SF Gate – March 15, 2022. A vision for a public bank in the East Bay– and possibly only the second one in the country– got a boost Tuesday when Alameda County Supervisors voted to give $75,000 to a group aiming to start one.
Supervisors voted unanimously to give the money to Friends of the Public Bank East Bay, which has already taken steps to start a bank. (Supervisor Richard Valle was excused from the meeting.)
The money from the supervisors is for planning activities, according to a letter to the board from Supervisor Dave Brown. The money is coming from Brown’s fiscal management reward funds.
“A public bank would provide many public benefits to the community,” Brown wrote. “It would create a long-term multigenerational source of capital for East Bay communities, and would cut infrastructure construction costs significantly by providing low-interest loans.”
Brown added that such a bank “would return profit and interest to local communities and bring transparency and democracy to banking and investment of public funds. Lastly, a public bank would help strengthen local banks and credit unions by backing their loans and letters of credit.”
Friends of the Public Bank East Bay have already completed a viability study for a public bank, according to the group’s website. A viability study is a necessary step under the California Public Banking Act.
The California Public Banking Act was established by Assembly Bill 857 and signed by Gov. Gavin Newsom in 2019. The law enables government entities to form public banks.
Friends of the Public Bank East Bay are now working on a business plan, another step in the process required by law.
Public Banking took a huge leap forward this year with many first-in-the-nation accomplishments.
âĒ Passage of first-in-the-nation bill for universal free banking services. The California Public Banking Alliance (CPBA) and our allies pushed the California Legislature to enact Assembly Bill 1177 in order to provide financial services for unbanked or underbanked Californians. On October 4, 2021, Governor Gavin Newsom followed up by signing the California Public Banking Option Act (AB 1177) into law.AB 1177, authored by Assemblymember Miguel Santiago, authorizes a commission of financial access experts, community members, and government representatives to begin implementing the CalAccount program. Upon securing final approval from the Legislature, the program will create a state-sponsored retail banking option offering a zero-fee, zero-penalty debit card enabling direct deposit from employers and public benefits, automatic bill pay, and many other financial services to every Californian.
California Public Banking Alliance joined with SEIU CA, California Reinvestment Coalition, public banking advocates, unions, and community organizations across California to pass this landmark legislation that will help close the racial wealth gap fueled by the exclusion of low-wage communities of color from basic banking services.
âĒ The California Public Banking Option Blue Ribbon Commission is getting underway. The Governor, Treasurer, and Senate and Assembly Leadership are now in the process of selecting and seating the CA Public Banking Option Blue Ribbon Commission to begin operations in 2022, as required by AB 1177. CPBA is working to make sure it fulfills its promises.
In the months ahead, the CalAccount Blue Ribbon Commission will convene to conduct a market analysis and to determine the best way to implement the CalAccount program. There will be opportunities for advocates to take part in shaping the CalAccount program and co-hosting public outreach forums.
âĒ CPBA local affiliates are establishing the nation’s first municipal banks. Local public banking advocates are busy in San Francisco, Los Angeles, the East Bay, the Central Coast, Pomona Valley, San Diego, North Coast, and Humboldt County, working with their representatives getting their local public banks up and running. This is no small task. There is much work to be done to fulfil the requirements of AB 857, the California Public Banking Act passed in 2019.
âĒ City and county representatives need to pass enabling legislation.
âĒ Publicly-minded banking experts need to be located and summoned to fulfil the requirements of AB 857.
âĒ Money needs to be allocated.
âĒ Business plans need to be drafted.
âĒ Banking managers and administrators need to be identified Read our status updates on California Public Banking Alliance cities and regions.
âĒ On the Federal level and across the nation, public banking is sprinting ahead. On the Federal level and across the nation, public banking is sprinting ahead. The House Committee on Financial Services, chaired by Californiaâs Maxine Waters, held one of its first hearings on public banking. During the hearing on ââBanking the Unbanked: Exploring Private and Public Efforts to Expand Access to the Financial System,â Reps. Rashida Tlaib and Alexandria Ocasio-Cortez discussed the Public Banking Act of 2021 to foster the creation of public banks across the country by providing a pathway to establishing an infrastructure for liquidity and credit facilities via the Federal Reserve, and setting up federal guidelines for regulation.
