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Los Angeles City Council on Tuesday took a step toward creating a public bank by voting unanimously to allow the chief legislative analyst to seek contractors or consultants to develop a business plan for the bank. .
“The opportunity to form a public bank in the city of LA is extremely important as the city begins to recover from the COVID-19 pandemic. This case before us now just sets the ball rolling, retaining a consultant to advise us on the pros and cons and details of creating such an institution, â€said Councilor Curren Price, who chairs the Committee on Economic Development and Employment, before the vote. Tuesday.
Public banks are meant to concentrate local investments by offering loans to businesses and could be used to finance public housing, among other projects, according to supporters of the system.
“Instead of investing in affordable housing, health care and education, cities are diverting huge portions of their limited budgets to paying off loans with interest. A public bank will eliminate Wall Street as an intermediary, while serving both as a public custodian for city funds, as well as a public lender for city borrowing needs, â€said Trinity Tran, co-founder of Public Bank Los Angeles and the California Public Banking Alliance.
The vote comes nearly two years after former council chairman Herb Wesson introduced a motion to establish the city’s first public banking institution. This motion – presented on October 11, 2019 – was seconded by city councilors Mike Bonin and Paul Koretz and adopted 14-0 on December 4, 2019.
Council members proposed the motion shortly after Gov. Gavin Newsom signed AB 857, which allows for the establishment of state-wide banks.
“A public bank is a huge and essential step to rebuild better after the COVID crisis and recession,†Bonin told City News Service on Monday.
“With a public bank, we can invest in our neighborhoods, promote affordable housing, help struggling small businesses, support a just transition to a green economy and advance equity capital. It is an exciting opportunity to create a system that stands up for people and not special interests, and I appreciate the opportunity to discuss it with my friends, colleagues and neighbors.
The motion came out of the Economic Development and Jobs Committee on May 11, with unanimous recommendations from committee members. According to a CLA report, the city should seek voter approval before forming the bank, although this is not required by state law.
In 2018, before the enactment of AB 857, voters in LA denied the city the power to create a public bank in a poll, with 44% voting in favor of establishing a public bank and 56% opposing it.
The motion approved Tuesday authorized the chief legislative analyst to draft and publish a request for proposals within 60 days to research the services needed to establish a public bank serving Los Angeles. The selected consultant or subcontractor should have a history of working and studying for public banks or other mission-oriented financial institutions, as well as experience in facilitating consultations with community stakeholders.
The public bank’s business operations would include:
– access to credit for small businesses, particularly those owned or employing residents of neighborhoods considered to be socio-economically disadvantaged;
– financing of affordable and social housing;
– climate change mitigation and investments, governance and accountability in green energy; and
– transformative credit programs to preserve and develop economic growth and the property of workers and tenants.
“We are talking about this effort to establish a public bank for the fact that the current banking system has never really worked for working families and especially for communities of color. Underserved communities have long been exploited and ignored by traditional banking institutions and many of the products offered do not necessarily meet the needs of our community, â€said City Councilor Kevin de León.
“The need for public banking services is clear, just look at some of the practices of the big institutions and the huge colonies just above racial discrimination.”
The CLA will also report to the City Council on the timetable for setting up the public bank and the funding required for the studies of the project.
The idea of ​​a public banking system gained national attention in 2016 after activists from the Dakota Access Pipeline called for the divestiture of the big banks that were funding part of the project. North Dakota has had state-run banks for the past 100 years.
Assembly member Miguel Santiago, D-Los Angeles, who supported AB 857, said at the time that public banking was the only controversial issue he had seen where the public voice was effective enough. to influence the vote of the legislature without the involvement of a lobbyist.
Tran said in 2019 that divesting from public banks could keep money in local communities. The city could also partner with credit unions and the bank would be a non-profit government organization overseen by an independent board of directors and managed by professional bankers.
The California Bankers Association opposed the signing of AB 857, saying public banks are risky and could undermine funding for future municipal projects. Earlier this year, the association also opposed AB 1177, or California Public Banking Option Act, which the Los Angeles City Council voted to support.
The California Public Banking Option Act, which was enacted by Newsom on Monday, will explore the creation of a “BankCal” program to be the first statewide program in the United States to provide residents with access to a bank account with no fees or penalties, including a debit card, automatic bill payment, direct deposit capability, and infrastructure for the account holder to build up credit. The bill was co-authored and presented by Santiago.
“We are moving closer to the public bank which fights the racial wealth gap and protects low income people from predatory banking practices!” Santiago wrote on Twitter after Newsom enacted the bill.
LA City Council Unanimously Passes Motion to Develop Public Bank was last modified: October 5, 2021 through
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