Measure B campaigns achieved 44.15% votes for a public bank. In total, 430 to 488 Angelenos voted in favor of a public bank. Considering the campaign was ill-founded and ran on volunteers’ dedication to the cause, this was a huge success.
After the Measure B campaigns, we switched our efforts towards a new cause. We are now focused on building the California Public Banking Alliance. The coalition was tasked with introducing the AB 857 bill to the California State Legislature in February of 2019. The coalition was a ten-city-member strong organization whose sole plan was to utilize the public banking act.
The public banking act is a state assembly bill that gives cities, counties, and regions in California a chance at setting up their public banks. The bill was written by Miguel Santiago and David Chiu, both Assembly members. This 2019 bill enables the department of business oversight to issue charters to local government organizations wishing to start and run a state bank.
The next major event took place in October of 2019. Governor Newsom signed the bill (public banking act) into law. Newsom made history by legalizing public banking in California. This bill also happened to be one of the few banking bills passed that year: the first progressive banking bill ever passed at a grassroots, citizen-powered effort without resources poured into lobbying.
In October of 2019, the Los Angeles City Council president introduced a new motion to the floor. Herb Wesson proposed a request for a quote to hire a consultant for the public bank business plan. He managed to bring the motion to the full council in December of 2019. The LA City Council was more than delighted to approve the motion. They voted to move forward and start the process of hiring a consultant.
The step to hire a consultant served as a go-ahead for the Chief Legislative Analyst (CLA). He set about drafting the scope and envisioned structure of the RFQ. The Chief Legislative Analyst was to revert the calculated costs of the consultant. As of February of 2020, the Public Bank Los Angeles had already kicked things off. The bank was working on a white paper addressing social injustices like Capitalization, lines of business, loans, and financial products. Financial products are aimed at supporting renewable energy in terms of infrastructure.
In addition to this, the Public Bank Los Angeles works on improved banking services for its members, impact and equity, regulatory purview and phasing, and governance and jurisdiction of the Bank of Los Angeles.
Why did Los Angeles start a Public Bank?
The cost of banking fees keeps rising. In 2018 alone, the city of Los Angeles paid over 170 million dollars in banking fees and an additional 1.1 billion dollars in interest to banking institutions and various investors. Banks have used their financial muscle to finance industries that cause harm to their clients. Some of these industries include private prisons, fossil fuel extraction, and weapons manufacturing. In 2017, the City of Los Angeles found itself in a prickly situation when Wells Fargo discovered thousands of false accounts that the company was using to siphon money. The company was fined millions of dollars, leading to Los Angeles cutting ties with them.
On several occasions, Wells Fargo was recorded to discriminate against Latino and African American buyers. Wells Fargo was also involved in the funding of harmful industries in Los Angeles. Logic dictates that local banks cannot manage the city’s funds. You would think that wall street should take up the mantle, but it’s not that simple.
Because we want to have banking services offered as a public utility, we want a bank that keeps money local and eliminates extra costs by cutting intermediaries. Shareholders and high-paid executives would also be removed from the banking scene, making way for a cost-effective banking system.
The 2008–09 recessions taught us a few things: the century-old public bank of North Dakota can safeguard taxpayers’ money and can help an economic boom. At the same time, Wall Street’s financial institutions needed billions of dollars in bailouts; all siphoned from the taxpayers’ pocket. Charter Amendment B was intended to clear a path for Los Angeles to declare its independence from Wall Street.
In short, a Public Bank would operate with Angelenos’ best interests at heart. It would safeguard and grow the city’s assets through loans to viable city projects and local businesses. Political interests would not run the bank but an independent board of governors comprised of Los Angeles residents. The bank’s mission would be to serve Angelenos and safeguard their financial welfare. A social economy is the best cause of action to ensure that LA Tax dollars are invested in improving the lives of community members.
The Public bank will be a bank by the people, run for the people and working in collaboration with the citizens of Los Angeles.