Additionally, public banking advocates in New York, New Jersey, Massachusetts, Philadelphia, and many other states and cities throughout the US are pursuing establishing public banks.
The many accomplishments of 2021 will build momentum for the coming year and lay the foundation for our next steps in 2022 and beyond: Getting control of our money out of the hands of Wall Street banks, providing financial services to those most in need, and getting our municipal public banks up and running so our cities and counties can provide permanently-affordable housing, support small and worker-owned businesses, enable community solar, and meet other critical needs.
Dollars and Sense features Rick Girling’s article in the September/October issue. Read his follow-up piece  “Corporate Bankers Wary of Public Banking” on Page 8 of the November/December Issue.
Ever-growing inequality has helped consolidate and concentrate corporate control over the U.S. economy. The financial sector is a prime example. This issueâs third feature article, by public banking activist Rick Girling, describes an alternative approach to banking that can âchallenge unelected and unaccountable corporate bank executivesâ control over the nationâs financial system.
AN HISTORIC HEARING TOOK PLACE ON JULY 21 WHEN THE House Committee on Financial Services for the first time in recent history discussed public bank- ing. Deyanira Del Rio from the New Economy Project, along with other panelists, presented proposals for revamping the American financial system to rebuild the economy and reach the one-fifth of Americans who are either unbanked or underbankedâthose lacking bank accounts, and those who have bank accounts yet rely on payday lenders and other predatory financial services.
In her remarks to the committee, Del Rio explained the importance of public banks in this historical moment:
“Public banking would serve as an especially powerful tool as cities and states throughout our country work to advance a just recovery from the pandemic and to withstand future crises. Weâve seen that countries that have public banks are significantly more resilient in the face of crises than those without them and thatâs precisely because local public banks invest in sectors that provide direct economic, social, and environ- mental benefits.”
Next City – October 12, 2021. Out of eight million unbanked households across the country, one million are in California alone. The state is now looking to address this by taking a page out of the former USPS savings account playbook.
Assembly Bill 1177, passed in September and signed by Governor Gavin Newsom last week, envisions a state-branded bank account service, dubbed âCalAccount.â The state would set the parameters for each account, including debit card and ATM access, no overdraft fees, no minimum balance requirements, online bill pay, and direct deposit capability. The state would also serve as the public face and marketing force behind the program â there would be CalAccount branding on debit cards, for example. I wrote about the details of this program over the summer.
Supporters bill CalAccount as a âpublic optionâ for banking â but behind the scenes, like the former USPS program, the accounts would still be held at private banks. The idea is to have the stateâs seal of approval and its power as an intermediary to ensure consistency and transparency for CalAccount holders, who wouldnât have to worry, for example, that features like no fees or no minimum balance will disappear with little notice and no say from consumers.
ABC7 News – October 8, 2021. Los Angeles might be the first major metropolitan city to create a public bank. A public bank would be owned and operated by the city.
Los Angeles City Council voted unanimously to take the first steps in seeing the viability of a public bank. According to city councilmembers, it aims to help low-income communities and could provide investment opportunities at a local level. And they say the bank operations would include:
Credit access for small businesses Financing for affordable and social housing Plus, opportunities for green energy investments
Continue reading and watch the video on ABC 7 News.
The Sacramento Bee – October 4, 2021. California set a course to offer the nationâs first zero-cost, public option platform for personal financial services, under a new law signed by Gov. Gavin Newsom. Assembly Bill 1177, authored by Assemblyman Miguel Santiago, D-Los Angeles, calls for the state to conduct a market analysis of a state-backed program that would give Californians a public option for banking services like debit cards. The study would aim to determine with that service would be viable within six years. The commission must complete the analysis by July 1, 2024. Then, the Legislature could decide whether to launch a public banking program.
Black and Latino families are more likely to lack access to commercial banks than white and Asian households, a trend that Santiago aims to reverse with a public bank. âCreating a public option for banking and closing the racial wealth gap isnât only a moral imperative, but is necessary to foster greater financial security for all of our communities. This bill is a much-needed step to address the needs of the unbanked and underbanked and moves us closer to building a more equitable economy after the pandemic,â Santiago wrote in a statement urging lawmakers to pass his bill.
