The 2008 financial crisis spurred calls to create a financial system that is more responsive to social needs. Subsequently, scholarly and legislative efforts to develop a more democratic and accountable financial system have focused on public options: postal banking, bank accounts with the Federal Reserve, and a national investment authority. While efforts at the federal level have largely stalled, state and local governments have spearheaded the charge through public banking. Across the country, local governments are actively developing public banks to better serve the chartering city as well as its residents.

But legal scholarship has not adequately engaged in a sustained examination of municipal public banking or the efforts of state and local governments to create public banking infrastructure. This Note makes a significant scholarly contribution by exploring recent legal innovations in public banking and reorienting the narrative around financial reform to the local level. Conceptually, this Note seeks to elaborate on the unique public origins and public purpose of banking institutions and to highlight the important logic of decentralization and diffusion of banking powers in American law and political economy. On a practical level, it provides a novel analysis of the legal powers of local governments to establish, capitalize, and govern municipal public banks while also considering potential challenges to this new model of democratic finance.