Our mission is to encourage and support the development of socially and environmentally responsible city, county, and regional public banks in California. Each of these public banks will support the economic development of its region and follow transparent, ethical, sustainable, and regenerative investment guidelines; strengthen existing financial institutions through its partnership with local community banks and credit unions; and serve the needs of its entire community by ensuring the meaningful participation of their underserved members.
Public banking is a powerful tool that helps to keep taxpayer dollars within local communities. Currently, cities and counties hold billions of dollars of public money in large corporate banks. These banks are legally allowed to control this money and legally required to use it for profit-driven purposes, regardless of the environmental, social, or economic consequences. They often prioritize investments in harmful industries – private prisons, immigrant detention centers, weapons manufacturers, and fossil fuel pipelines – rather than supporting small local businesses, regional infrastructure such as public housing and recreation, and sustainability. These too-big-to-fail banks have a history of engaging in risky and fraudulent practices, similar to or worse than those that caused the global financial crisis in 2008. Given the numerous issues posed by large corporate banks, public banks emerge as a vital solution that prioritizes investing in the needs and interests of the communities they serve.
The California Public Banking Alliance (CPBA) was founded in 2018 by a group of public banking advocates in California who are committed to establishing socially and environmentally responsible city and regional public banks. In 2019, members from Los Angeles, San Francisco, the East Bay, the South Bay, Santa Rosa, Santa Barbara, Humboldt-Eureka, the Central Coast, and San Diego worked together to write and pass AB 857, the California Public Banking Act. This law made California the first state in the country to formally allow the chartering of municipal public banks.
Since the passage of the California Public Banking Act, several local governments, including San Francisco, Los Angeles, Oakland, Berkeley, Richmond, and the Central Coast, have passed legislation that will help establish public banks in their areas. We now have the opportunity to build a new, alternative banking system through locally-controlled, socially and environmentally responsible public banks. This will allow cities and counties to reclaim our public dollars and have a say in the financing of our communities.
In addition to supporting the development of public banks for municipalities, the CPBA is also working to provide essential financial services to nearly 10 million unbanked or underbanked Californians. In October 2021, Governor Newsom signed the Public Banking Option Act into law. This legislation will enable the offering of fee-free and penalty-free debit cards to all Californians, providing access to basic financial services such as check cashing, deposits, and bill paying. AB 1177, also known as CalAccount, will help to improve financial inclusion and address the challenges faced by those who lack access to traditional banking services.
In 2022, the 9-member CalAccount Blue Ribbon Commission was established, with State Treasurer Fiona Ma serving as chair. This commission is tasked with evaluating the scope, feasibility, and costs of the CalAccount program. The California Public Banking Option Act has received widespread support, with over 250 racial justice groups, faith-based organizations, financial advocacy groups, labor unions, and cities all endorsing the legislation, demonstrating the importance and benefits of providing accessible financial services to all Californians.
In addition to our efforts at the local and state levels, the CPBA also actively supports federal legislation that promotes public banking. The Public Banking Act, co-sponsored by Congresswomen Alexandria Ocasio-Cortez (D-NY) and Rashida Tlaib (D-MI), seeks to make it easier for states and local governments to establish public banks and could help to expand the reach and impact of public banking in the United States. In addition, the National Infrastructure Bank Act of 2021 is currently being revived in the US Congress. This bill would create a $5 trillion bank to fix the US infrastructure.