Read more at: https://www.sacbee.com/news/politics-government/capitol-alert/article254761472.html#storylink=cpy
September 10, 2021 – Rick Girling, Steve Sittig, Trinity Tran, California Public Banking Alliance.
Today the California State Legislature approved landmark legislation guaranteeing universal free banking access to all Californians. AB 1177 sets into motion the creation of the CalAccount program guaranteeing all California residents access to basic banking services without fees or penalties. The California Public Banking Option Act addresses the inequities in financial services acutely felt by communities that have been hardest hit by the pandemic and recession, inequalities such as discrimination, predatory lending, and vicious spirals of debt.
Californians are demanding banking reform because Wall Street banks have historically failed low-income communities of color. The State Legislatureâs approval of AB 1177 paves the way for a banking system centered on people instead of profits. In just a few months, AB 1177 has garnered extraordinary support in the effort to assure that all Californians gain access to banking services. The California Public Banking Alliance, along with AB 1177 co-sponsors, SEIU California and the California Reinvestment Coalition, gained endorsements from over 230 labor, community, and environmental justice groups to extend financial services to unbanked and underbanked residents. This broad support paid off handsomely as the legislation moved through the State Legislature and now heads to the Governorâs desk.
A public option for essential financial services can replace exploitative alternatives to traditional banking, reducing the wealth gap and helping Californians to avoid catastrophic debt. As many AB 1177 supporters have explained, itâs very expensive to be poor. Minimum balance requirements, late fees, overdraft fees, higher interest rate charges for loans to the financially insecure, as well as check cashing and money order fees add up to substantial financial burdens placed on those least able to pay. As Mayron Payes testified to the State Assembly, âA lot of street vendors donât have a banking relationship because of the high fees and couldnât maintain the minimum balance. Many of them are operating on a cash basis and couldnât open a bank account.â This law would provide a banking card to all residents who request one that will enable them to have access to free banking services essential to everyday living.
There is a broad basis of support for this needed financial reform. The stateâs largest union, SEIU California with 700,000 members, is the primary proponent. Other labor unions such as the California Labor Federation and UFCW Western States Union have joined in. Community activist groups are showing strong support. Indivisible CA: StateStrong and 350.org chapters throughout the state are mobilizing their members to advocate for AB 1177. Environmental activists such as Friends of the Earth and Greenpeace International see the benefits of making financial services available to all.
California Public Banking Alliance (Co-Sponsor) SEIU California (Co-Sponsor) California Reinvestment Coalition (Co-Sponsor) Action Center on Race and the Economy (ACRE) Active San Gabriel Valley Alameda County Democratic Party All Rise Alameda Alliance for a Just Recovery, Sonoma County Alliance of Californians for Community Empowerment Action (ACCE) Alloy Asian Pacific Environmental Network (APEN) Asian Pacific Islander Small Business Program Bay Area Regional Health Inequities Initiative (BARHII) Black Arts Movement Business District Community Development Corp. of Oakland (BAMBD, CDC) Bay Area-System Change Not Climate Change Beneficial State Foundation Building the Base Face to Face California Asset Building Coalition California Association for Micro Enterprise Opportunity (CAMEO) California Coalition for Worker Power California Community Land Trust Network California Democratic Party California Democratic Party Delegates â 204 Delegates California Employment Lawyers Association California Labor Federation, AFL-CIO California Low-Income Consumer Federation California Progressive Alliance California River Watch Center for Farmworker Families Center for LGBTQ Economic Advancement & Research (CLEAR) City and County of San Francisco City of Berkeley City of Burbank City of Long Beach City of Los Angeles Climate Protection and Recovery Fund Cloverdale Indivisible CodePink Women for Peace Committee for Better Banks Communities for a Better Environment (CBE) Community Financial Resources Community RePower Movement Consumer Federation of California Consumers for Auto Reliability