The Santa Barbara County Board of Supervisors passed a resolution this month expressing interest in participating in a viability study that would determine the feasibility of establishing a public bank with the five Central Coast counties.
âAt least studying this as a possibility is a responsible decision in light of the hedging of risk and diversification as a way to minimize risk and at least have the possibility or returns,â First District Supervisor Das Williams said at the May 4 meeting. âI think it would be a responsible decision to analyze that, to analyze the possible benefit for the taxpayer and for the county. And if there is no benefit, then you donât move forward.â
California Assembly Bill 857 created a process for local agencies to create a public bank, which is defined as a corporation organized for the purpose of engaging in the commercial or industrial banking business that is owned wholly by a local agency, local agencies or a joint powers authority, according to a letter filed to the board.
Before forming the bank, the bill requires the local agency to conduct a study to assess its viability.
Santa Cruz County Supervisor Zach Friend sent a letter requesting statements of interest in participating in the study to the five Central Coast counties: Santa Cruz, Monterey, San Benito, San Luis Obispo and Santa Barbara.
The study must include a discussion of the purposes of the bank, including achieving cost savings, strengthening local economies, supporting community development, and addressing infrastructure and housing needs for localities.
A fiscal analysis of costs associated with starting the bank and financial projections for the first five years of the proposed bank also must be included in the study. The financial projections should include an estimate of the time period for when expected revenues meet or exceed the expected costs and an estimate of the total operating subsidy that the agency may be required to provide until the proposed bank generates sufficient revenue to cover its costs, according to the board letter.
The study also must include an analysis of how the proposed governance structure of the public bank separates from unlawful insider transactions and apparent conflicts of interest.
The majority of board members were interested in participating in the study and thought the proposed bank offers an opportunity to reinvest money locally, reduce taxes or provide a major new source of income.
âThis offers an opportunity to reinvest money that we are already collecting in taxpayer revenue and invest it locally,â Third District Supervisor Joan Hartmann said. âMy real interest in this is that it could reduce the cost of public infrastructure projects by 35 to 50%.â
Williams said that a huge position of advantage would be if cannabis was part of the studyâs analysis because the bankâs lending opportunities are fewer.
âI would imagine that there is at least a possibility of a competitive advantage on a public bank that is really looking to financing, borrowing or investing via that industry simply because we would not be shackled by the same federal prohibitions that most lending institutions have,â he said.
SALINAS â Monterey County elected officials have OKâd exploring the concept of joining other Central Coast counties to develop a public banking system that would provide benefits for economic development, infrastructure needs and affordable housing.
The Board of Supervisors on Tuesday gave the nod to exploring how interested Monterey County would be in joining Santa Cruz, San Benito, San Luis Obispo and Santa Barbara counties in a regional public banking system called the Central Coast Public Bank.
Introduced by Supervisor Luis Alejo, the decision was exploratory only and no taxpayer dollars would be used. If enough interest is generated, the county would then debate joining partner counties in conducting a feasibility study that would cost between an estimated $100,000 to $500,000.
The Santa Cruz County Board of Supervisors is taking the lead on developing funding for a viability study.
Senator Mike McGuire, Chair of the Governance and Finance Committee and Senator Steven Bradford, Chair of Banking and Financial Institutions Committee at the State Public Bank hearing.
California State Senators Mike McGuire and Steven Bradford took a bold step toward establishing a state public bank on November 23, 2020 by chairing a joint hearing with the Governance and Finance, and Banking and Financial Institutions Committees. The Senators unleashed testimony from a wide range of financial professionals and community activists supporting legislation for a state public bank.
The State Public Bankâs coauthor, Assemblymember Miguel Santiago stated the urgency of financial transformation for COVID-19 recovery by emphasizing âthe need to reimagine a financial system that puts the public good before profit.â His appeal for Californiaâs financial sovereignty was reinforced by Assembly cohort, David Chiu, stating that a state public bank ââĶcould keep the peopleâs financial power in our state to ensure that we are jump-starting our stateâs economic recovery, to catalyze the development of local financial institutions in their communities, providing infrastructure, capital, and support.â
Assemblymember Miguel Santiago and Assemblymember David Chiu, joint authors of the State Public Bank bill.
