Mass. could he get into banking? Perhaps.

That’s not to say he’s certain financial services chairmen Sen. Paul Feeney and Rep. Jamie Murphy will approve of the idea, especially in the face of staunch opposition from the state banking industry. They are expected to meet again on Saturday to discuss and possibly act on a number of pending bills, including public banking legislation, in time for the latest reporting deadline. Maybe the committee will kick again. But time is running out, with the formal 2022 sessions ending in just three months.

This time, the committee has a new endorser to consider: the economist who a decade ago wrote a report that threw cold water on the idea, now gives it his full backing.

Yolanda Kodrzycki downplayed the need for a public bank in 2011, when she co-authored a report at the Federal Reserve Bank of Boston. (She retired from the Fed in 2015.) A state bank was seen then as a potential accelerator to pull Massachusetts out of the Great Recession, or a potential cushion to soften the blow of a future economic crash.

So Kodrzycki and a colleague analyzed the only public bank that existed at the time, Bank of North Dakota, to see what kind of role that institution played in his home state’s low unemployment rate. The answer: not much.

They also noted that the economies of Massachusetts and North Dakota are so different that it would be difficult to draw too many conclusions for our local economy. His report helped a legislative commission conclude at the time that a state bank might not be worth the investment and could duplicate existing quasi-state agencies.

But now Kodrzycki says lawmakers should give the idea another look. Times have changed and so have the reasons to explore the concept.

Instead of forming a bank to protect the state from cyclical downturns, the current motivation is to address insufficient access to credit in underserved neighborhoods and municipalities. Like home ownership, business ownership helps families and communities grow wealthier over time. Kodrzycki said credit constraints have created startling wealth gaps between racial and ethnic groups. A public bank, she argues, could leverage public funds to unlock the economic potential of these communities, by guaranteeing loans that private sector banks don’t want to touch.

This new public institution, Kodrzycki added, could partner with private banks and community development financial institutions to support business lending or help provide low-cost debt to municipalities that may not qualify for treaty bonds. .

The public banking legislation, championed by progressive Democrats Jamie Eldridge in the Senate and Mike Connolly and Nika Elugardo in the House, would take $200 million over four years from the state budget to help seed the bank, as well as $1.4 billion in existing deposits. of the public treasury. The more than 15 goals of the new bank, as set out in their legislation, would include helping businesses and cities recover from the pandemic, funding projects that address the risks of global warming, and ensuring that State Treasury deposits support economic activities in Massachusetts. (A separate public banking bill, introduced by Sen. Adam Hinds, also includes infrastructure funding in its mission statement.)

Eldridge said his motivations for the state bank concept include help fund more affordable housing and provide more financing to entrepreneurs of color. A public bank, he said, could also help with cannabis banking, a tricky market largely avoided by banks in Massachusetts today. Existing banks, on the whole, focus more on wealthier enclaves, he said, leaving much of the state with relatively few options for obtaining credit. He said he was encouraged by all the allies who joined the cause during this two-year session. But will it be enough?

Not if the Massachusetts Bankers Association has anything to say about it.

Kathleen Murphy, the association’s president, had rebuffed calls for a public bank in Maryland, where she ran a similar business group before taking the Massachusetts gig in 2020. Now she’s tasked with leading the charge for the industry against the concept here. Proponents say the public bank would be a collaborator, not a competitor, of Murphy’s members. That’s not how Murphy sees it, or how his members see the bill, Murphy said. This state-owned bank would still get some of the state deposits that would otherwise be set aside in a commercial bank, she said, and it could still end up competing with private banks for lending customers.

It’s not just that a public bank would be a rival. Murphy agrees with the findings of this decade-old legislative commission: essentially, that this initiative could become redundant government bureaucracy. Rather than funneling state funds (without FDIC insurance, she’s quick to point out) into a new branch of state government, Murphy said, why not find ways to shore up quasi-agencies. -existing public, such as MassDevelopment or Mass. Growth Capital Corp., to meet real or perceived needs?

These are the questions Feeney and Murphy will face, possibly as early as Saturday. Eldridge remains hopeful of winning the committee’s approval. But even without that, he plans to push to include his state bank’s language in the Senate’s version of the economic development bill when it’s ready for debate.

While there’s no way of knowing if it would survive the inevitable House and Senate horse trade this summer, one thing is certain: this once radical concept has been pushed off the fringes and into the main stream.

Jon Chesto can be contacted at [email protected]. Follow him on Twitter @jonchesto.