Los Angeles voters struck down the creation of a public municipal bank in November, but that hasn’t stopped activists and policy-makers from pushing their dream to the next level. While November’s ballot initiative would have created a public bank for Los Angeles, new legislation in Sacramento could open the door to public banking statewide.
Introduced by State Assemblymen Miguel Santiago (D-Los Angeles) and David Chu (D-San
Francisco), Assembly Bill 857 would allow local governments to form their own local or regional public banks.
California Public Banking Alliance member Trinity Tran said the bill would allow citizens to invest in their own communities through a means of democratizing the current banking system.
The public bank could provide affordable loans and lines of credit to local businesses and nonprofits, and fund public infrastructure projects such as rebuilding after wildfires, Santiago’s office said.
“It is pretty obvious that the Wall Street system of wealth distribution has created an income inequality crisis,” Santiago said. “And nowhere is that more visible than right here in my district, where luxury condos loom over Skid Row. Instead of making rich men even richer, our resources should be invested in community development — parks and green spaces, free community college, new schools, smooth roads, and cleaner air.”
If successful, the new legislation would effectively create the first handful of public banks in the United States, except for the Bank of North Dakota, which has been referenced as a potential model in discussions.
Even if Sacramento passes on public banks, though, California cities are exploring their options. San Francisco has launched a task force to study its feasibility, also citing cannabis as one motivating factor behind municipal banking. California Treasurer John Chiang has also floated a state banking uniquely for the cannabis industry.
“California is the fifth largest economy in the world and it’s time for us to take our money back,” Tran said. “The answer for Wall Street exploitation is here.”
Eleven other public entities, including the City of Santa Fe, the City of Oakland, and the states of Vermont and New Hampshire, are considering public banks of their own.