and Safety Contra Costa Move On Converging Storms Action Network Cooperation Humboldt Cooperative Center Federal Credit Union Courage California Culver City Vice Mayor Daniel Lee DSA Ecosocialists Democratic Socialists of America, San Francisco Democrats of the Desert Dreams for Change Duende Consulting EcoChoices El Cerrito Progressives Feel the Bern Democratic Club, Los Angeles Feel the Bern San Fernando Valley Feminists in Action Fight For 15 Fight for 15 LA Fight for 15 NorCal Fossil Free California Fresno County Democratic Party Friends Committee on Legislation of California Friends of Public Banking Santa Rosa Friends of the Climate Action Plan Friends of the Earth U.S. Green Lining Institute Green Party Humboldt County Green Party of Santa Clara County Greenpeace International Ground Game LA Hanmi Bank Haven Neighborhood Services Hillcrest Indivisible HOPE for All: Helping Others Prosper Economically Housing and Economic Rights Advocates (HERA) Hull Professionals Inclusive Action for the City Independent Indivisible Indivisible 30/Keep Sherman Accountable Indivisible 36 Indivisible 39 Indivisible 41 Indivisible 43 Indivisible 52 Indivisible Auburn Indivisible Beach Cities Indivisible CA -7 Indivisible California Green Team Indivisible California: StateStrong Indivisible East Bay Indivisible Lorin Indivisible Los Angeles Indivisible Marin Indivisible OC 46 Indivisible of Sherman Oaks Indivisible Petaluma Indivisible Sacramento Indivisible San Bernardino Indivisible San Diego â Persist Indivisible San Francisco Indivisible San Jose Indivisible Santa Barbara Indivisible Sausalito Indivisible Sebastopol Indivisible SF Peninsula and CA-14 Indivisible Simi Valley Porter Ranch Indivisible Sonoma County Indivisible South Bay Indivisible South Bay LA Indivisible Stanislaus Indivisible Ventura Indivisible Windsor Justicia Digna LA Forward Lassen County Democratic Central Committee Lawyersâ Committee for Civil Rights of San Francisco Bay Area Liberty Tree Foundation for the Democratic Revolution LITE Initiatives Livermore Indivisible Los Angeles Alliance for a New Economy (LAANE) Los Angeles City Councilmember Kevin de LeÃģn Los Angeles City Councilmember Curren Price Los Angeles City Councilmember Nithya Raman Los Angeles County Democratic Party Malonga Arts Residents Association March and Rally Los Angeles Marin Sunshine Realty Mayor Pro Tem G. Muir Davis, City of La Verne Mayor Robert Garcia, City of Long Beach Mayor Tim Sandoval, City of Pomona Mayor Jennifer Stark, City of Claremont McGee-Spaulding Neighbors in Action Media Alliance Mendocino County Public Banking Coalition Mendocino Womenâs Political Coalition Mill Valley Community Action Network Mobility Capital Finance, Inc. (MoCaFi) Mothers Out Front CA Mountain Progressives National Domestic Workers Alliance NextGen California New Economics for Women North Bay Jobs with Justice North Bay Labor Council Northridge Indivisible Occupy Sonoma Valley Orchard City Indivisible Orinda Progressive Action Alliance Our Revolution Long Beach Partnership for Working Families Peace and Justice Center of Sonoma County People for Public Banking Central Coast PODER (People Organizing to Demand Environmental & Economic Rights) Pomona City Councilmember John Nolte, District 1 Progress Noe Valley Progressive Alliance of the Inland Empire Progressive Asian Network for Action (PANA) Prosperity Now Public Bank East Bay Public Bank Long Beach Public Bank Los Angeles (PBLA) Public Bank Pomona Valley Public Banking Institute Public Counsel Public Law Center Ready to Help LA Renaissance Entrepreneurship Center River Watch Romero Institute Rose Foundation for Communities and the Environment San Diego County Democratic Party San Fernando Valley Young Democrats San Francisco Berniecrats San Francisco Board of Supervisors San Francisco County Treasurer JosÃĐ Cisneros San Francisco Public Bank Coalition San Francisco Supervisor Dean Preston San Jose Nikkei Resisters San Mateo Labor Council Sanctuary Santa Cruz Santa Cruz Climate Action Network Santa Cruz County Democratic Party Santa Cruz Indivisible SaverLife SEIU 1021 SEIU 721 SEIU International SFV Indivisible Shoreline Study Center Silicon Valley Rising Action Sister-to-Sister 2 SoCal 350 Climate Action Social Eco Education Sonoma County Climate Activist Network (SoCoCAN) Sonoma County Climate Mobilization Sonoma County Democratic Party Sonoma County Pachamama Alliance South Bay Progressive Alliance South Sacramento Seniors for Systemic Equality SouthBayCan Southern Poverty Law Center Strategic Actions for a Just Economy Strike Debt Bay Area Sunrise Movement LA Tehama Indivisible Thai Community Development