San Francisco has assembled a 16-member task force to study launching a public bank to fund affordable housing development, low-interest loans for low-income residents and cutting ties with the Wall Street banks that do not live up to The City’s social responsibility principles.
The Municipal Bank Feasibility Task Force announcement Wednesday by the Treasurer Tax Collector, which oversees it, came a day before last week’s Board of Supervisors Budget and Finance Committee hearing on establishing a public bank. Former Supervisor John Avalos is among the members appointed to serve on the task force and has been a longtime advocate for establishing a public bank.
“I worked for years to create the municipal bank under the belief that it could make San Francisco more financially self-sufficient and have resources to build equity in our public infrastructure,” Avalos told the San Francisco Examiner on Friday. “With the profit motive out of its mission, the municipal bank can hold private financial institutions to a higher standard of greater equity and public good. The task force is where the city is finally exploring the municipal bank and I want to make sure my experience, voice and vision is part of the mix.”
Other members of the task force include Ada Chan, regional planner for the Association of Bay Area Governments; Paulina Gonzalez, executive director of the California Reinvestment Coalition; Kate Hartley, executive director of the Mayor’s Office of Housing and Community Development; and Steve Zuckerman, president of the Self-Help Federal Credit Union.
Supervisor Malia Cohen, who has taken up the effort along with Supervisor Sandra Fewer, pressed the Office of the Treasurer and Tax Collector during a Jan. 22 hearing on the issue about the willingness to see through the public bank vision.
“We know that we are in unchartered territory and what we are embarking on doing is definitely groundbreaking. I am just trying to get a sense as to your office’s confidence level,” Cohen said. “Can this be done? Can we execute it? Are we chasing a pie-in-the-sky dream?”
Chief Assistant Treasurer Tajel Shah said there were many unknown factors but that the task force would spend the next six months investigating them.
“There are several hurdles,” she said, which include, “how do we bring in-house some of those core functions that we do with our banks right now, such as payroll or vendor payments” and what the cost would be to do that.
“There are a lot of aspirations for a public bank — one supporting our cannabis businesses, another is housing, another is businesses,” Shah said. “One of the big challenges is going to be making those policy decisions around what areas and outcomes are we going to focus on and what areas and outcomes are we going to invest in. And what’s the scale.”
The Treasurer’s Office oversees The City’s pooled fund investment portfolio valued at about $10 billion.
“I both want to have more independence from large national corporate banks that make investment choices or have business practices misaligned with the San Francisco values, and I want more local control over how our public dollars are invested so that we can leverage our public resources better for the public good,” Fewer said. She noted that these large banks have invested in civilian firearms, tobacco, nuclear power, fossil fuels and private prisons.
There is only one public bank in the nation, the Bank of North Dakota, which was created in 1919.
Fred Brousseau, an analyst with the Budget Analyst’s Office who conducted a study of a public bank, said, “Oakland is actually in process of conducting their feasibility study. They’ve partnered with the city of Berkeley, the City of Richmond and Alameda County.” He said that study is due within months.
Brousseau said if The City launched a public bank, it would be a separate legal entity with an independent board of directors. “It’s like launching a startup, and The City would be the investor in it,” he said.
The Municipal Bank Feasibility Task Force will hold its first meeting Wednesday, Feb. 21, from 3 to 5 p.m. in Room 305 at City Hall.