Los Angeles Advances on the First Municipal Public Bank in the United States

by Public Bank LA
in News
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The Los Angeles municipal bank would be the largest publicly held municipal bank in the nation. It will create a socially responsible and publicly accountable source of capital for investment in public goods, small businesses, and green infrastructure.

LOS ANGELES, California — The Los Angeles City Office of the Chief Legislative Analyst (CLA) released a Request for Proposal (RFP) seeking consultants to author a viability study and business plan for a proposed Los Angeles public bank. This RFP issuance represents the culmination of a historic effort to realign the city’s financial infrastructure with its values and the pressing needs of its nearly four million residents. Once complete, this plan will outline next steps for Los Angeles to establish a public bank via a state-issued charter.

The City is seeking proposals from organizations with knowledge of municipal finance and modeling social finance entities and experience engaging directly with stakeholders to set the priorities and principles of their financial institution. The RFP directs applicants to propose how they would evaluate the existing banking market in Los Angeles, including the current federal compliance of local banks and performance in banking City funds. Applicants will assess a public banking model along financial, risk, operational, and business lines, estimating startup and staffing costs, governance structures, capitalization, strategy and financial projections. In a second phase, applicants will develop a statement of purpose for the bank and complete an application to the Department of Financial Protection and Innovation (DFPI), the state’s banking regulator and chartering agency.

Los Angeles City Council voted on October 5, 2021 to direct the CLA to issue the RFP after the council’s Economic Development and Jobs Committee chaired by Los Angeles City Councilmember Curren Price, ratified the amended motion originally proposed by Councilmember Herb Wesson. The motion expanded the Request for Proposals to include requirements described in Assembly Bill 857, the California Public Banking Act, a 2019 state law permitting the chartering of public banks by cities and counties to support community economic development and address infrastructure and housing needs for localities.

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