Could California succeed where Wall Street fails? Five things to know about a state-run bank

Cal Matters – By Felicia Mello and Ben Christopher. Once an idea batted around mostly in Occupy Wall Street circles, public banking is attracting a surge of interest among policymakers in several states, including California.

“We must break Wall Street’s chokehold on state finance and develop our own state bank,” Gov.-elect Gavin Newsom said on the campaign trail.

If California had a bank controlled by the government rather than profit-hungry shareholders, public banking advocates argue, the state could fund social goods that often get the cold shoulder from commercial institutions: infrastructure projects, low-interest student loans and affordable housing. California’s treasurer and attorney general just published two studies that look at whether a state bank could help the newly legal weed industry by providing a safe repository for cash that major banks won’t accept.

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This Fall, Measure B was Defeated. But Public Banking is on the Rise.

On November 6, responsible and sustainable economics was on the ballot in Los Angeles in the form of Measure B. Measure B was arguably one of the most important midterm ballot items in the country. For the first time in ninety-nine years, voters had the opportunity to approve by referendum a measure in support of public banking. Without funding, and virtually without precedent, Measure B was the first time many voters had even heard of public banking.

The last time a public bank was on the ballot, it was 1919 and in North Dakota, when 61,495 voters established the only other public bank in the history of our fifty states. Ninety-nine years later, thanks to the laudable efforts of a small group of unfunded activists, the success of the Bank of North Dakota, and the growing need for a common sense and bipartisan solution to the financial crisis, public banking was finally up for a vote again.

This time, over a quarter of a million Angelenos gave their thumbs up, garnering over 43% of the vote in favor of this little-known strategy for local governments to recapture wealth and reinvest it in the community. That is why the public banking movement is celebrating a growing momentum of support. The reality of instituting a bank supportive of people and the planet is becoming ever more tangible.

Put on the ballot through a 12–0 vote of the LA City Council, Measure B was designed to simply add an amendment to the city’s charter, allowing the city to form a financial institution, which may have been considered a commercial or industrial enterprise. This amendment was proposed in part to overcome possible barriers due to legal interpretation of the charter, and in large part, to determine a baseline of public interest and support.

Considering the lack of preparation and financial support for a proper public education campaign, such a high number of votes in support of Measure B bespeaks a community galvanized by a banking concept that finally makes sense.

So, if any Angelenos who voted yes on Measure B felt disappointed with its defeat, take heart and stay tuned: the idea of public banking is on the rise.

What’s next? Public banking advocates such as those representing the California Public Banking Alliance are working to remove statutory barriers and facilitate the path forward with state legislation. California Governor-Elect Gavin Newsom, and Treasurer-Elect Fiona Ma have both voiced their support for public banks. With several cities across the nation completing feasibility studies and support building across the political divide, public banking offers too many solutions to ignore.

While in California, the powerful cannabis plant may be responsible for bringing much needed attention to the complicated and contentious issue of banking, it isn’t the only reason to create a bank with more local control. Here are some of the top reasons to get excited about the public banking solution:

1.) Public banks save local governments a lot of money. Last year, the city of Los Angeles paid $170 million in banking fees and $1.1 billion in interest to big banks and investors. Interest alone accounts for 50% of the cost of infrastructure projects, an enormous cost that could be avoided by financing through a public bank.

2.) Public banks tend to be safer and more profitable. With a nearly 17% return on investment, the Bank of North Dakota (BND) is more profitable than Goldman Sachs, with a better credit rating than JPMorgan Chase. In 2008, when economies around the country were shrinking, North Dakota’s grew 7.3%. This is in part due to the state’s expenses running through BND, and BND’s partnerships with local community banks and credit unions.

3.) Public banking can help solve inequality. With 82% of wealth created in 2017 going to 1% of the population, it is clear there are some major design flaws in our financial system. Public Banking is one way to recapture and recirculate wealth, and to end the extractive functions of the existing banking model.

