1. Save money

The city of Los Angeles pays $100M a year in banking fees and interest. This could be reinvested into our communities instead of siphoned out by Wall Street. By depositing our public tax dollars into our a publicly owned and accountable financial institution, Angelenos would keep our money in Our City,creating credit from our own revenue, instead of giving that power to Wall Street to finance wars, pipelines, private prisons, among other socially and environmentally harmful projects. Nearly 50% of the cost of all infrastructure projects go towards paying bank interest and fees – if we fund public projects ourselves through a public bank, our we can half the cost of infrastructure, doubling our power to invest in our own communities.

The Bank of North Dakota is the nation’s only state-owned and operated bank. It is also the most profitable bank in the United States. With a nearly 17% return on investment, the BND is more profitable than Goldman Sachs, with a better credit rating than JPMorgan Chase. It withstood the economic crash of 2008 because, unlike large private banks, the BND does not engage in high-risk financial schemes. Like the BND, a municipal bank for Los Angeles would be prohibited from unsafe and unsound banking practices.

2. Community Development

Private Wall Street banks are responsible for maintaining the stability of their bank system, our tax dollars are used to keep their doors open, instead of it being the other way around. With a public bank, we can focus on the long-term prosperity of our community through low-income housing, green energy infrastructure, co-ops, small businesses, etc. The city-owned Bank of Los Angeles would be a banker’s bank, partnering with local credit unions and community banks, guaranteeing their loans for locally-directed economic development, public works financing, and jobs creation.

  • Fund local projects for low-income housing and neighborhood stabilization efforts by extending credit lines through the public bank’s loan portfolio. The public bank can directly loan money for housing projects below market interest rates; unlike private banks, they won’t be bound by a need to maximize profit margins.
  • Low interest loans or interest free loans for students to invest in education and stimulate the economy. 
  • Support small businesses and cooperative ownership structures by increasing the lending capabilities of local credit unions and community banks.
  • Finance transition towards decarbonization and renewable energy. The German Sparkassen public banking networks have funded over 70% of investments for renewable energy infrastructure. Renewables are now Germany’s top source of energy, with one-third of electricity derived from sources including wind and solar.

3. Ethical Allocation of Money

The municipal public banking movement advocates for banks to be chartered with socially and environmentally responsible mandates. This includes a transparent Board of Directors and an anti-corruption ethos to ensure the bank operates under sustainable and ethical guidelines. The bank’s lending activities would be subject to strict evaluation to determine adherence to its principles and fulfillment of its public policy goals. 

4. Local Self-Determination

The City of Los Angeles pays $3.14B in debt services, which is the cost to borrow money; billions of dollars of our city’s interest payments are redirected into the coffers of Wall Street. A municipal public bank enables the people of the city to recapture public dollars and have a say over the financing of our own community. A chartered public bank maximizes public good within the community rather than maximizing profits globally. With municipal revenues and banking profits being returned to the public, the bank would issue loans to benefit the local economy, not private shareholders.

5. Serve the Unbanked and Underbanked

3 out of 10 Angelenos do not have either access or adequate access to a checking or savings account and therefore cannot build credit, and are susceptible to theft, fraud, and the predatory practices of financial alternatives such as payday lenders or check cashers. A public bank would help meet the financial needs of the unbanked and underbanked population, largely comprised of minority, working-class communities and immigrant households. A public bank could also provide banking services to the massively growing and unbanked cannabis industry, bringing legitimacy to the finances of this sector.