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FINANCE THE FUTURE: PUBLIC BANKING POWER

OUR MONEY. OUR VALUES. OUR BANK.

Trinity Tran - California Public Banking Alliance

October 15, 2024

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Wall Street Banking Problem

High Costs of Banking with

Private Banks

Cities like Los Angeles wastes over $1.5 billion annually on fees and interest to Wall Street banks, reducing funds for affordable housing and public services

Deepening Inequality

The financial system lacks affordable credit and investment in underserved communities, deepening inequality. Big banks were fined over $9 billion last year for fraud and discrimination.

Conflicting Investments

Cities invest their own treasury funds in companies like ExxonMobil and Chevron, working against its own climate priorities and the well-being of its residents.

Inefficient Operations

High costs and limited control in the current banking system make it hard for the city to fund essential projects efficiently. Wall Street banks prioritize profits over the city needs.

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Divest from Wall Street, Invest in our Communities.

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What’s a public bank?

  • Government-owed: public banks are owned by a city, state, or county, reinvesting profits back into the community.
  • Public focus: funds local projects like affordable housing, small business loans, and infrastructure.
  • Wholesale model: serves cities, not consumers, redirecting funds from Wall Street to community projects. Partners with local financial institutions.
  • Non-profit, tax-exempt: public banks are separate from city operations, with independent boards, and no private shareholders.

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Public Interests vs Private Interests

Public banks back a green economy and affordable housing, while private banks prioritize fossil fuels, the weapons industry, and short-term shareholder profits.

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Benefits of a Public Bank.

  • Save money. Maximize tax dollars.
  • Cut borrowing costs significantly; double power to invest in local governments.
  • Leverage existing funds up to 10 times to create loans.
  • Support local economic development through targeted investments.
  • Partner with community banks, credit unions, and CDFIs to lower loan costs and expand lending for public benefit.

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Bank of North Dakota - the US’s first public bank.

  • Globally, nearly 40% of banks are publicly-owned, with over $40 trillion of global wealth.
  • Bank of North Dakota (BND) is a 100-year-old public bank.
    • Distributed more PPP loans than any other state.
    • 18% ROI in 2023.
    • Without banker bonuses, commissions, high paid CEOs, private shareholders or advertising, profit returns to the community.

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  • 60 major banks funded $5.5 trillion in fossil fuel projects since the Paris Accord.
  • Public banks fund public projects, including decarbonization and energy retrofits.
  • Public funding reduces infrastructure costs, freeing up funds for renewable energy.
  • German Sparkassen public banks financed over 70% of green energy transition.

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Public Banks will finance local green projects.

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Racial equity will be “baked into” public banks.

  • Banks have redlined and discriminated against communities of color for decades.�
  • Public Banks will expand community lending through participation lending to local financial institutions.�
  • Public Banks can provide historically underserved communities with access to affordable capital and credit.

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Support affordable housing and small businesses.

  • Simplifies and centralizes affordable housing financing
  • Provide low-cost financing for affordable housing, hotel acquisitions, and tenant purchases.
  • Keep interest payments public, reducing bond costs.
  • Create underwriting standards that lower loan costs for small businesses, benefiting local banks.
  • Multiplier effect, stimulating increased local business activity

and economic growth.

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California Public Banking Alliance

  • A grassroots network of advocates in 10 localities working to establish socially and environmentally responsible city and regional public banks.
  • Led the passage of two first-in-the-nation public banking bills: the California Public Banking Act (2019) and the California Public Banking Option Act (2021) - CalAccount.
  • Following the passage of the Public Banking Act and the finalization of regulations in 2022, five local governments have taken steps to establish city/regional public banks.

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VIABILITY STUDY

Requires local agencies to conduct a viability study and seek state and federal regulatory approvals.

California Public Banking Act

PARTNERSHIP

AB 857 public banks will partner with existing local community banks, credit unions, and CDFIs.

OVERSIGHT

Oversight by DFPI and FDIC. Tax-exempt and subject to transparency laws Brown Act and Public Records Act.

The California Public Banking Act allows California cities and counties to form their own banks by establishing a legal framework for local governments to apply for public bank charters.�

California’s Public Banks will be created for the purposes of: 1) cost savings, 2) strengthening local economies, 3) supporting community economic development, and 4) addressing infrastructure and housing needs for localities.

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  • Central Coast: Four-county regional public bank: Santa Cruz, Santa Barbara, Monterey, and San Luis Obispo. Ten jurisdictions approved resolutions for a viability study.�
  • East Bay: Jointly owned by Oakland, Berkeley, Richmond, and Alameda County. Board candidates finalized, first draft of business plan completed.�
  • Los Angeles: City Council approved funding for Phase 1 of the LA Public Bank feasibility study and business plan in May 2024.�
  • Sacramento: City Council released RFQ for consultants to develop viability study in August 2024.

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  • San Francisco: Board of Supervisors approved plans for a public bank and interim green bank in June 2023.

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California’s Public Banking Progress

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PUBLIC BANKING FOR THE PEOPLE

OUR MONEY. OUR VALUES. OUR BANK.

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Trinity Tran

California Public Banking Alliance

capublicbanking.com

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