4.) Public bank charters put local people and environments first. North Dakota’s governor, John Hoeven, the nation’s longest-serving governor, attributes the state’s success to a results and customer service oriented economic development plan, supported by the state’s public bank charter. Unlike large private banks, which engage in high-risk financial schemes and are required to prioritize profits, public banks can be obligated to put people and planet first.

5.) Investing in community development creates virtuous economic cycles. While our tax dollars are used to keep private banks lucrative, a public bank focuses on the long-term prosperity of its community through loans for low-income housing, green energy infrastructure, co-ops, small businesses, or other locally-determined priorities. A public bank partners with local credit unions and community banks, guaranteeing their loans for locally-directed economic development, public works financing, and jobs creation. The public bank can directly loan money for housing projects below market interest rates; unlike private banks, they won’t be bound by a need to maximize profit margins.

6.) Public banks can support a transition to renewable energy. Saving on the up-front costs of renewable energy infrastructure, public banks create real energy efficiency. The German Sparkassen public banking networks have funded over 70% of investments for renewable energy infrastructure. Renewables are now Germany’s top source of energy, with one-third of electricity derived from sources including wind and solar.

7.) Public banking offers ethical allocation of money. The municipal public banking movement advocates for banks to be chartered with socially and environmentally responsible mandates. This includes a transparent Board of Directors and an anti-corruption ethos to ensure that the bank operates under sustainable and ethical guidelines. The bank’s lending activities would be subject to strict evaluation to determine adherence to its principles and fulfillment of its public policy goals.

8.) Public banking provides local self-determination. A municipal public bank enables the people of the city to recapture public dollars and have a say over the financing of our own community. A public bank maximizes public good within the community rather than maximizing profits with globalized extraction. With municipal revenues and banking profits returned to the public, a public bank could issue loans to benefit the local economy, not private shareholders.

9.) Public banks can serve the unbanked and underbanked, and maximize local revenues. Three out of ten Angelenos have either no access or inadequate access to a checking or savings account and therefore cannot build credit, and are susceptible to theft, fraud, and the predatory practices of financial alternatives such as payday lenders or check cashers. A public bank could help meet the financial needs of the unbanked and underbanked population, largely comprised of minority, working-class communities and immigrant households. A public bank could also provide banking services to the massively growing and unbanked cannabis industry, bringing legitimacy to the finances of this sector.

There are enumerable reasons why a public bank can serve the needs and meet the interests of all citizens, everywhere. This is a solution-oriented way to creating a regenerative economy that is flexible, resilient, diverse, fiscally responsible, humane, peace-generating, and truly profitable.

Find out more and get involved in the movement to take control of our money.

If you live in California, join the California Public Banking Alliance, join a regional movement, or create one of your own. Regional movements are bustling in Los Angeles, San Francisco, East Bay, Santa Cruz, Santa Barbara, and Santa Rosa. Visit the Public Banking Institute and Commonomics for a wealth of information, articles, podcasts, and videos that can be shared with your community.

Alison Malisa is a member of Friends of Public Banking Santa Rosa and the California Public Banking Alliance.

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California Public Banking Alliance sees its momentum continuing

Public Banking Institute – Although LA’s Measure B did not pass, the effort generated massive awareness and support in a few brief months. The California Public Banking Alliance is now using that momentum in their work toward statewide legislation that will enable cities and regions to establish public banks.

Public Bank LA, part of CPBA, claims victory despite the ballot measure’s defeat and writes about this wider strategy in a recent CPBA press release: “Over 395,000 Angelenos voted in favor of a policy that they had likely never heard of before 2018. 43% in favor is a strong baseline measure of support that public banking advocates look forward to building upon through sustained outreach and education. … Having this [state level] legal framework in place will give L.A. and other cities a solid template to work from in setting up our banks.”

