The ordinance paves the way for creation of the nation’s first municipal public bank here in Philadelphia.
PHILADELPHIA, March 3, 2022 – Today, City Council voted 15-1 to pass legislation introduced late last year by Councilmember Derek Green (At-Large), to establish the Philadelphia Public Financial Authority (“PPFA”), an entity that permits the City of Philadelphia to create the nation’s first municipal public bank. The PPFA will provide much needed financial support and resources to hard-to-lend-to businesses and organizations and local commercial development financial institutions (“CDFIs”).
As a former banker and small business lender, Councilmember Green has identified access to capital for entities that fall through the gaps of the current lending environment as an urgent issue that demands action from the City. Currently, only six percent of businesses with employees in Philadelphia are owned by African Americans, even though the City’s population is 44% African American. Only four percent of businesses with employees are owned by Latinx Philadelphians. Approximately 40% of minority-owned businesses in Philadelphia were forced to close because of the COVID-19 pandemic, further exacerbating existing wealth disparities and making credit access even more elusive. The goal of PPFA is not to compete against current businesses or organizations, or duplicate existing services, but to offer credit enhancement products, such as letters of credit, that will provide greater opportunities for co-operatives, entrepreneurs of color, and other business organizations to access additional credit to help build cash flow and job growth.
“This bill is the culmination of years of collaboration with the Philadelphia Public Banking Coalition, the City’s Law Department, the City Treasurer, our outside counsel, Holland and Knight LLP, and numerous conversations with the Pennsylvania Department of Banking and Securities, the Department of the Treasury, other interested parties, and most importantly, community stakeholders,” said Councilmember Green. “The lack of access to credit, which has been reiterated by numerous small business owners of color, as their biggest challenge and the greatest impediment to their ability to grow and thrive, was the basis for the legislation that was passed today and why I chose to pursue this public banking initiative. I’m grateful for the support of my Council colleagues, and especially for the tireless efforts and dedication of all who helped to make this legislation a reality.”
Black and Brown businesses are fewer in number, employ fewer workers, and have more difficulty growing, all of which are directly connected to their owners’ lack of access to credit and wealth. This inequitable access is why the PPFA is needed. More jobs, greater wealth, and more equity are the right way to alleviate the inextricably linked issues of the City’s 25% poverty rate, Philadelphia’s gun violence crisis, and critical for building the more just city our residents deserve.
The ordinance, which can be viewed here, goes into effect immediately.