1. Fiscal Responsibility

A Los Angeles public bank will ensure that public tax dollars stay within the city and are invested in local communities. This will enable the city to finance projects that align with its values and priorities, rather than relying on Wall Street banks to choose projects that may be harmful to the environment or society, such as petroleum pipelines, armaments, and private prisons. By using a publicly owned and accountable financial institution, the city can lower the cost of infrastructure improvement, as currently a significant portion of the cost - nearly 50% - goes towards bank interest and fees. The fees and interest from public bank loans can be reinvested in the communities rather than being sent to Wall Street banks.

As the only state-owned and operated bank in the US, the Bank of North Dakota serves as a model for the potential success of a Los Angeles public bank. Like the BND, the Los Angeles Public Bank would be subject to strict regulation and prohibited from engaging in risky banking practices. The BND has consistently achieved a high return on investment, with a better credit rating than JPMorgan Chase and Goldman Sachs, according to the Wall Street Journal. It has also helped to reduce the cost of student debt for residents and students in North Dakota, and played a crucial role in distributing Paycheck Protection Program loans to small businesses during the COVID-19 pandemic. By following the successful example of the BND, the Los Angeles Public Bank can provide similar benefits to our city and its residents.

2. Community Development

The Los Angeles Public Bank will prioritize the long-term prosperity of LA communities by funding initiatives that support local economic development, such as affordable housing, green energy infrastructure, conservation measures, and co-ops. By partnering with local financial institutions, the bank will be able to offer loans for economic development, public works financing, and job creation. Small and medium-sized businesses are vital to California's economy, and the Los Angeles Public Bank can support them by acting as a sole originator or convening loan participations with community banks, credit unions, and community development financial institutions (CDFIs). This will help to keep money within the local economy and build wealth within the community.

Some examples of the types of local projects that the Los Angeles Public Bank could fund include:

• Affordable and supportive housing and neighborhood stabilization efforts by extending credit lines through the public bank's loan portfolio. In partnership with local lenders, a public bank can lower the cost of financing housing developments because it won't be bound by the need to maximize profit margins.

• Working with local financial institutions, public banks will provide access to capital, helping them to develop and scale their operations.

• The transition towards decarbonization and renewable energy. The German Sparkassen/KfW public banking networks have funded over 70% of the country's investment in renewable energy infrastructure. Renewables are now Germany's largest source of energy, with one-third of the nation's electricity coming from wind and solar.

• Enterprises that alleviate wealth inequality by making capital available to those that corporate banks exclude, such as Black and Brown households and businesses, women-owned businesses, single-parent households, worker cooperatives, and non-traditional forms of home ownership.

• Low-interest or interest-free loans for students to invest in education and stimulate the economy.

3. Responsible Use of Funds

The municipal public banking movement calls for the creation of banks that are chartered with social and environmental responsibility as a core mandate. To ensure that these banks operate in a transparent and ethical manner, the boards of directors will be held to high standards of transparency and integrity. The lending activities of the Los Angeles Public Bank will be subject to strict mandates that require the board and staff to adhere to the bank's founding principles and fulfill its public policy goals. This will ensure that the bank operates sustainably and ethically, and serves the best interests of the community.

4. Local Autonomy

Cities often pay high fees to corporate banks for their services. For example, the City of Los Angeles pays $3.14 billion annually in debt servicing, which goes to Wall Street banks that often invest in distant places and harmful initiatives such as fossil fuel production. A Los Angeles municipal bank would allow city residents to reclaim public dollars by keeping the money in our communities and having a say in which projects are financed. A chartered public bank prioritizes the public good within the community rather than maximizing profits for a small group of investors. Public bank revenue and profits are returned to the public, increasing the bank's lending capacity and benefiting the local economy.

5. Investing in the Future of Los Angeles

The COVID-19 pandemic has exacerbated the needs and revenue shortfalls faced by California's local governments. With the federal government in a state of gridlock, local governments have been forced to cut critical services such as schools and food programs, and spend significantly more on public health than anticipated before 2020. These service limitations disproportionately impact communities of color and low-income communities. Public banks will not only provide California's municipal governments (such as cities, counties, water districts, transportation districts, and joint power authorities) with affordable depository services and cash management, but they will also provide revenue to supplement government spending, freeing up funds for crucial services.