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Public Banking Proponents See Victory in Outcome of Measure B Vote

November 21, 2018

Media Contact
Sylvia Chi

Public Banking Proponents See Victory in Outcome of Measure B Vote

(Los Angeles) Although Measure B, which proposed amending the Los Angeles City Charter to authorize the city to establish a municipal financial institution, was defeated on November 6, public banking advocates, united as the California Public Banking Alliance (CPBA), remain focused on advancing statewide legislation to enable localities to establish public banks.

CPBA is confident that as it continues to advocate for this enabling legislation and educate the public about public banking, more and more Californians will join the momentum currently building for public banks across the country.

Public banking: a nationwide movement
On June 29, 2018, the Los Angeles City Council responded to a rapidly growing movement in favor of public banking by placing Measure B on the ballot, making it the first referendum on public banking in the United States since the Bank of North Dakota was established in 1919. According to a map created by the Public Banking Institute, over 20 U.S. cities and states, from Washington state to Washington, D.C., are currently working toward public banks.

The Green New Deal put forward by Alexandria Ocasio-Cortez and other Congressional progressives proposes a public banking system as a way to finance their plan for a just transition of the U.S. economy to becoming carbon neutral. Germany’s public banking sector has been key to the country’s transition to renewable energy, providing over 70% of investments in renewables, totaling 10.3 billion euros, in 2016 alone.

From near-zero to 44% in a few months
Public Bank LA, the grassroots group spearheading the Yes on B campaign, claims victory despite the ballot measure’s defeat. As organizer Trinity Tran explains, “Council President Wesson made a bold and progressive move to place public banking on the ballots. Even with limited resources as a volunteer-run group, we committed to fight for Measure B’s success. 44 percent of the votes, in the second largest city in the nation, shows an incredible level of support given our short time frame to secure endorsements and educate voters on the benefits of public banking. Our campaign has since propelled public banking onto the national radar… We’ve gained a lot of momentum.”

Over 420,000 Angelenos voted in favor of a policy that they had likely never heard of before 2018. 44% in favor is a strong baseline measure of support that public banking advocates look forward to building upon through sustained outreach and education.

The statewide alliance
Earlier this year, Public Bank LA helped launch the California Public Banking Alliance, a coalition of local public-banking advocacy groups across the state. The Alliance aims to introduce a bill in the state legislature in the 2019 legislative session.

This enabling legislation will allow for localities to establish a system of public banks in the state and provide appropriate terms, exceptions, and constraints.

Tran said, “[Public Bank LA’s] original strategy has always been to get this bill passed first, and then push for establishing the bank. Having this legal framework in place will give L.A. and other cities a solid template to work from in setting up our banks.”


California Public Banking Alliance is a coalition of public banking activists working towards creating socially and environmentally responsible municipal and regional banks.
Facebook: @californiapublicbankingalliance
Twitter: @calpba

Public Banking Proponents See Victory in Outcome of Measure B Vote Press Release

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The Campaign for Public Banks, From Coast to Coast

The Next System Project – This week on the Next System Podcast David Jette from Public Bank LA and Juleon Robinson from the New Economy Project, a member of Public Bank NYC, a broad-based coalition of community, worker rights, economic justice, and environmental groups to sit down to discuss the transformative potential of public banks. These institutions aim to hold finance publicly accountable, directing credit into the real economy with the public goods prioritized over profit.

Adam Simpson: I am here today with two guests to talk about two public banking campaigns, coast to coast. David Jette is the co-founder and legislative director of Public Bank LA. David is a financial analyst and consultant with 10 years in the tech real estate and start-up sector, as well as a life-long activist and organizer. David, welcome to the program.

David Jette: Thank you for having me.

Adam Simpson: We also have with us Juleon Robinson, a program associate at the New Economy Project, where he co-produces and hosts the organization’s podcast and conducts research to support campaigns like the ongoing campaign to establish a municipal bank in New York City. Juleon, welcome to the program.

Juleon Robinson: Thanks for having me as well.

