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Capitol Weekly - July 1, 2021 - California cities from Los Angeles to San Francisco to the Central Coast are moving forward with establishing AB 857 public banks. "Los Angeles made progress in its quest for a public bank. In a unanimous vote, the city’s Economic Development and Jobs Committee approved the motion for the formation of the Municipal Bank of Los Angeles."  

San Francisco has taken its first major step toward establishing a public bank, and other California municipalities are also moving forward in exploring public banking, including a regional effort by cities and counties on the Central Coast.  

The moves come nearly two years after Gov. Gavin Newsom signed AB 857, enabling California cities and counties to form public banks. These are locally-controlled financial institutions into which municipal revenues — such as taxes and fees — are deposited. The money is then lent out to small businesses and infrastructure projects, among others, through partnerships with community banks. The goal is to directly benefit residents, while providing not-for-profit services for citizens who choose to use the bank.

A state public bank was formed in North Dakota more than a century ago, although no cities or counties in the nation have public banks. But the California statute reportedly is adding fuel to a nationwide public banking effort.

By law, a public bank in California must be run by banking professionals responsible to a board and overseen by California’s Department of Business Oversight. 

“We finally have the option of reinvesting our public tax dollars in our local communities instead of rewarding Wall Street’s bad behavior,” Assemblyman David Chiu, a San Francisco Democrat and coauthor of AB 857, said at the time of the governor’s signing.

On June 15, San Francisco’s Board of Supervisors unanimously approved the San Francisco Reinvestment Working Group ordinance. Penned by Supervisor Dean Preston, the ordinance authorizes the creation of a working group made up of financial experts, community members, and representatives of the city’s Controller and Treasurer. 

The working group has one year from its first meeting to create a business plan to present to the Board of Supervisors and Local Agency Formation Commission, which, if approved, will be submitted to the California Department of Financial Protection and Innovation. However, before the working group can convene, it must be funded. Currently, there is no money earmarked in the mayor’s proposed budget to support a reinvestment working group. 

The creation of the working group is the latest in San Francisco’s decade-long drive to establish a public bank which includes dozens of hearings, meetings and studies, including last year’s Municipal Bank Feasibility Task Force Report.  That study outlined three possible routes that San Francisco get into public banking, all of which, if approved, will take years to see to fruition.   

Cities and counties on California’s Central Coast are in the starting stages of creating a regional public bank.

Led by Santa Cruz County, resolutions supporting a Central Coast Public Bank viability study have been passed in Monterey and Santa Barbara counties, as well as the cities of Santa Cruz, Capitola, Seaside, Scotts Valley, Del Rey Oaks, and Watsonville.

In a unanimous vote, the city’s Economic Development and Jobs Committee approved the motion for the formation of the Municipal Bank of Los Angeles.

Led by Santa Cruz County, resolutions supporting a Central Coast Public Bank viability study have been passed in Monterey and Santa Barbara counties, as well as the cities of Santa Cruz, Capitola, Seaside, Scotts Valley, Del Rey Oaks, and Watsonville.

Continue reading on Capitol Weekly.

"The lack of alternatives to Wall Street banks gave rise to the Public Bank LA initiative, which began a campaign to establish a municipal bank that would be owned by the city of Los Angeles."

The movement to create public banks is gaining ground in many parts of the U.S., particularly as part of an effort among activists and progressive lawmakers to extend banking access to low-income communities and communities of color in the post-COVID-19 economy. But how does public banking help protect the local community and assist with development? If public banks become part of the Federal Reserve — as a bill introduced by Representatives Rashida Tlaib and Alexandria Ocasio-Cortez aims to do — what would be the consequences? Leading progressive economist Gerald Epstein, professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts at Amherst, has studied the issue of public banking extensively and sheds ample light on these questions in this exclusive interview for Truthout.

The Los Angeles City Council today voiced its support for creating a statewide public banking option for California residents in an attempt to reduce racial and income inequalities in financial services. "There's no question that there's a need for a public bank. The simple fact is that the current banking system has never truly worked for working people and specifically for communities of color," said Councilman Kevin de Leon, who introduced a resolution to support the California Public Banking Option Act currently pending in the state Assembly. The resolution was unanimously passed by City Council members.

"The public banking option will level the playing field so that everyone — no matter how much money they make, the color of their skin, or which zip code they live in — can fully participate in our economic recovery."

The California Public Banking Option Act would create the BankCal program, which would be the first statewide program in the U.S. to offer residents access to a no-fee, no-penalty bank account, including a debit card, automatic bill pay, direct deposit capacity and an infrastructure for the account holder to build credit. The bill was co-authored and introduced by Assemblyman Miguel Santiago, D-Los Angeles.

Ben Gordon, an organizer with Public Bank L.A. and the California Public Bank Alliance, called into the City Council meeting Tuesday to urge council members to approve the resolution. "This bill is an important step forward to bridge the racial equity and wealth gap in our state," he said.

Read the article on KCET.org.