Chief executives of the major banks did not raise a whimper yesterday after Greens leader Richard Di Natale raised the prospect of a return to state-sponsored banking in Australia.Curiously, mutual banks and credit unions made a prompt and deliberate effort to engage with Di Natale's controversial proposal to resurrect the RBA as a retail banking player.Neither the Customer Owned Banking Association nor some of its most influential members were prepared to dismiss the idea of a "People's Bank" as misguided or ill conceived.Indeed, the mutuals might have solid business reasons to back the state banking model advanced by Di Natale.The Greens leader dropped a subtle hint in his speech that customer-owned banks might be big beneficiaries of his policy.Under the proposal, the RBA's lending activities would be contracted out to organisations that Di Natale did not identify.However, he also said he would provide more support for credit unions and mutual banks and signalled that his party would soon announce details of such initiatives.It's highly likely that the Greens would look to farm out a chunk of the RBA's new mandate to customer-owned institutions.Di Natale actually praised mutual banks and credit unions for the style of banking they offered members.COBA chief executive Michael Lawrence welcomed the Greens' announcement and also hinted that his member organisations could benefit from the proposal."If Australians want banking that's truly focused on people, that model has been operating in Australia for more than 70 years," he said."It's positive that there are ideas to make banking more competitive."We look forward to seeing the detail of the Greens' proposal and consulting our members about the proposal."Rob Goudswaard, chief executive of CUA, the country's largest credit union, said the People's Bank proposal reinforced the need for credit unions to be given the tools they need to become a stronger alternative to the major banks."The features that senator Di Natale is calling for in a 'People's Bank' are the very same services that are already offered by Australia's original people's banks - credit unions," he said.However, regional banks appear less enthusiastic about the Greens policy.ME Bank chief executive Jamie McPhee said the industry needed to acknowledge community disillusionment with the current banking system, but he rejected the notion that a return to state-ownership was a solution."Australia already has a group of customer-focused banks that are ready to be a stronger competitive force," he said."Contrary to the Greens' proposal, we believe the best answer to the issues being highlighted in the current royal commission is to the fix the current system by creating stronger competitive pressures through reforms that level the playing field."Federal Treasurer Scott Morrison dismissed the People's Bank as flawed policy."That was an idea that was deeply discredited by financial experience in this country and God forbid we ever go back to those bad old days," he told an AFR conference in Sydney."Have they forgotten how many people were injured and hurt and how many businesses were destroyed by the folly of government intervention of that scale?"