Center The Climate Center The Cobb Institute The Future Left The Greenlining Institute Together We Will â San JosÃĐ Together We Will Contra Costa Together We Will/Indivisible â Los Gatos UFCW (United Food and Commercial Workers) Western States Council UFCW Local 5 UFCW Local 770 United Farm Workers UXO Architects Vallejo-Benicia Indivisible Venice Resistance We The People SD Western Center on Law & Poverty Wild Solar Wilshire Center Koreatown Neighborhood Council Women For: Orange County Womenâs Alliance Los Angeles Working Group for Emergency Climate Action Now Working Partnerships USA Worksafe Yolo Indivisible 350 Butte County 350 Chico 350 Conejo / San Fernando Valley 350 Marin 350 Silicon Valley 350 Sonoma 350 South Bay Los Angeles
Assemblymember Miguel Santiago, author Assemblymember David Chiu, author Assemblymember Ash Kalra, author Assemblymember Alex Lee, author Assemblymember Wendy Carillo, author Assemblymember Eduardo Garcia, author Assemblymember Mike Gipson, author Assemblymember Lorena Gonzalez, author Assemblymember Adrin Nazarian, author Assemblymember Phil Ting, author Assemblymember Buffy Wicks, author Senator Maria Elena Durazo, co-author Senator Ben Hueso, co-author Senator Lena Gonzalez, co-author Senator Josh Newman, co-author Senator Scott Wiener, co-author Assemblymember Laura Friedman, co-author Assemblymember Luz Rivas, co-author Assemblymember Reggie Jones-Sawyer, co-author
Originally posted on the California Public Banking Alliance’s Medium page.
The basic functions of investment are too important to be left in the hands of private banks only interested in accruing profits. We need public banks â something the Public Banking Act, introduced by Reps. Alexandria Ocasio-Cortez and Rashida Tlaib, would provide.
While only a few dozen people across the country might tune in to a Wednesday morning subcommittee hearing under the House Financial Services Committee on solutions to increase access to our nationâs banking system, millions have now seen the viral clip of Rep. Alexandria Ocasio-Cortez taking her colleagues to task for failing to read the legislation on which they were commenting. And if youâd read the bill before hearing their comments, itâd be clear as day.
The Public Banking Act, introduced in October 2020 by Representatives Ocasio-Cortez and Tlaib, mirrors legislation that has been introduced in several states and passed in California, establishing a federal regulatory framework to oversee and service publicly owned banks at the municipal and state levels that place communitiesâ needs over corporate greed. After all, if private banks have FDIC insurance, access to the Federal Reserve and Treasury, and are (insufficiently) regulated by governments, then why wouldnât public banks?
What does it not do? Establish a national bank (the Federal Reserve is our central bank), take over private banks, create a single public bank, or funnel unlimited amounts of taxpayer revenue into high-risk loans, as Republicans on the committee claimed. Nevertheless, they insisted that a public-banking option would usher in an economic apocalypse and the death of American industry and innovation.
The hearings on public banking are the same every time. With every opportunity, Wall Street lobbyists and think-tank pundits â consistently the sole critics of public banking â pop up to repeat the same tired talking points: âHave you been to a DMV?â or âBig Brother is coming to crush competition and steal our freedoms and property!â These claims come despite legislation in numerous cities, states, and now Congress explicitly stating otherwise, and primarily serve to muddy the waters.
The CATO Institute and Competitive Enterprise Institute (both directly funded by the Charles Koch and fossil-fuel corporations, among others) and the American Bankers Association (the lobbying arm for Wall Street megabanks) have blatantly lied and misrepresented what public banking legislation clearly states to protect a status quo of private banks that have failed to invest in socioeconomic and environmental crises when theyâre not deemed profitable. While Republicans in Congress didnât bother to read the bills, they had no problem memorizing the talking points fed to them by the bankers and their think tanks.
What is public banking and why is it so scary? All one has to do is look to the Bank of North Dakota (BND), a bank owned and operated by the State of North Dakota. BND partners with credit unions and community banks across the state to increase lending capacity to the residents of North Dakota at more affordable rates, rather than letting Wall Street giants price gouge North Dakotans to maximize profits.
