Governor Gavin Newsom signed a bill that lets municipalities sponsor public banks, and Los Angeles' City Council is creating a proposal for one. David Jette of Public Bank LA says this will help cities and counties invest in affordable housing and renewable energy.
When you pay state and local taxes, parking fees and other payments to your regional government, chances are those funds will almost immediately end up in a corporate bank.
For instance, until recently the majority of these payments to the city of Los Angeles were held by Wells Fargo, a bank that has routinely paid out millions of dollars in fines and settlements due to predatory lending, foreclosure abuses and defrauding investors. Although the Los Angeles City Council voted in December 2017 to divest from Wells Fargo, the city must still use the banking services of JP Morgan Chase and Bank of America, which are among the largest financiers of fossil fuel industry. That’s in large part because the city has lacked the option of chartering its own public banks.
That changed on October 2, when the California Public Banking Act was signed into law by the state’s governor, Gavin Newsom, making it explicitly legal for municipalities in California to create their own public banks and use those banks to hold and leverage public funds.
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Cities like San Francisco looked at ways to separate taxpayer money from fossil fuels but realized there was a limit. In two big ways, North Dakota both shined a light on a problem and offered a solution — one that eventually brought Jackie Fielder, an indigenous Defund DAPL organizer, to help form the San Francisco Public Bank Coalition and take it to the state with similar-minded folks in Los Angeles.
“The narrative shifted,” says Trinity Tran, co-founder of Public Bank LA, of battling Wells Fargo lobbyists while pushing for divestment. “It was pretty apparent that this is literally the people versus Wall Street. This is a permanent form of divestment.”
In 2017, then-Supervisor Malia Cohen was intrigued by the idea and established a public bank task force. Cohen’s status as a San Francisco moderate showed it wasn’t a pie-in-the-sky idea but something for governments to seriously consider.
“I know it’s sort of a culture shift to think about a public bank and what does that mean,” Fewer says. “I never thought San Francisco would be moving toward buying or acquiring PG&E assets. This is very similar to the path toward public banking.”
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