City of Rochester mulls a groundbreaking move: creating its own bank

Legislation currently under consideration could pave the way for Rochester, N.Y., to establish its own public bank, the first of its kind in New York State.

The bill to authorize the “Bank of Rochester” was introduced in the New York State Senate in May with the stated aim of “achieving cost savings, strengthening local economies, supporting community economic development, and addressing infrastructure and housing needs for localities” in Rochester. The city-owned bank would be a not-for-profit agency and would partner with local banks, credit unions and other financial institutions to provide loans.

The bank would be governed by an appointed board of directors serving four-year terms, with the chair appointed by the mayor of Rochester. The bank’s primary function would be wholesale lending to other financial institutions and participation lending. The bank would be restricted from engaging in direct commercial lending, retail banking and participating in equity markets, according to the bill.

Champions of the initiative have said a public bank would open more loan opportunities to low-income borrowers and communities that have historically faced more difficulty obtaining loans from traditional banks. A 2023 report by the New York State Attorney General found that applicants for a purchase loan who were Black were 43% more likely to be denied compared with applicants who were white, and that people of color in general had more difficulty securing loans when compared with their white counterparts.

New York State Assembly member Harry Bronson, a co-sponsor of the bill, speaking with Spectrum News 1, called the Bank of Rochester “a tool that they want so they can invest and create vibrant neighborhoods.”

Rochester Mayor Malik Evans’ office did not respond to a request for comment.

“The Bank of Rochester Act is exactly the kind of bold action that is needed to address entrenched racial inequities in our financial system and economy,” Andy Morrison, associated director of the New Economy Project, a New York-based nonprofit, said in a press release that also pointed out racial disparities in obtaining loans in Monroe County, N.Y.

Currently, the only government-run bank in the U.S. is the Bank of North Dakota, which was founded in 1919 and is owned by the state. It serves the state through wholesale lending and has been largely successful since its launch, recently recording a record $192.7 million in profits, which are used to support local loan participations and disaster recovery programs, KX News reported.