The result? North Dakota has more credit unions and community banks per capita than anywhere else in the country, and BND routinely returns its surpluses into the stateâs general fund to increase funding for public projects. Most impressively, through its requirements to make safe and sound investments, it was one of only a few banks in the country to operate in the black throughout the 2008 financial crisis and the 2020 recession sparked by COVID. Additionally, it has been a shining example and processed more PPP loans to North Dakotans than any financial institution in the country.
Over the past several years, weâve seen what looks like an apocalypse as wildfires left Californiaâs skies bloodred and choked by smoke, entire towns reduced to rubble, nearly all of which were found to be directly due to mismanaged infrastructure by the stateâs largest energy corporations. For decades, hurricanes have been leaving cities across the South underwater and ravaged after hurricanes.
Every year sees more carnage across the world as the clock to complete climate catastrophe ticks toward zero. The only path forward to save humanity is to face these crises head-on and build a new economic foundation capable of overhauling our energy grid to 100 percent renewable, building sustainable and truly affordable housing and transit systems and much more. Itâs vital that our governments are equipped with every tool possible to mobilize the resources needed.
Thanks to the work of grassroots organizers in cities up and down the state, 2019 saw the first public-banking legislation in a century pass in California, creating a regulatory framework and pathway for municipalities to establish public banks. Through the creation of public banks in California, cities like San Francisco, Los Angeles, New York, Philadelphia, Seattle, Chicago, San Diego, and many more would have additional tools to invest their public revenues and assets into large projects like public infrastructure, renewable energy, affordable housing, and partnering with local banks to further increase their lending capacity and spur more affordable investment in small business, housing, education, and more.
The for-profit megabanks have almost completely monopolized public finance and failed miserably to provide the services needed by the communities theyâre chartered to serve. Due to a lack of public options, every city in the country is forced to turn to Wall Street titans for banking services, held hostage by the banksâ profit margins and predatory practices. Millions across the country lack access to most basic financial services such as a checking or savings account, which the for-profit banking industry has continuously failed to provide, forcing the most vulnerable residents across the country to turn to payday lenders and the check-cashing industries that charge up to 400 percent interest rates. And their investments have accelerated environmental destruction and wealth inequality by directly financing fossil fuels, weapons manufacturers, and private prisons.
Amid all of this, there is virtually no mechanism to hold such banks accountable for their crimes, let alone democratize our financial sector. It seems like common sense to many. We pay taxes to a government and expect them to use those funds to provide services to residents and improve quality of life. Yet the reality is that the taxes we pay are shipped off to Wall Street and used to underwrite loans to finance oil pipelines, defense contractors, and overpriced student loans.
These conditions call for immediate governmental intervention, ironically creating the competition that reactionary politicians cry for as a driver of progress and innovation, failing to realize that a robust network of public banks is the very competition that can set a new industry standard by charging lower interest rates on public infrastructure and providing capital to credit unions and community banks to more affordably meet the needs of local economies.
For-profit giants have branded themselves âtoo big to fail,â yet continuously fail to meet the most basic needs of the communities theyâre tasked with investing in. Itâs time to embrace the opportunity to build a better, more equitable alternative â one thatâs accountable to the public and will uplift and empower the communities left behind by Wall Street. As Rep. Rashida Tlaib argues, itâs not that the banks are too big to fail, but that the people are too important to fail.
San Francisco has taken its first major step toward establishing a public bank, and other California municipalities are also moving forward in exploring public banking, including a regional effort by cities and counties on the Central Coast.
The moves come nearly two years after Gov. Gavin Newsom signed AB 857, enabling California cities and counties to form public banks. These are locally-controlled financial institutions into which municipal revenues â such as taxes and fees â are deposited. The money is then lent out to small businesses and infrastructure projects, among others, through partnerships with community banks. The goal is to directly benefit residents, while providing not-for-profit services for citizens who choose to use the bank.
A state public bank was formed in North Dakota more than a century ago, although no cities or counties in the nation have public banks. But the California statute reportedly is adding fuel to a nationwide public banking effort.
By law, a public bank in California must be run by banking professionals responsible to a board and overseen by Californiaâs Department of Business Oversight.