Three issues stood out from a myriad of speakers.
Wall Street banks have failed our communities, particularly people of color.
Taxpayersâ money needs to be used efficiently to assist those most in need by providing capital to revitalize small businesses and rebuild communities devastated by COVID-19.
A state public bank will counter the corrupting influence of big banks by providing investment opportunities for those doing social good: to build affordable housing; to build sustainable infrastructure; to support small business survival; to put people back to work while rebuilding our communities, especially those that are ignored by big banks.
State Treasurer Fiona Ma and Senator Maria Elena Durazo speaking at the State Public Bank hearing.
Public banking proponents gained traction with a series of well-informed presentations from public servants, entrepreneurs, community financial institutions and community groups. California State Treasurer Fiona Ma made it clear that she supports a thorough, appropriate study for the feasibility of a public bank. Henry Levy, Alameda County Treasurer and Tax Collector, noted âa lot of the county treasurers are in support of the goals of a public bank.â Senator Maria Elena Durazo spoke of the critical need for an alternative to Wall Street to address community and small business needs that the current system has failed to support. Durazo emphasized that officials should find ways to move bold ideas forward rather than dismiss them, and acknowledged âThe private sector takes advantage of our funds but doesnât reciprocate the way that it should for our communities.â
Ameya Pawar from Open Society Foundations pointed out that the government gives banks ââĶthe license to create money. That is what the public provides private sector banks.â Mr. Pawar offered a solution to Senator Durazoâs concern, saying âThere is no reason why the public sector couldnât also obtain a license to create money, to fill in the gaps that are created by private sector banks.â
Ameya Pawar with Open Society Foundation and Mark Herbert, Vice President of California Small Business Majority testifies in support of a California State Public Bank.
Noni Ramos from Enterprise Community Loan Fund explained how a state public bank would help Community Development Financial Institutions be more effective. âCDFIs work to bring capital to low income and underserved communities and financial resources from the public bank could be leveraged by CDFIs.â Mark Herbert, Vice President of California Small Business Majority concurred, saying public banks provide ââĶ the opportunity to think about, how do we get more tools and more resources and more capital to the smallest businesses?â He concluded that ââĶfundamentally we need to think about not just this moment â and meeting the significant needs that small business owners and our state face â but how do we build a more equitable economy in the future?â
Scores of community activists made their voices heard in public comment. Trinity Tran from the California Public Banking Alliance made it clear that a public bank will enable public funds for rebuilding and recovery. Ms. Tran reminded legislators at the hearing that while campaigning Governor Newsom committed to breaking the hold of Wall Street banks by establishing a state public bank. Jennifer Tanner, speaking on behalf of Indivisible CA: StateStrongâs over 70 groups with 40,000 members, registered strong support for a state public bank. Ben Hauck of Public Bank Long Beach, called on legislators to take bold action for public banking as a systemic solution to a broken financial system.
Members of UFCW Western States Council.
United Food and Commercial Workers (UFCW) Local 770âs Political Director Nam Le spoke on behalf of 150,000 grocery and retail frontline workers. The union supports public banks capable of partnering with community banks and credit unions to lend responsibly to localities, especially communities of color, which have suffered the greatest losses in the pandemic. Steve Sittig of Public Bank Pomona Valley pointed out that a state public bank can smooth the way for setting up local and regional public banks.
Joining the overwhelming support for a state bank in the public comment section were California Reinvestment Coalition (CRC), a key ally in California Public Banking Allianceâs effort, representing over 300 California small businesses and CDFIs, and the Peopleâs Alliance for Justice testifying on how a State Public Bank will be able to support CDFIs in their work with the unbanked, leveling the playing field for our most needy.
