LAist – Millions of low-income Californians might be able to bank free of penalties and fees if state lawmakers approve the latest attempt to create public banking.
AB 1177 would form a state-supported public bank board, which would partner with private banks to offer the free accounts. The program would be called “BankCal.”
“If a rich person earns money, that money makes money,” said State Assemblymember Miguel Santiago (D-LA), the bill’s author. “When a poor person earns money, that money is gouged from every corner you could possibly get it. You get gouged when you go to payday lendings, you get gouged at the banks. You get gouged on every transaction and every fee.”
The California Public Banking Alliance sponsored the measure. Co-founder Trinity Tran said the bill would help bridge the racial wealth in underserved communities:
“Because when poor folks have to pay for their financial services, that means they have fewer opportunities to grow credit, they’re rejected for loans, and that all amounts to a real disadvantage for millions of families.”
Gov. Gavin Newsom signed a bill in 2019 to allow independent municipalities to create their own public banks, but this would create a state-backed banking system.
Correction: A previous version of this article stated that previous California bills allowing public banking option failed. Actually, Newsom signed a bill years ago to allow independent municipalities to create their own public banks.