Congresswomen Rashida Tlaib (MI-13) and Alexandria Ocasio-Cortez (NY-14) introduced the historic Public Banking Act, which allows for the creation of state and locally administered public banks by establishing the Public Bank Grant program administered by the Secretary of the Treasury and the Federal Reserve Board which would provide grants for the formation, chartering and capitalization of public banks. 29 organizations that have long advocated for the public banking system it would make possible also support the legislation, including the California Public Banking Alliance (CBPA).
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.
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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.
Oscar Perry Abello talks with Sylvia Chi and Kurtis Wu from the California Public Banking Alliance. YES! Magazine takes a deep dive into the Bank of North Dakota, the only state-owned bank in the nation and explores how public funds can be redirected to empower local communities.
The little city of Hazen, North Dakota, population 2,300, is the kind of town where farming and ranching families often have a second income from a job at a power plant or a coal mine.
As a teenager, Christie Obenauer, nÃĐe Huber, frequently made the hourlong drive from Hazen to Bismarck, the state capital, to go shopping with her sister. On the way, theyâd usually make a stop to run an errand for their dad, who ran Union State Bank of Hazen.
âWe would back up that giant Buick to the back of the old Bank of North Dakota building, they loaded it up with money, and weâd cover it up with a blanket, close the trunk, go to the mall, and come home,â Obenauer says. âThat was a different time. Everyone just knew we were the Huber girls.â
Obenauer is the fourth generation in her family to run Union State Bank. Founded in 1908, the bank today holds $130 million in deposits and has $147 million in loans, investments, and other assets. Obenauer still sends her staff on regular trips to pick up coin and currency in Bismarckâjust donât ask her what car they drive.
Though itâs a tiny institution in a tiny city, Union State is able to do many things normally beyond the reach of a bank of its size. It served as the lead local lender for a $30.5 million medical center that opened in 2016, combining state and federal loans, another federal loan guarantee, and cash from the regional health system. Obenauer describes how her bank partnered with the medical center, Basin Electric, and a few other local employers to convert a former church into a cooperatively owned child care center that now serves 88 kids. She also notes that her bank helped finance manufactured housing for new workers attracted by the shale oil boom. The Bank of North Dakota was an instrumental secondary market to buy those mortgages, taking up the long-term risk in the way Fannie Mae helps local lenders across the country.
While there is certainly a lot thatâs unique about Hazen, Union State Bank, and Obenauerâs path to becoming a fourth-generation community banker, it is not unusual in North Dakota to find a little bank punching far above its weight. Thatâs just how banking works in this state, largely because of the century-old Bank of North Dakota, the only state-owned bank in the country.
All of North Dakotaâs state tax and fee revenues get deposited by default into the Bank of North Dakota. Prohibited by law from competing with the private sector, it has no branches or ATMs, and other than student loans, the bank rarely originates or services loans directly to people or businesses. If you want to open an account and deposit your own money into the bank, you have to go in person to the main office in Bismarck, and you also have to be a North Dakota resident.
The Bank of North Dakota operates primarily as a bankersâ bank, partnering with local financial institutions to leverage the stateâs deposits in ways designed to strengthen local banks and credit unions.
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.
fter years of claiming to be a leader in climate action, California might be finally starting to step into its promised role â and it is bringing a secret weapon to the challenge.
On November 19, Gov. Gavin Newsom announced the state was placing a moratorium on new permits for oil drilling activities that involved steam injection and fracking. The announcement came just a few months after news broke that not only did Californiaâs top oil regulators have a vested interest in major oil companies, but since Newsom became governor, the number of oil permits had doubled.
âGovernor Newsom has shown the world today that the future of climate leadership means saying ânoâ to the fossil fuel industryâs dreams of endless expansion,â said Stephen Kretzmann, head of Oil Change International, one of the organizations behind the Keep It in the Ground movement. âWhile there is still a long road ahead, the measures announced today are important steps towards comprehensive action to phase out Californiaâs oil and gas production and align its economy with climate safety,â he added.
Governor Newsom agrees there is a long road ahead. In his press release, he explicitly mentioned that the moratorium was undertaken with Californiaâs goal of achieving carbon neutrality by 2045 in mind, and the subsequent need to manage the decline of oil production and consumption in the state â all while ensuring that the transition protects Californiaâs people, environment and economy.
As in many climate discussions, the promises of balancing economic goals with the winding down of fossil fuel production and the ramping up of new infrastructure are often received with skepticism and raised eyebrows. Soon, climate action numbers in the scale of trillions are thrown into the debate in an attempt to align climate ambition with âachievableâ solutions. But fortunately, California can bypass this misguided set of choices. Enter the stateâs secret weapon: public banks.
Largely unnoticed in the environmental sphere, Newsom also made headlines last month when he passed the Public Banking Act. The act, the first of its kind in the country, legalized the creation of public banks across the stateâs cities and counties. Public banks, financial institutions that are owned and accountable to their people through their representative government, are often praised for their investments in much-needed projects and businesses in their localities. Supported projects typically include affordable housing initiatives and small business development.
Thank you American Postal Workers Union (APWU)Â for your support on the Public Banking Act. Postal banks and municipal public banks are complimentary efforts and we look forward to continuing our work on the financial revolution to build a banking system that works for all working people.
APWU represents 330,000 members, employees and retirees of the United States Postal Service.
(This article first appeared in the November/December 2019 issue of the American Postal Worker magazine) â
The early 20th century Supreme Court Justice Louis Brandeis coined a phrase when he referred to the states as âlaboratories of democracy.â Brandeis noted in his opinion that a state âmay, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.â
California has just started a new experiment in freedom from the big Wall Street banks with the passage of AB-857 into law. The bill, signed into law by Governor Gavin Newsom (D) in September, will allow cities and counties across California to establish public banks. The new law makes way for California to become only the second state in the country â after North Dakota â to establish public banking.
A grassroots organization called The California Public Banking Alliance was the driving force behind AB-857’s passage, building on the momentum of a narrowly defeated ballot measure in Los Angeles that would have led to a city-owned and operated bank. The Alliance expanded the ballot measure to cities and counties across the state.
The work to pass public banking brought together city and county councils, labor unions, civil rights organizations and banking reform advocates. AB-857 supporters included the California Labor Federation; the cities of Los Angeles, Long Beach and San Diego; the National American Postal Workers Union; and the California State APWU.
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.