Richard Girling of United Educators of San Francisco and SF Public Bank Coalition urged legislators to look to Germanyâs Sparkassen, a network of hundreds of public banks that have operated for a couple hundred years. Rose Anwich from Ventura County expressed her concern that Wall Street banks continue to finance extractive industries and that public banks are needed for financing climate resilient initiatives. Bonnie Petty, from North Bay Jobs with Justice, noted that had there been a state public bank, recovery funds could have been leveraged to provide much more relief from the fires that destroyed communities.
In a recent newsletter by the Public Banking Actâs co-author Asm. Phil Ting, the Legislative Analyst estimated âa one-time $26 billion windfall in revenues this coming year. However, deficits are projected for several years thereafter. In addition, COVID-19 cases are surging, potentially exacerbating our economic challenges and the number of vulnerable Californians in need of assistance.â Using some of this windfall as the foundation for a state public bank in 2021 will be critical in enabling California to leverage funds in future years to assist in rebuilding and restructuring our local economies.
The California Public Banking Alliance (CPBA) is a coalition of public banking activists in California working to create socially and environmentally responsible city and regional public banks.
By Brett Garrett, Rick Girling, Susan Harman, Debbie Notkin, Trinity Tran
Public banking took a gigantic step forward on Monday as the Senate Governance and Finance Committee under Chair Senator Mike McGuire heard informational testimony for AB 310, which will establish the California state public bank to address the catastrophic economic consequences of COVID-19. This historic hearing confirmed that Treasurer Fiona Ma and Controller Betty Yee will work closely with the California Public Banking Alliance (CPBA) and legislative authors Assemblymembers Miguel Santiago (D-L.A.) and David Chiu (D-S.F.) in the coming months. With their support, the bill is likely to be passed and signed into law during the next legislative session in 2021.
While abbreviated legislative sessions resulting from the pandemic postponed a vote on AB 310 until the next session, the support of the Treasurer, the Controller, and the chair of the Senate Governance and Finance Committee has given public banking advocates and financial experts a chance to refine the proposal to grow its support, popularity and efficacy, and see it passed and signed into law next year.
Assemblymember Miguel Santiago testifies in support of AB 310 in the Senate Governance and Finance Committee.
âAB 310 is about shifting power away from big Wall Street banks and back into the hands of our real shareholders; the taxpayers,â said Assemblymember Santiago. âAs we deal with the ghastly economic crash from the pandemic, we simply do not need to be suckered into the predatory banking practices of Wall Street. The state bank is a direct, efficient, fast way to give small businesses, local governments and the people of California financial peace and justice.â
âWe made history together with AB 857 last year, which made our state the first in 100 years to allow locally-chartered public banks. A state public bank builds on this progress and makes an overdue investment in our financial infrastructure to promote the social good. I look forward to revisiting this conversation next year and continuing to ensure that the publicâs money works for the people,â said Assemblymember Chiu.
Assemblymember David Chiu testifies in support of AB 310 in the Senate Governance and Finance Committee.
In a letter to Chair McGuire, Ma commended the AB 310 authors âfor trying to address the economic impacts due to Covid-19 as well as supporting historically marginalized communities across Californiaâ and said that she looks âforward to working with the advocates over the next 6 months on coming up with a workable solution.â
Within a few weeks of the billâs introduction, AB 310 garnered unprecedented support from over 80 organizations and 220 delegates of the California Democratic Party, including endorsements from United Food and Commercial Workers Western States Council, SEIU California, and Los Angeles County Federation of Labor, AFL-CIO. Union President John Grant made clear labor support for the legislation. âOn behalf of the over 30,000 members of the United Food and Commercial Workers Local 770, we strongly support the creation of a public bank for the State of California. In this moment of crisis, grocery, retail drug and packing house workers are struggling in very basic ways as essential employees. If nothing else, the global pandemic gives us the opportunity to rethink equity and how we best respond to a likely imminent global recession. A public bank is a necessary part of the overall recovery.â
Public banking proponents Sushil Jacob from the Lawyersâ Committee for Civil Rights of SF and Paulina Gonzalez-Brito of California Reinvestment Coalition presented powerful arguments for a state bank. They reminded everyone that communities of color have been the first and hardest-hit victims of the economic crisis with 42% of African-American-owned small businesses shuttered compared to 17% of white-owned businesses. Access to capital is vital to rural and urban municipalities that have been robbed of tax revenue due to business closings and record unemployment. AB 310 reimagines banking by providing California with an alternative to Wall Street banks, keeping funds in the state rather than siphoning money to out-of-state actors. Under AB 310, funds in the state coffers will be efficiently utilized for reinvesting and rebuilding devastated communities, leading to a vibrant and sustainable recovery from COVID-19.
