Los Angeles City Council Unanimously Votes to Move Forward With First Municipal Bank in the US

Los Angeles City Council Unanimously Votes to Move Forward on the First Municipal Bank in the United States, Issues Request for Proposals Within 60 Days.

The Los Angeles municipal bank will be the first publicly held municipal bank in the nation. It will create a socially responsible and publicly accountable source of capital for investment in public goods, small businesses, and green infrastructure.

LOS ANGELES — On Tuesday, October 5, Los Angeles City Council voted to approve a motion calling for the study and planning of a public bank for the city—what would be the first municipal bank in the nation.  This vote represents the culmination of an historic effort to realign the city’s financial infrastructure with its values and the pressing needs of its millions of residents.  Once complete, this plan will outline next steps for Los Angeles to establish a public bank via a state-issued charter.

The council’s Economic Development and Jobs Committee ratified the amended motion, originally proposed by former council president Herb Wesson, in committee on May 11, 2021. The motion expands the Request for Proposals to include requirements described in Assembly Bill 857, a 2019 state law permitting the chartering of public banks by cities and counties for social and environmental purposes. This motion directs the City Legislative Analyst to release an RFP for consultants who will organize public comment and author a viability study and business plan for a proposed bank. The motion also requests the City Attorney work with the chosen consultant to devise the formal governance plan and constitutional orientation of the bank to existing city offices, and to ensure no conflicts of interest or perverse incentives are built into the bank’s organizational structure.  The motion requires the chosen consultant to have a working office in Los Angeles, and to have experience in modeling public banks and social finance entities, and to engage directly with Angelenos to set the priorities and principles of their financial institution. The plan formed by the consultant will constitute the city’s application to the state for a bank charter, thereby eventually authorizing the formation of the LA public bank.

"Today, we took a major step in forming a City-owned bank in Los Angeles, the first of its kind in a major metropolitan locality,” said Councilmember Curren Price. “In Los Angeles alone, nearly 10 percent of residents are unbanked or underbanked. Having access to a bank will allow individuals to do things that many take for granted such as saving for a home, becoming an entrepreneur, or simply building generational wealth. A public bank will also help businesses weather through the storm in a post-COVID world.”

As Los Angeles reels from the COVID-19 crisis, a public bank would and should lead the recovery. Public banking allows for low-cost lending at a local level to support the resurgence of restaurants and small businesses, particularly those owned by historically disadvantaged and underrepresented people of color that have been forced to close and may never return without additional support. A public bank will lay the foundation for a more equitable local economy by financing projects including local public infrastructure, renewable energy, affordable housing, a local Green New Deal, and more—carried out by well-paying and union jobs. A public bank would provide access to capital and credit through partnership with credit unions, banks, and Community Development Financial Institutions (CDFIs). Public banks provide an indispensable tool towards building intergenerational progressive social change and wealth transfer.

“The current financial system doesn’t have an incentive to better our communities, and a public bank can do better. Wall Street banks are motivated by profit—pursuing deals where the most money can be made, engaging in predatory lending and providing money for fossil fuels. There’s a real social objective to creating a public bank that doesn’t exploit our communities, with profits returned back to the public ensuring that everyone sees benefits from economic growth,” adds Trinity Tran, co-founder of Public Bank LA and lead organizer of the California Public Banking Alliance (CPBA).

After the historic Measure B campaign that saw over 430,000 Angelenos voting yes on a Los Angeles public bank, California Public Banking Alliance sponsored and spearheaded the landmark Assembly Bill 857, empowering California cities, counties and regions to form their own public bank. Such banks will be 100% accountable to local communities and state regulations, not Wall Street profit mandates. AB 857 was made law and cleared the way for Los Angeles to start a bank without a ballot measure. PBLA’s work focuses on the City of Los Angeles and the broader LA area. 

Lend your skills and talents to put an end to Wall Street greed and join the historic efforts to create the Public Bank of Los Angeles and the first municipal public bank in the nation! 

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