Adam Simpson: Before we get into public banks, let’s talk about the problem first with our current system. Our current financial system is dominated by enormous, powerful intuitions. It’s owned by and operated for the benefit of a handful of shareholders. What are the consequences of such a system, and in your work what motivates you to pursue reform in this sector as you do?

Juleon Robinson: I think most people are aware of the consequences of the financial system, especially at the national level. We’ve seen companies like Wells Fargo commit widespread fraud and maintain most of its business. We’ve seen the government bail out banks despite their having caused a financial crisis only 10 years ago through their reckless profiteering. And in a place like New York City that’s both home to many communities of color, many immigrant communities, we’ve seen these mega banks that routinely extract wealth from those neighborhoods. The consequences are really present for our campaign, our coalition, and all the groups that we work with. The members of the public bank in the New York City coalition work in these neighborhoods all over New York City that are reeling from predatory lending, from foreclosures, from eviction, job loss, and other problems that are really caused by Wall Street.

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Why Los Angeles should start a public bank

Los Angeles Times – By Harold Meyerson. With all that’s at stake in the midterm elections, Los Angeles voters would be forgiven for overlooking Charter Amendment B, a referendum that would amend the city charter to conform with an ordinance the City Council enacted earlier this year.

But Charter Amendment B is no municipal snoozer. It proposes the most fundamental change to our economic system that Angelenos have ever had the opportunity to vote on. The amendment would allow for the creation of a Bank of Los Angeles: a public bank to be operated by and for the city.

Currently, when L.A. collects tax revenue, that revenue does not immediately flow back out to pay city employees. Instead, the revenue is deposited into one of several mega-banks, to be withdrawn when the city needs the funds. This spring, the city’s portfolio came to $9.5 billion. We’re not talking chicken feed.

L.A. has already withdrawn its funds from Wells Fargo, whose steady stream of abusive and fraudulent practices compelled the bank to pay billions in fines in recent years. But the alternatives — the other Wall Street behemoths that brought us the 2008 crash and saddled us with the Great Recession — also have a deference to shareholders and commitment to bonuses that exceed any interest they may have for the well-being of L.A.

Last year, a group of concerned Angelenos who’d formed an advocacy organization, Public Bank LA, began talking to the City Council about establishing a municipal bank. They pointed to North Dakota, which since 1919 has had a state-owned bank that is used to make loans to businesses and farms.

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Pedestrian signals can be seen outside of a Citibank branch in New York

What If Banks Were Publicly Owned? In LA, This May Soon Be A Reality.

Huffington Post – By David Dayen. Voters will decide in November whether to take city money out of the hands of big banks. Trinity Tran is a powerful speaker. Addressing a rally in downtown Los Angeles for New York congressional nominee Alexandria Ocasio-Cortez, the 33-year-old activist and organizer thundered, “We are witnessing the emergence of a solution, from profit and greed to collective prosperity. We can empower our community from the ground up. It’s time to take our power back.”

Tran’s organization, Public Bank LA, is leading the revival of an idea that had largely been discarded until the financial crisis. In November, Los Angeles voters will have the opportunity to approve a public bank for the city. If the measure passes, it would become the first government-owned bank developed in the United States since 1919.

The term “public bank” may confuse some into thinking that Los Angeles is about to create a bunch of branch offices where residents can open a free checking account. The idea is much more ambitious. Public bank enthusiasts want to finance local improvements in housing, infrastructure, and community development by employing the money citizens already pay to state and local governments for services. To them, it’s about democratizing the financial system.

The public has yet to be brought in on this idea, until now at least. The Los Angeles vote represents the first popular referendum on public banking since the financial crisis brought the public bank idea back into the conversation. For the vote to go their way, activists will have to demystify a technical financial concept, and answer charges from critics that a city-owned bank will prove too risky and too costly for taxpayers.

The activists say they’re ready for the challenge. “Until now, activists have been fighting in the ivory towers of legislatures, and off the radar of the populace, even though it’s in their best interest,” said Phoenix Goodman, an organizer with Public Bank LA. “We have the opportunity to bring this down to the grassroots, where it belongs.”