The state bank will provide a counter to the global banks that have mishandled and profited substantially from funds allocated to address the current financial crisis. Wall Street banks gave priority to large corporations in distributing Paycheck Protection Program (PPP) funds, leaving little or nothing for struggling small businesses. The Federal Reserve Bank handed out billions to the largest banks at near-zero interest with no strings attached while making municipalities beg for funds at above-market rates with onerous constraints. As Jacob explained, AB 310 is a better way. âWe can invest our state and local dollars in job creating, income producing and climate-change adapting projects. That is the promise of AB 310.â
AB 310 coalition members speak with California Treasurer Fiona Ma.
Public banking has a long history in growth-oriented economies such as Germanyâs, as well as our own home-grown public Bank of North Dakota celebrating 100 years of successful operation. These are times that require new approaches, and fortunately Treasurer Ma and Controller Yee together with Senator McGuire are contributing their expertise to a collaboration with public banking advocates, California labor, and other stakeholders to find the right solutions for ensuring that Californiaâs money does the most it can to help Californians.
The desperately needed California state public bank will allow us to thrive again sooner, setting the pace for the nation.
The California Public Banking Alliance (CPBA) is a coalition of public banking activists in California working to create socially and environmentally responsible city and regional public banks.
April 17, 2020 – The Hill. Rick Girling of the California Public Banking Alliance and Isaiah Poole with Next System Project lays out the case for why public banks are a necessary engine for economic recovery.
At least 90 percent of the nationâs cities are facing a budget crisis because of the economic shutdown in response to the COVID-19 pandemic, according to a mid-April report by the U.S. Conference of Mayors and the National League of Cities. Because municipal governments cannot run deficits, they will have to respond by cutting staff and programs, which will worsen the economic conditions of the cities they serve.
If cities had public banks, they would be much better equipped to deal with these budget shortfalls and maintain the services and staff most vital to their economic recovery. Thatâs why state and local political leaders should use emergency powers to rapidly create public banks that can serve as key engines of a just and sustainable economic recovery.
Public banks are new to most of us in America, but they have been a proven institution globally for the past few hundred years. The one place in America where public banking is not new is North Dakota, where the 100-year-old Bank of North Dakota is widely credited with helping the stateâs economy weather the 2008 recession far better than other states.
In 2019, the California Public Banking Alliance ushered through the California legislature historic legislation, AB 857, The Public Banking Act. This law for the first time allows municipalities across the state to set up public banks in their communities. An increasing number of states and localities are considering following Californiaâs lead.
A public bank, capitalized with the deposits that cities now park in Wall Street banks, will be a ready source of funds to help people and businesses sustain themselves through these hard times and rebuild. Public banks, like all banks, are able to multiply the impact of their capital by leveraging it up to ten times in loans. They provide the most efficient means for expeditiously deploying funds quickly to help recovery efforts, such as the low-interest loans to small- and medium-sized businesses to help them get back on their feet.
ÂĐ Getty Images
At least 90 percent of the nationâs cities are facing a budget crisis because of the economic shutdown in response to the COVID-19 pandemic, according to a mid-April report by the U.S. Conference of Mayors and the National League of Cities. Because municipal governments cannot run deficits, they will have to respond by cutting staff and programs, which will worsen the economic conditions of the cities they serve.
