Supervisor Sandra Fewer last week revived the idea of creating a municipal bank by requesting the budget analyst to update a 2011 study on the idea, but on Tuesday Supervisor Malia Cohen took that effort a step further.
Cohen introduced a resolution calling on Tax Collector José Cisneros to convene a 15-member task force to study creating a municipal bank over a six-month period. Members would include those who work in the Treasurer’s Office, City Controller’s Office, Mayor’s Office of Housing and “an expert on cannabis banking and financing.”
SEE RELATED: SF revives effort to establish public bank
“The Board of Supervisors believes that the long-term financial and social well-being of The City is contingent upon the ability to provide equitable and transparent financial opportunity for all its residents,” the resolution reads.
The effort builds on previous work by former Supervisor John Avalos, who was termed out of office in December.
The task force would explore creating a Municipal Public Bank as separate city department to perform such duties as manage the treasurer’s short-term investment portfolio, provide loans for small businesses and “underserved San Francisco residents,” and accept deposits “with special attention to the operational needs regarding financing for cannabis-related businesses.”
The idea of public banks has grown in popularity since the 2008 mortgage crisis and the effort has become more invigorated as a possible solution to banking for those in the cannabis industry who deal in cash since banks won’t do business with them while the drug remains illegal under federal law.
Cohen said “a thoughtful approach needs to be taken in understanding the divestment calls” and “our financial system is unable to figure out how to serve our small businesses.”
In response to the resolution, Cisneros’s spokesperson said in an email that “he is reviewing this resolution carefully, and looks forward to working with the Board of Supervisors to better understand their policy goals regarding the creation of a municipal bank.” Cisneros oversees an approximate $8 billion short-term investment fund.
The 2011 budget analyst report noted a state law change would be needed to launch a public bank, but a June 2013 City Attorney’s Office memo gave legal advice stating otherwise.
The memo said that “a court would likely conclude that The City may own stock in a municipal bank and spend city money to support the bank’s operation, if The City appropriated funds for that purpose and the operations of the bank served a legitimate municipal purpose.”