CBA Responds to AB 1177, the California Public Banking Option Act
SACRAMENTO, Calif. – The California Bankers Association (CBA), issued the following statement in response to today’s press conference supporting AB 1177:
“Here we go again with the annual introduction of yet another bill seeking to introduce public banking to California. Despite voter rejection of the idea at the polls and public opinion polling indicating Californians’ opposition to the concept, advocates are nonetheless back pushing an idea with limited support.
“Today Californians are served by nearly 150 financial institutions, many of which offer low or no-cost banking account options specifically designed to assist the unbanked and eliminate the need for visits to costly payday lenders – the newest argument advocates are exploiting in their quest for public banking. In fact, a recent study by the U.S. Federal Reserve, indicated that nearly 80 percent of U.S. adults were fully banked, with a bank account, and reported no use of alternative financial products- only six percent identified as unbanked. Financial institutions across the nation and in the state of California continue to make it a priority to outreach to the remaining percentage of adults who remain unbanked or underbanked regarding the financial services and products available to them.
“We would be remiss to ignore current news headlines regarding the $30 billion liability California is poised to assume due to issues related to antiquated technology and EDD fraud. But somehow we should support the idea of the state getting into the very complex business of banking? Additionally, advocates have been silent on what happened if a state or municipal run public bank is no longer sustainable and suffers loses? Will the taxpayers also have to pick up this tab?
“Finally, this measure is incredibly premature. The major assumption this bill makes is that BankCal will operate in partnership with public banks. However, not one municipality has yet to put forward a business plan, which is the first step in creating a bank. At the very least, this measure should not be contemplated until a network of public banks have been established and proven to be financially viable.
“California’s banking community remains committed to serving the needs of our communities and helping to support economic growth and vitality. We remain opposed to the concept of public banks, and hope that community leaders and elected officials will take note of the risks associated with establishing a public bank, before opting to explore this unnecessary and unwanted public option.”