By Devin Camacho

Recently, PNC Bank announced its purchase of FirstBank Colorado. Not only did Colorado lose a local banking option, but nearly 1,000 people lost jobs, with more job losses coming as the big bank now closes branches too.

Lakewood city council members expressed their frustration at the loss of local jobs and local banking that resulted from the merger. They announced they were considering moving city accounts out of the formerly local bank. But where would they bring their accounts to next?

Colorado law largely limits public deposits to banks, preventing local governments from considering credit unions as a potential option in most circumstances.

The obvious question is: Why?

Imagine if a city could evaluate its financial institution the same way it evaluates other public partners: What does this institution provide to our community? How does it treat its customers and employees? How locally invested is it? What does it do with the money it earns? And what options are available if the relationship no longer serves the community? Banks and credit unions provide many of the same financial services. Both are federally insured. Both are heavily regulated. Both serve communities across Colorado, but they operate under fundamentally different ownership and governance structures.

Banks are owned by shareholders. Their responsibility is to generate returns for investors, and their success is measured, in part, by the profits they deliver to those shareholders. In this case, making profit off tax dollars for shareholders well outside of Colorado.

Credit unions are member-owned financial cooperatives that are fundamentally not-for-profit. The people who use the institution are also its owners. Unlike banks, credit unions do not answer to outside shareholders seeking a return on investment. Instead, they are governed by a one-member, one-vote structure that prioritizes the interests of the people and communities they serve.

Unfortunately, Colorado law gives banks a monopoly on working with public entities and doesn’t allow municipalities, counties, school districts and fire districts the ability to choose what type of financial institution is best positioned to protect and grow their public funds and to serve the needs of their community.

Local governments should have the flexibility to evaluate all qualified options and determine which institution is best equipped to safeguard taxpayer dollars, provide strong financial management and meet the unique needs of their communities.

Recent discussions about how financial institutions such as FirstBank affect local communities serve as a reminder where public dollars are held can matter for reasons far beyond a balance sheet. Communities may choose their financial institutions because they value local relationships and community investment, because they care about the proximity of a branch or need a specific service or because they want a financial institution that is locally owned and managed and values people over profit. Local officials should have the freedom to consider those factors when making decisions on behalf of taxpayers.

More choices also mean more competition. Taxpayers are best served when local officials have access to the widest range of qualified options and the flexibility to choose the institution they believe offers the strongest stewardship of public funds.

Colorado’s current framework does more than limit choice. It favors for-profit ownership while restricting a local, not-for-profit ownership model from being considered. The issue is not whether banks or credit unions are better. The issue is whether state law should predetermine the options available to local governments, or whether local officials should have the freedom to decide which qualified institution is best suited to protect taxpayer dollars and serve their communities.

Colorado law should not pick winners and losers and create monopolies for banks, many of which are selling to large out-of-state entities. We should entrust our local elected officials to decide what financial institution best serves their community’s needs and benefits taxpaying Coloradans.

Instead of asking why Colorado law limits public deposits to banks, we should be asking: why shouldn’t Colorado’s cities, counties, schools and other public entities be allowed to choose the local option that is best for them?

Devin Camacho is director of advocacy and policy at Canvas Credit Union.