We are a coalition of public banking activists working towards creating socially and environmentally responsible municipal and regional banks. 
What is a public bank?
A public bank is one which is owned by the public of a city (county). It is:
  • Owned and operated by the city.
  • Chartered by the state of California.
  • Governed by laws passed by the city.
  • Operated by banking professionals.
  • Serves only the needs of the city.
What is the purpose of a public bank?
A commercial bank is in business to make profits to enrich shareholders, whereas a public bank is in business to make and leverage money to serve the needs of the people of the city and to make low cost loans to finance civic needs.
A public bank has the same privilege a commercial bank has – to make loans for up to nine times its actual deposits. It can also borrow money through the Federal Reserve system at very low interest rates. This allows it to make low cost loans for many civic projects.
How does a public bank serve the city?
A Public Bank would benefit a city in many ways:
  • Rather than deposit its money in commercial banks and borrowing money at high interest rates and fees, a city can deposit some or all of its money in its own bank. The bank can use those deposits to leverage loans back to the city at rates of 1% or 2% for a variety of public purposes. Half of the total cost of some current infrastructure projects, for instance, goes simply to cover bank interest and fees on loans.
  • Whereas commercial banks can invest in any projects they choose, a public bank would invest only in loans serving the needs of the city and its people.
  • It would not compete with local community banks, except when invited to co-partner in loan by a community bank.
  • A public bank could immediately start saving money for a city by refinancing current debt as a start.
Do other public banks exist now?
The Bank of North Dakota is the largest of a few public banks in the United States and a good example for new public banks. Founded in 1919, it manages the state income and lends it to serve the needs of the people of North Dakota. However, it also regularly makes the highest return on equity of all U.S. banks. It regularly transfers these profits to the people of the state through low interest loans, increased services or regular deposits to the state general fund (which decreases taxes). It is structured differently than a city public bank would be, but it would contribute to the financial and real well-being of its citizens as seen below.
What types of benefits might a public bank provide for a city?
A public bank would provide any benefits to the city the legislature chooses, for example:
  • Low-interest loans for city infrastructure projects.
  • Low-interest loans for public housing, both new construction and capital improvements.
  • Online depository banking services to under-banked and unbanked residents where private banking has not met their needs.
  • Commercial loans to businesses, but only in partnership with Community Banks and Credit Unions.
  • Creating and supporting Community Development Financial Institutions (CDFIs) to drive community revitalization.
  • Other community redevelopment goals and benefits to the city’s people the legislature chooses.
About California Public Banking Alliance
We are a coalition of public banking activists working towards creating socially and environmentally responsible municipal and regional banks. We believe that state legislation is required to instruct the California Department of Business Oversight to issue a special license for charter cities to form public banks.
The currently available commercial and credit union licenses do not provide the adequate parameters and principles to require public banks to be responsive to local economic development. Commercial banks and credit unions are also subject to Federal Deposit Insurance Corporation (FDIC) requirements that would not be satisfied by a public guarantee. The public bank charter license would establish a regulatory framework for a system of public banks in the state and provide the terms, legal exceptions and constraints for cities to operate within.
We aim to coordinate political and legislative strategy with local grassroots organizers across the state to pass the Public Bank License bill in the State Senate and Assembly for the 2019 legislative session. The charter city and regional alliance will work in close alignment with the California state public banking efforts, and experts at the Public Banking Institute and Commonomics USA.
Our objective is to develop a new type of bank- publicly owned, local, and ethical. Every bank would support the economic development of their region and follow socially responsible investment guidelines.
The need to develop a state chartered municipal bank license provides us with a unique and powerful opportunity to influence it to reflect principles of social good, sustainability, accountability and transparency, in addition to the structural technicalities.
As the formation of each bank will be up to local activists and elected officials, we are developing a legislative framework to create a standardized approach for public banks through a charter. The charter will explicitly define the regulatory barriers, purpose and structure, oversight, capitalization, implementation, investment principles, and governance for the networks of public banks in California.
A Public Bank Charter License Bill would establish a regulatory framework for a system of public banks in the state that includes: a socially responsible charter, prohibiting the bank from opening retail locations, anti-corruption clauses, 100% transparency, a board of directors that includes persons associated with community development as well as financial experts, and prohibiting the bank from competing with community banks and credit unions. These safeguards will ensure the best bank possible.
The legislative path to creating a city-owned public bank typically includes commissioning a city-sanctioned report on feasibility and determining the details of the design of the bank based on each region’s unique challenges and values.
By coordinating our efforts through this coalition, we aim to facilitate the development of municipal public banks across the state through three primary objectives:
1) Coordinate the public banking network of activists.
Cities and regional areas across California are exploring local public banking and each will face similar challenges in the process. Rather than allow each movement to develop in isolation, we will provide a central network for activists and their counterparts in other cities to exchange ideas, provide guidance, and coordinate political and social efforts. By connecting through our organization, public bank organizers can gain and give invaluable advice and tools to other organizers.
2) Develop a California municipal public bank license to be administered by the California Department of Business Oversight.
We will draft the proposed legislation of the public bank charter, organize statewide lobbying efforts to identify key legislators in both chambers, and successfully pass the legislation through the California State Legislature- State Senate and Assembly. We will provide templates, tools and guidance for activists and elected officials in other states to lobby their state governments on the proper development of these licenses.
3) Expand the movement.
This is only the beginning. Our vision is for socially responsible local public banks to spring up across the nation. We will be activating networks in new cities and campaigning to inspire activists and elected officials to develop public banks. Outreach campaigns will identify potential organizers through coalition networks and provide them with the orientation and tools to organize a public bank campaign in their city.
California Cities