ROCHESTER, – The legislature is considering a bill right now that would establish a public bank in Rochester. Its goal would be to invest in underserved communities and help some who would have been rejected at a private bank get a loan. I talked to one of the authors of the bill, New York Assemblymember Harry Bronson who represents the 138th district. I told him about a young man I interviewed who got a car loan from a subprime lender for 27.5 percent.

Deanna Dewberry: “Could that young man have hoped for a better interest rate at a public bank?”

Harry Bronson: “Yes. That’s part of this that by leveraging through participatory banking we’re going to be able to offer better financial services.”

What that means is the public bank would partner with a private one, giving that private bank more confidence in lending to someone with a poor credit score because the loan is essentially backed by the public bank. So a low credit score wouldn’t necessarily keep you from getting a loan.

Deanna Dewberry: “The other side of that argument would be that this young man had a credit score of 580. He’s a bigger risk. Is that good for the bank?”

Harry Bronson: “Credit scores have value to them but there’s a lot of studies that show if you look more comprehensively at the borrower, that their repayment can be as positive as someone who has a much higher credit score.”

But running a bank is complex, and bankers argue the city should not be in the banking business. As president of the Greater Rochester Chamber of Commerce, he agreed to talk to me on behalf of his members in the banking industry.

Bob Duffy: “Running a bank is a super complex operation. The state DFS [Department of Finance Services] is not going to oversee it, so it basically falls on the city.”

Bronson argues that the state would have oversight and the city wouldn’t actually be running the bank. He points out that the city wouldn’t handle bank operations. Instead, the city would establish a non-profit organization that would apply for a bank charter. And the non-profit would actually run the bank. But Duffy argues the competition from a public bank could actually weaken Rochester’s banking sector.

Bob Duffy: “We only have a few home-grown banks and credit unions. We have branches from outside but I know that the tables I sit at are the banks and credit unions that are heavily involved with projects in Rochester.”

On that both men agree. Bronson points to ESL Credit Union, also run by a non-profit, that is heavily invested in philanthropic activity, much of which benefits the underserved of Rochester.

Harry Bronson: “It’s not to say that they’re not doing good work. It’s to say that we’re not doing enough, and this is another tool for us to step it up.”

But Duffy points out there is only one public bank in the country. He says that’s because other attempts and public banking failed. Duffy met with banking leaders on Monday who are not happy about this legislation. He says this bill should be shelved, and legislators should work collaboratively with bankers to help it reach its goals of better serving the underserved. The sponsors of this bill only have days to get it over the finish line because the session ends at the end of this week.