. These banks aim to serve the public interest by promoting community economic development, environmental justice, and cooperative economics. By focusing on these goals, public banks can address the needs of underserved communities and invest in key social goods.

One significant advantage of public banking is its ability to fill the gaps left by private banks. Private institutions often avoid investing in areas deemed too risky or unprofitable, leaving underserved communities without access to affordable banking services and credit. Public banks, driven by their social mission, can step in and provide these essential services, helping to bridge the gap and promote economic development.

Another advantage of public banking lies in its potential to counter the dominance of large, speculative banks. By offering an alternative to these “too big to fail” institutions, public banks reduce society’s dependence on them and provide competition in the financial sector. Additionally, public banks can deliver basic financial services more affordably by leveraging the financial power of the state and avoiding the pressure to maximize profits for shareholders and bankers.

See also  Dallas Emerges as a New Financial Mecca, Attracting Wall Street Giants

Furthermore, public banks tend to adopt more democratic governance structures, with stakeholder and community representation on their boards. This inclusive approach ensures that decision-making processes consider a broader range of perspectives and interests, making public banks a stabilizing force in financial markets.

Challenges Facing Public Banking

Despite its potential, public banking faces several challenges. The major private banking institutions, collectively known as the “Bankers’ Club,” actively oppose the establishment of public banks. They fear competition and view public banking as a threat to their profits and dominance. Moreover, public banking initiatives often struggle to gain public support due to a lack of understanding and skepticism about government involvement in finance.

Logistical obstacles also pose challenges to the establishment of public banks. These include acquiring the initial capital, ensuring a continuous source of funds for lending, securing liquidity and financial backup, and building community support. Skilled administrators and employees with banking experience are also essential for the success of public banks.

Progress and the Path Forward

Despite these challenges, public banking efforts have gained momentum in various states and countries. The Bank of North Dakota, the only state bank in the US, operates on a partnership model, lending to partner banking institutions that then serve the final borrowers. This model reduces competition with private banks and helps smaller community banks expand their customer base.

To truly compete with Wall Street and big banks, public banks need to become larger and more numerous. The Public Banking Act, a federal bill introduced by Representatives Alexandria Ocasio-Cortez and Rashida Tlaib, aims to provide regulatory infrastructure and assistance for public banks. However, achieving a level playing field will require progressive control in Congress and a reduction in the influence of money in politics.

See also  The Rise of Digital Journalism: Unleashing the Power of Unlimited Access

Epstein suggests that reform and revolution are both necessary. While waiting for another financial crisis may lead to a revolutionary moment, it is important to engage in ongoing battles against the Bankers’ Club, support public banking initiatives, and work for politicians who prioritize democracy and economic justice. By weakening the power of the elite and enhancing the influence of reformers, we can pave the way for comprehensive economic transformation.


The movement for public banking offers a promising path to democratize finance and challenge the dominance of the wealthy elite. By prioritizing social missions over profit, public banks can address the needs of underserved communities and promote economic development. While challenges persist, progress is being made, and the push for public banking is gaining momentum. By supporting these efforts and advocating for a more democratic financial system, we can work towards a future where finance serves the common good and restores democracy.