• The California Public Banking Act (AB 857) allows charter cities like Los Angeles to store their funds in a public bank instead of a private bank. This includes money that city departments, like the treasurer's office, receive in the form of taxes, fees, fines, and funding from state and federal programs.
• The Los Angeles Public Bank is well-positioned to provide affordable loans for community projects like affordable housing, climate-resilient infrastructure, and small business support due to its lower overhead costs. Any profits earned by the bank can be reinvested back into the municipality's general fund. This arrangement allows the public bank to offer loans at lower interest rates compared to traditional financial institutions.
• The Los Angeles Public Bank will function as a "mini-Fed" for the region, providing support to local banks and underwriting loans. It will act as a "banker's bank," working in partnership with community banks and credit unions to offer loans. This arrangement can increase the lending capacity and stability of local banks.
• The Los Angeles Public Bank will be able to fund local projects at a lower cost by partnering with small banks, credit unions, and Community Development Financial Institutions (CDFIs). As a self-funding and self-sustaining institution, it will not put state funds or tax dollars at risk. This feature makes public banks a particularly attractive option for municipalities and charter cities looking for an alternative to traditional financial institutions.
• The Los Angeles Public Bank will be managed by experienced professionals and overseen by an independent board of directors to ensure that it is not influenced by special interests. This structure is designed to protect the bank from political interference and allow it to serve the needs of the community. To obtain approval for its charter from state and federal regulatory agencies, the bank will need to provide a governance plan demonstrating its independence from political influence.
• To ensure that community concerns are taken into account, the Los Angeles Public Bank will establish citizen advisories to monitor its investments. These advisors will have a role in shaping the bank's decision-making and ensuring that it is responsive to the needs of the community.