What's a Public Bank?



Public banks are a vital and transformative solution to the limitations and inadequacies of traditional, privately-owned financial institutions. In contrast to private banks, which are operated for the benefit of shareholders and are profit-motivated, public banks are owned and controlled by local governments or municipalities. This means that they are accountable to the public and operate with the goal of serving the public interest rather than solely focusing on increasing profits for private shareholders.

One of the key benefits of public banks is their ability to keep public money invested locally. Because they are not driven by profit, public banks can prioritize returning banking profit and interest to local communities. This helps to support the growth and prosperity of our communities by keeping money circulating within them, rather than allowing it to be siphoned off to external interests.

Creating sustainable, livable communities that can meet the needs of their residents will require significant planning and investment. This includes efforts to provide affordable housing, reduce reliance on fossil fuels and extractive industries, and support local enterprises. However, traditional sources of funding, such as private banks and investors, may not always prioritize these goals. This is where public banks can play a crucial role.

As financial institutions accountable to the public, public banks can prioritize investments that align with the goals of building sustainable, livable communities. Because public banks return banking profit to local communities, they can help to ensure that investment is directed where it is needed most. By investing in projects that support energy-efficient affordable housing, climate justice, and small businesses, public banks can play a vital role in creating communities that are able to thrive and meet the needs of their residents.


Cost savings: Public banks enable local governments, such as the City of Los Angeles, to borrow from its own bank, significantly lowering borrowing costs for governments and municipalities, and increasing revenue to spend on community-identified priorities.

Support for local economies: Public banks keep money in the local economy rather than allow it to be drained out to distant shareholders. Public banks prioritize lending to local businesses and critical infrastructure projects, supporting the growth and development of the local economy.

Transparency: Public banks are owned by local governments and subject to democratic oversight.

Positive impact: Public banks can direct their investments towards socially and environmentally responsible projects, creating a positive social impact.

Accountable: Public banks are democratically controlled and accountable to the community, which means they can prioritize the needs of local businesses, individuals, and government agencies over the profit motive.

Access to credit: Public banks can partner with community banks, credit unions, and CDFI’s to provide loans and other low-cost and affordable credit to underserved communities or businesses that may not qualify for loans from traditional banks.

Stable funding: Public banks can provide a source of stable, low-cost funding for public infrastructure projects, such as schools, roads, and hospitals.

Public banks are a powerful tool for supporting economic justice and promoting equitable development within our communities. By providing underserved populations, including small businesses owned by women, immigrants, worker co-ops, and communities of color, with access to transformative capital, public banks can help to level the playing field and create more opportunities for these groups to succeed.

In addition to supporting the economic well-being of our communities, public banks also offer many financial advantages. Rather than depleting general reserves through spending, public banks can improve our cities' financial position through lending, generating profits that can be directed back into our communities. This helps to distribute wealth more evenly, supporting economic development and reducing inequality.

One of the key goals of Public Bank Los Angeles and the California Public Banking Alliance (CPBA) is to address the widening racial wealth gap in the state, which is fueled in part by the exclusion of nearly 10 million low-wage Californians, many of whom are Black and Brown, from basic banking services. To address the unbanked and underbanked issue, the CPBA co-sponsored Assembly Bill 1177, which was approved by the state legislature in 2021. This bill will explore the creation of a program to guarantee all Californians access to essential banking services without fees or penalties, helping to promote financial stability and enhance economic progress.

Through our efforts, Public Bank Los Angeles is committed to advancing the cause of public banking and creating a more equitable financial system for all Californians.