âWe finally have the option of reinvesting our public tax dollars in our local communities instead of rewarding Wall Streetâs bad behavior,â Assemblyman David Chiu, a San Francisco Democrat and coauthor of AB 857, said at the time of the governorâs signing.
On June 15, San Franciscoâs Board of Supervisors unanimously approved the San Francisco Reinvestment Working Group ordinance. Penned by Supervisor Dean Preston, the ordinance authorizes the creation of a working group made up of financial experts, community members, and representatives of the cityâs Controller and Treasurer.
The working group has one year from its first meeting to create a business plan to present to the Board of Supervisors and Local Agency Formation Commission, which, if approved, will be submitted to the California Department of Financial Protection and Innovation.
However, before the working group can convene, it must be funded. Currently, there is no money earmarked in the mayorâs proposed budget to support a reinvestment working group.
The creation of the working group is the latest in San Franciscoâs decade-long drive to establish a public bank which includes dozens of hearings, meetings and studies, including last yearâs Municipal Bank Feasibility Task Force Report. That study outlined three possible routes that San Francisco get into public banking, all of which, if approved, will take years to see to fruition.
Cities and counties on Californiaâs Central Coast are in the starting stages of creating a regional public bank.
Led by Santa Cruz County, resolutions supporting a Central Coast Public Bank viability study have been passed in Monterey and Santa Barbara counties, as well as the cities of Santa Cruz, Capitola, Seaside, Scotts Valley, Del Rey Oaks, and Watsonville.
According to Santa Cruz County Supervisor Zach Friend, San Benito and San Luis Obispo counties have also been asked to back a viability study. Currently, neither county has signed on. The viability study is the first step municipalities must take to create a public bank.
In May, Los Angeles made progress in its quest for a public bank. In a unanimous vote, the cityâs Economic Development and Jobs Committee approved the motion for the formation of the Municipal Bank of Los Angeles. The motion now goes before the full city council, though no date has been set for its hearing.
North Dakota, through the efforts of its farm community, established a public bank in 1919, an institution that has survived Great Depression, widespread bank and savings-and-loan failures, and the Great Recession. If San Francisco, Los Angeles, or the Central Coast are able to establish their own, it will be the first for an American city or county.
While public bank proponents point to the Bank of North Dakota (BND) as a success story, critics of public banking counter that both BNDâs scale and when it was established render such comparisons moot. Other critics, such as the CATO Instituteâs Mark Calabria, use public bank failures from the 1800s in states like Vermont and Indiana as proof that public banking is a disaster waiting to happen.
The public banking law âinfers that banks are not serving their communities, an argument repeatedly made by public bank activists in a variety of forums,â wrote the California Bankers Association, a leading public banking opponent. âCommercial banks, particularly community banks, will be harmed by the taking of local agency deposits which would otherwise be used as a source of liquidity by these banks to make loans into their communities.â
But supporters of public banking arenât buying it, saying the public banks would retain revenues for the community and save the costs associated with private banking, among other benefits.
Public banks have the potential to âsave local governments money, increase investment in affordable housing, infrastructure and other essential items,â says Santa Cruzâs Zach Friend.
âAt a minimum, itâs important to explore the viability and possibilities of the formation and then to see whether this model makes sense for our region,â he added, âany method that would help improve investments in these challenges and save money to our communities is worthy of serious exploration.â
CBS Bay Area – SAN FRANCISCO (BCN/CBS SF) â June 15, 2021 San Franciscoâs Board of Supervisors on Tuesday unanimously approved an ordinance that moves the city closer to creating the first public bank in the U.S.
The Reinvest in SF ordinance, authored by Supervisor Dean Preston, creates a working group of community leaders and financial experts to come up with a business plan to submit to the California Department of Financial Protection and Innovation for approval.
In addition to a business plan, the group will also come up with a timeline for the city to apply for a public banking license.
âThe pandemic has laid bare the deep disparities that exist along social, economic, and racial lines,â Preston said. âAs we chart a path to economic recovery, we need to look beyond corporate banks that prey on our most vulnerable communities.â
According to Preston, a public bank would allow the city to reinvest millions of its revenues toward initiatives that support working San Franciscans, including economic recovery, affordable housing, green infrastructure and small business loans.
