By Scott Soriano, Capitol Weekly. The concept of public banking in California is making a comeback.
By law, currently California cities and counties typically have one place to deposit the funds they collect from taxes, fees and fines: private commercial banks. Billions of dollars of public money are handled by commercial banks — for a fee.
Despite having billions of dollars banked, municipalities have no say in how their money is used by commercial banks. Bank management, owners and stockholders set policy.
But public banking advocates say that because commercial banks are loyal to their shareholders, that policy reflects the shareholders’ desire for high profit, not the interests of the community whose money they bank.
Last month, the Assembly on a bare majority vote approved AB 857, by Assembly Democrats Miguel Santiago of Los Angeles and David Chiu of San Francisco. The measure amends existing banking law to allow California municipalities to establish their own public banks. The bill was sent to the Senate, where the Banking & Financial Institutions Committee approved last week and sent to it to Governance and Finance.
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