Yesterday, California’s Public Banking Act, AB 857, passed the Senate Governance & Finance Committee 4 Aye’s to 3 No’s. In the extended hearing, Assemblymember David Chiu, the bill’s co-author, emphasized, “Something is truly broken with the present financial system.” The bill has one more committee — Senate Appropriations — before the Senate floor vote.
Watch the hearing video here (bill discussion starts at 1:25).
Meanwhile, publications in San Jose, Santa Cruz, Santa Rosa, North Bay, Marin County, San Francisco, Sacramento, Los Angeles, and Monterey Bay each published robust articles recently detailing what a public bank could mean to their local communities. The journalistic push indicates a high-water mark for interest in public banking, and provides advocates around the country with excellent talking points to share.
An article by Jennifer Wadsworth in Santa Cruz’s Good Times, for example, describes one important benefit of a public bank mandated to serve the public interest:
“[T]he broader decline of small banks across the Greater Bay Area reflects a broader trend. … But the rural Midwestern state [of North Dakota] boasts six times the number of locally owned financial institutions than the rest of the country. Its secret? A public entity that supports small private lenders by helping with capitalization and liquidity and allowing them to take on larger loans that would otherwise go to out-of-state megabanks.”
Scott Soriano writes in Capitol Weekly:
“With a public bank, the ‘shareholder’ is the public, not private individuals. The goal of personal profit is replaced with whatever benefits the community. If a municipality prioritizes low interest small business loans in a blighted area in order to bring jobs to an impoverished community, the public bank is there as a resource. Municipalities can, in turn, use their rich deposits to secure low interest loans for infrastructure development, low income housing, and other projects commercial banks are loath to loan money to, especially at low interest rates. … The California Public Banking Alliance suggests that cities could save millions just by refinancing their debt.”
Ida Mojadad writes in SFWeekly:
“‘The public’s money should serve a public purpose, not line the pockets of Wall Street investors,’ said Assemblymember David Chiu, who represents San Francisco and introduced the bill in March. ‘Time and time again, we have seen big banks invest billions of dollars of our money in institutions most Californians are opposed to.’”
The Bohemian of the North Bay writes:
“North Dakota’s 100-year-old state-run public bank is a success in a state with a population of 750,000. The aggregate population of Sonoma, Mendocino and Humboldt counties is right around that same number. It’s a heady idea that’s taken hold of the public imagination around the state.”
Jennifer Wadsworth writes a similar article for San Jose Inside:
“The banks that financed entrepreneurial ventures and helped its founders buy homes and equipment are no longer here. No wonder Silicon Valley is losing its luster. Local lawmakers, however, are looking to an unlikely source for answers: North Dakota.”