Public Bank Advocates Charge Ahead
by Jason Lane, VP/Deputy Director of Government Relations
Last month, the San Francisco working group established to form a public bank finalized the group’s membership and hired public banking consultant HR&A Advisors to formulate a plan to establish San Francisco’s first public bank.
According to a news release issued by the working group:
Last June, the Board of Supervisors took an important step towards setting up a public bank for the city by unanimously passing the Reinvest in San Francisco ordinance introduced by Supervisor Dean Preston. Another dramatic step came on April 15, 2022, with the first official meeting of the Working Group, composed of financial professionals and community representatives charged with preparing a business plan for the bank. After being approved by the Board of Supervisors, the plan will be submitted to the California Department of Financial Protection and Innovation in Sacramento. Other members of the group include and one executive from the banking industry and one from the credit union industry, in addition to community development and consumer protection advocates.
Across the bay, the Public Bank Eastbay group, a cooperative venture among the cities of Oakland, Berkeley, and Richmond and Alameda County released a robust viability study to:
- achieve fiscal stability within the first three years;
- provide loan support to underserved sectors of the local economy;
- address local infrastructure needs;
- reduce local government dependency on Wall Street banks;
- decrease local fossil fuel and other harmful investments;
- partner with local financial institutions to the economic and social benefit of all;
- mitigate economic inequity in the region;
- serve as a model for public banks around the state and the country.
The purported goals, as listed in the report which was authored by a former Senior Policy Advisor to Rhode Island General Treasurer, is to make loans to local small businesses, in cooperation with local community development financial institutions (CDFIs) and local banks, provide capital to non-profit affordable housing developers for property acquisition, and lending for small scale climate change projects. The projections detailed in the report show that with a $40 million investment from the cities of Oakland, Berkeley, Richmond, and Alameda County, the bank will loan over $120 million by the third year of existence. By the end of a decade, the original investment will result in over $250 million in assets, and almost $400 million in loans made.
San Francisco and the East Bay collaborative, in addition to the City of Los Angeles, are rushing to submit applications for approval to the Department of Financial Protection and Innovation, which is not permitted to grant licenses after seven years from the date of published regulations.
Finally, Governor Newsom has proposed $4 million in funding for CalAccounts, a state financial institution that will offer fee-free deposit transaction accounts. Last year, the legislature approved AB 1177 which creates a blue-ribbon task force to examine the unbanked population and requires an analysis of existing private sector solutions, and the risk and cost of those private sector solutions in comparison to the CalAccounts proposal.