Local Government
California’s More Than Dreamin’ about Public Banks

California’s More Than Dreamin’ about Public Banks

By Oscar Perry Abello.

A bill to set in motion massive structural economic change could easily be hundreds, maybe thousands of pages long. AB 857 — which creates a legal pathway in California for public banks owned by city and county governments, where cities and counties would deposit public dollars — clocks in at a mere 29 pages.

“What we wanted to do was create a very lightweight bill that grafts public banks onto the existing state banking law rather than create a standalone financial code section that only covers public banks,” says Sushil Jacob, who played a lead role in drafting the bill as the legislative committee co-chair for the California Public Banking Alliance, a coalition of grassroots groups hailing from ten cities across the state.

Keeping the bill relatively short and sweet was essential, Jacob says, to crafting something that legislators and legislative staff and lawyers and consultants could digest, deliberate over, and ultimately pass in the same year it was introduced. Of course it was also crucial that, since the bill’s introduction in February, the alliance rallied support for AB 857 from over 180 organizations across the state, including 17 city and county governments. The governor has until October 13 to sign it into law.

“Part of why our message resonated with so many across the state, from elected officials to ordinary folks, was because everyone understands intuitively that Wall Street is extractive, is predatory,” says Trinity Tran, lead organizer for the California Public Banking Alliance. “Why are we using our tax dollars to harm communities when we could use it to help our communities?”

Today in the U.S., state and local governments hold $502 billion in bank deposits (not to mention $4.3 trillion in state and local public pensions). Progress on public banks in California will be closely watched in other states and cities where organizers and public officials have been pushing for public banks — including Washington State, New Mexico, Michigan, New Jersey, the District of Columbia, New York CityPhiladelphiaChicago, the Twin CitiesPortlandSeattle, and elsewhere.

Inspired by the state-owned Bank of North Dakota (until recently the only public bank operating in the U.S.), proponents of AB 857 envision a statewide network of public banks that would leverage local public deposits in support of public policy priorities like affordable housing and homeownership, clean energy and climate adaptation, small business lending, alternatives to payday loans, and other priorities that public banking advocates feel are too important to leave entirely up to privately owned banks.

Read more at NexyCity.org

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