If cities had public banks, they would be much better equipped to deal with these budget shortfalls and maintain the services and staff most vital to their economic recovery. Thatâs why state and local political leaders should use emergency powers to rapidly create public banks that can serve as key engines of a just and sustainable economic recovery.
Public banks are new to most of us in America, but they have been a proven institution globally for the past few hundred years. The one place in America where public banking is not new is North Dakota, where the 100-year-old Bank of North Dakota is widely credited with helping the stateâs economy weather the 2008 recession far better than other states.
In 2019, the California Public Banking Alliance ushered through the California legislature historic legislation, AB 857, The Public Banking Act. This law for the first time allows municipalities across the state to set up public banks in their communities. An increasing number of states and localities are considering following Californiaâs lead.
A public bank, capitalized with the deposits that cities now park in Wall Street banks, will be a ready source of funds to help people and businesses sustain themselves through these hard times and rebuild. Public banks, like all banks, are able to multiply the impact of their capital by leveraging it up to ten times in loans. They provide the most efficient means for expeditiously deploying funds quickly to help recovery efforts, such as the low-interest loans to small- and medium-sized businesses to help them get back on their feet.
Imagine the difference it will make when a network of public banks exists to partner with the Small Business Administration to help execute the Paycheck Protection Program authorized by Congress. Instead of small businesses being frustrated trying to work with the commercial banks to obtain the loans, and having no place to turn when the agency announced the program ran out of funds on April 16, public banks would be there to stand in the gap.
SF Bay View – January 17, 2020. About 500 people gathered in the Pauley Ballroom on the University of California-Berkeleyâs campus for the second annual meeting of the California Progressive Alliance (CPA) on Jan. 12. Trinity Tran of the California Public Banking Alliance spoke to Diana Cabcabin:
âPublic banking is an idea that we introduced into the California State Legislature in 2019. It took a considerable amount of work to build political capital behind this bill and move the public banking conversation into the political mainstream. We are not the first organization to pass a state public banking bill [AB 857], but what we accomplished was extraordinary.
âThis was a high profile and controversial bill facing heavy opposition from nine big financial firms but, without any corporate funding, we coordinated strategy with activists and supporters from across the state and got it passed. We built an endorsement list of 200 statewide regional and community organizations, including national organizations like Our Revolution and national figures like Sen. Bernie Sanders, who backs this bill.â
The editorial staff gathered 19 of the yearâs best ideas into their Solutions of the Year print magazine. Rounding out the top 19 solutions is the California Public Banking Alliance’s AB 857 Public Banking Act!
Oscar Perry Abello reports on California’s adoption of Assembly Bill 857, which creates a legal pathway for public banks owned by city and county governments. Proponents envision a network of public banks that will leverage local public deposits in support of policy priorities such as affordable housing, clean energy, small business lending and alternatives to payday loans. âPart of why our message resonated with so many âĶ was because everyone understands intuitively that Wall Street is extractive, is predatory,â says Trinity Tran, the California Public Banking Allianceâs lead organizer on the bill. âWhy are we using our tax dollars to harm communities when we could use it to help our communities?âÂ
This 80-page special issue highlights the programs, people, and projects that are making cities more equitable and sustainable. Continue reading at Next City.
NextCity, December 3, 2019: Watch guest presenters, Trinity Tran and Sushil Jacob of the California Public Banking Alliance, discuss how they organized citizens to help pass public banking legislation in California. This webinar is the second installment of our 2019 Solutions of the Year webinar series.
November 5, 2019. Glenn Daigon with Who.What.Why talks with Assemblymember David Chiu and the Alliance’s Trinity Tran. From successful legislating to overcoming the clout of big finance, California’s new public banking law is reverberating across the country.
For only the second time in 100 years, a people-powered coalition overcame the stiff opposition of the banking lobby to successfully pass a law that legalizes public banking. Governor Gavin Newsom (D-CA) signed a bill into law last month allowing California cities and towns to establish public banks.
