Los Angeles Weighs Bringing Its Wall Street Cash Home

by Public Bank LA
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By: Romy Varghese. Bloomberg.com. A ballot measure to create a public bank could designate funds for investment within city limits.

When revenue from sales taxes and parking fines comes in, the city of Los Angeles does what every other local government in America does: deposits it in safe, boring bank accounts or invests it in safe, boring short-term securities. The city has about $11 billion deposited with or managed by the country’s biggest banks, which use the capital for their own needs and ultimately their own profit. This arrangement has Los Angeles and some of its more adventurous brethren considering an alternative. Why not create a public bank that would support investment within city limits, backing such things as small-business loans and affordable housing instead of sending the money out?

On Nov. 6, Los Angeles will hold a referendum to ask voters just that. If the answer is yes, the city will amend its charter and become the first U.S. metropolis to take this step toward creating a public bank, giving a big boost to similar campaigns around the country.

The only public bank in the 50 states is Bank of North Dakota. Established in 1919 to support North Dakota’s agriculture industry, it returns profits to the state for reinvestment and works with other financial institutions to stimulate local economies. Outside the 50 states, American Samoa won the Federal Reserve’s approval to tap into its payment system for a public bank earlier this year. The impetus there was pragmatic and urgent: The territory needed a replacement after the commercial Bank of Hawaii said it would close its branches there.

The path to the ballot in Los Angeles began with environmental protests about two years ago, when activists from the group Divest LA descended on city hall to lobby officials to stop doing business with Wells Fargo & Co., a major financier of the Dakota Access Pipeline. Then last year, following revelations that the San Francisco-based bank opened millions of unauthorized customer accounts, organizers began considering wider issues as well. Soon they formed an advocacy group called Public Bank LA, proposing that Los Angeles form an institution using Bank of North Dakota and local banks in Germany as models.

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Why Los Angeles should start a public bank

by Public Bank LA
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By: Harold Meyerson, Los Angeles Times. Harold Meyerson is executive editor of the American Prospect. He is a contributing writer to Opinion.

With all that’s at stake in the midterm elections, Los Angeles voters would be forgiven for overlooking Charter Amendment B, a referendum that would amend the city charter to conform with an ordinance the City Council enacted earlier this year.

But Charter Amendment B is no municipal snoozer. It proposes the most fundamental change to our economic system that Angelenos have ever had the opportunity to vote on. The amendment would allow for the creation of a Bank of Los Angeles: a public bank to be operated by and for the city.

Currently, when L.A. collects tax revenue, that revenue does not immediately flow back out to pay city employees. Instead, the revenue is deposited into one of several mega-banks, to be withdrawn when the city needs the funds. This spring, the city’s portfolio came to $9.5 billion. We’re not talking chicken feed.

L.A. has already withdrawn its funds from Wells Fargo, whose steady stream of abusive and fraudulent practices compelled the bank to pay billions in fines in recent years. But the alternatives — the other Wall Street behemoths that brought us the 2008 crash and saddled us with the Great Recession — also have a deference to shareholders and commitment to bonuses that exceed any interest they may have for the well-being of L.A.

Last year, a group of concerned Angelenos who’d formed an advocacy organization, Public Bank LA, began talking to the City Council about establishing a municipal bank. They pointed to North Dakota, which since 1919 has had a state-owned bank that is used to make loans to businesses and farms.

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Banking on the Public Option: Will LA Lead the Way for People-Owned Banks?

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By: Glenn Daigon, Who.What.Why. Glenn Daigon talks to Trinity Tran and Ellen Brown on Los Angeles establishing a public bank - an issue its residents will vote on in the fall.

If Los Angeles were to establish a public bank — an issue its residents will vote on in the fall — one of two things could happen.

In the opinion of plan proponents, a public bank would free the city from predatory Wall Street institutions and save taxpayers a lot of money. That money could then be used to fund needed projects, such as affordable housing, infrastructure, renewable energy, and small-business expansion.

Opponents of the proposal, on the other hand, predict that such a bank would be a disaster. Untethered from market forces, the “public” bank might make loans to the politically connected without regard to profitable returns. Critics argue it would be so inefficient and poorly managed that city taxpayers would eventually be forced to bail it out.

Granted, even public approval does not mean LA will get a public bank. Other local, state, and federal hurdles need to be cleared before such a bank could be up and running.

Nevertheless, the vote on the measure could have implications far beyond the city or even California. If the proposal passes this November, it could jumpstart other efforts by cities and states around the nation that are currently considering setting up their own public banks.

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