An old chapter was re-opened yesterday in the real-life saga of Australian banking, with the Greens refreshing the business case for a state-owned retail bank to market cheap loans to first homebuyers.Greens leader Richard Di Natale unveiled the skeleton of a proposed "People's Bank" at the National Press Club on Wednesday, where he advanced several arguments for government intervention in the economy.The banking policy was the centrepiece of the speech by Di Natale, who said it was time for the Commonwealth to deliver a low-cost banking service backed by the Reserve Bank."Through the People's Bank, the Reserve Bank of Australia could offer banking services to the Australian public online, via Australia Post branches, and other contracted organisations," he told the press club."By offering a no frills mortgage tracker account to homeowners, people paying off their home will be able to borrow up to 60 per cent of the value of the property directly from the RBA."Presumably, the People's Bank would also be given a mandate to raise deposits from Australian households.However, Di Natale did not explain how the RBA would fund its prospective home lending activities, saying only that its mortgage rates would rise or fall in line with movements in the official cash rate."The interest rate would go up with the cash rate if it rises above three per cent, but it will always deliver loans that householders can pay off faster and with significant savings on interest compared to the current offerings of the big banks," he said."The People's Bank will give current and future homeowners a much needed advantage over investors."It will help turn around the recent decline in home ownership ratios."Di Natale said the People's Bank would also stem the flow of "lazy profits" to the banks and inject some real competition into the banking sector."It's the only way we can force them to actually provide a public benefit, instead of distorting the economy and loading up the financial system with risk," he said.The Greens leader blamed federal and state governments for the national housing crisis, arguing that policies favouring investors in the home loan market such as negative gearing should be binned.While many political commentators are prone to dismissing the Greens as a naïve movement, the parliamentary party actually has an impressive track record as a harbinger of banking reform.The Greens were the first to advocate a raft of measures and courses of action that the major political parties eventually adopted as their own policies in government.These include the formation of the Clean Energy Finance Corporation by the Gillard Government and recent decisions by the Turnbull Government to introduce the bank levy and establish the royal commission into the banking industry.An obvious weakness of the People's Bank proposal is the conflict of interest it creates for the Reserve Bank as a competitor to the lending institutions that it jointly regulates.It is difficult to see how the RBA could re-enter the mortgage market as a lender without compromising its existing roles as an independent regulator of