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California Democratic Party Passes Public Banking Resolution

Medium – By Ben Hauck. On July 15th 2018, the California Democratic Party (CDP) passed a resolution supporting socially and environmentally responsible, state-chartered public banks. The state party resolution is a significant milestone for the public banking movement, as the CDP represents over 8.7 million registered Democrats.

The resolution was originally presented by Feel the Bern Democratic Club, Los Angeles with the support of public banking advocacy group Public Bank LA (PBLA). After passing unanimously through the Los Angeles County Democratic Party in April 2018, the resolution was passed during the California Democratic Party Executive Board meetings in Oakland this weekend.

Public Bank LA co-founder Trinity Tran states, “The California Democratic Party’s resolution endorsement is a significant step to elevate publicly-owned banks as a top priority issue for the mainstream. The solutions to many of the problems that stem from privately-controlled banks can be addressed through public banking. It’s a common sense approach for local-control and self-determination of our public finances.”

Los Angeles City Council President Herb Wesson and six councilmembers introduced an exploratory public banking motion in July 2017, following the City’s divestment from Wells Fargo bank. Wesson and council members took further action on June 26, 2018, unanimously passing a motion that will add a measure on the November 2018 general election ballot that would amend the city charter, removing a barrier to creating a city-owned bank. This will put the fate of public banking in the hands of Los Angeles voters.

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los angeles

A Public Bank for Los Angeles? City Council Puts It to the Voters.

Truthout – By Ellen Brown. Cities and states are seeking ways to better leverage taxpayer dollars and reinvest them in the needs of local communities. Voters in Los Angeles will be the first in the country to weigh in on a public banking mandate, after the City Council agreed on June 29th to put a measure on the November ballot that would allow the city to form its own bank. The charter for the nation’s second-largest city currently prohibits the creation of industrial or commercial enterprises by the city without voter approval. The measure, introduced by City Council President Herb Wesson, would allow the city to create a public bank, although state and federal law hurdles would still need to be cleared.

The bank is expected to save the city millions, if not billions, of dollars in Wall Street fees and interest paid to bondholders, while injecting new money into the local economy, generating jobs and expanding the tax base. It could respond to the needs of its residents by reinvesting in low-income housing, critical infrastructure projects, and clean energy, as well as serving as a depository for the cannabis industry.

The push for a publicly-owned bank comes amid ongoing concerns involving the massive amounts of cash generated by the cannabis business, which was legalized by Proposition 64 in 2016. Wesson has said that cannabis has “kind of percolated to the top” of the public bank push, “but it’s not what’s driving” it, citing affordable housing and other key issues; and that a public bank should be pursued even if it cannot be used by the cannabis industry. However, the prospect of millions of dollars in tax revenue is an obvious draw. Los Angeles is the largest cannabis market in the state, with Mayor Eric Garcetti estimating that it would bring in $30 million in taxes for the city.

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Public Banking Will Be on the Ballot in L.A. this Fall

Next City – By Alejandra Molina. The Los Angeles City Council is moving forward with a proposed ballot measure that would ask voters this fall whether they want to create a publicly owned bank.

In a unanimous vote, council members on Tuesday, June 26, gave the go-ahead to begin the process of adding a measure on the November 2018 ballot that would amend city charter in order to create a city-owned bank. The city’s code currently prohibits it from entering into a “purely commercial venture,” unless it’s approved by voters.

To advocates, this move is a historic one that can set the tone for other public banking movements happening across the nation.

“The outcome will reflect the pulse of the national movement,” says Trinity Tran with the Public Bank LA campaign.

In New York City, dozens of residents and community organizers in early June gathered in front of the New York Stock Exchange to launch the Public Bank NYC Coalition, a group calling for the creation of a New York City-owned bank. Oakland and San Francisco are exploring the idea. New Jersey and Michigan are also considering setting up state-owned banks.

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