Busting the Bankers’ Club: The Rise of Public Banking and the Fight for Democratic Finance

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

Our current banking and financial system has come under scrutiny for its role in exacerbating inequality, undermining democratic institutions, and neglecting the needs of the poor. In his groundbreaking book, “Busting the Bankers’ Club: Finance for the Rest of Us,” economist Gerald Epstein explores the need for transformative changes that go beyond regulation. He argues for the establishment of public banking as a means to create a financial system that works for everyone. In this exclusive interview, Epstein discusses the advantages of public banking and the challenges it faces in a society where money dominates politics.

Advantages of Public Banking: Banks Without Bankers

Public banking, as Epstein explains, refers to banks owned by governments or financial institutions with a primary mission of serving the public interest rather than maximizing profit. These banks focus on pursuing social goals such as community economic development, environmental justice, and cooperative economics. The advantages of public banking are manifold:

1. Addressing Neglected Social Goals: Private banks often avoid investing in areas deemed risky or less profitable. Public banks, with their mission-oriented approach, can make significant progress in areas such as affordable housing, credit for cooperatives and small businesses, and environmental sustainability.

2. Providing Alternatives to Mega Banks: Public banks offer an alternative to large, speculative banks that prioritize profit over the needs of communities. By reducing dependence on these “too big to fail” institutions, public banks can promote a more stable financial system.

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3. Affordable Financial Services: Public banks, free from the pressures of maximizing profits and high executive salaries, can provide basic financial services at a lower cost.

4. Stabilizing Force in Financial Markets: Public banks, guided by a mission rather than profit motives, are less likely to engage in speculative and risky investments. Their governance structures are typically more democratic and representative, with stakeholder and community involvement.

Challenges Facing Public Banking and Progress Made So Far

While public banking has gained momentum globally, it faces significant challenges, particularly from private banking institutions and their allies. The American Bankers Association (ABA) and local banking organizations routinely oppose legislation for public banks, spreading misinformation about their viability and risks. Lack of public understanding and skepticism about government’s role can also hinder progress.

Logistical obstacles include acquiring initial capital, ensuring a continuous source of funds, establishing liquidity and financial backup, and garnering community support. However, recent developments, such as the submission of a blueprint for a public bank in New Jersey, indicate that public banking efforts are gaining traction.

Public Banks and Wall Street: Keeping Money in Local Communities

While public banks, such as the Bank of North Dakota, can help underserved borrowers and meet community needs, they currently have limited capacity to compete with Wall Street in areas like infrastructure financing. To truly challenge the dominance of big banks, public banks need to become larger and more numerous. The proposed Public Banking Act, if passed, would provide federal support and regulatory infrastructure for public banks, leveling the playing field.

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The Federal Reserve and the Potential for Economic Development

Epstein highlights the Federal Reserve as the most powerful public bank in the US. However, its focus on supporting private financial institutions raises questions about its potential to act as a national bank for economic development, especially in the era of climate change. While opposition from the Bankers’ Club poses challenges, Congress has the power to broaden the Fed’s mandate and make it more accountable and democratic.

Reform or Revolution: Strategies for Financial and Social Restructuring

Epstein argues for a combination of reform and revolution. Waiting for another financial crisis to spur radical change is risky, as crises often push politics to the right. Instead, he urges people to support organizations fighting for financial reform, public banking initiatives, and politicians committed to protecting democracy. These incremental victories can weaken the Bankers’ Club and pave the way for more comprehensive economic transformation.


The establishment of public banking offers a promising path towards democratizing finance and challenging the influence of the wealthy elite. While public banking faces significant obstacles, its potential contributions to addressing social goals, providing affordable financial services, and promoting stability in financial markets are undeniable. By supporting public banking initiatives and advocating for a more accountable and democratic Federal Reserve, we can work towards a financial system that truly serves the common good.