More than 100 years after North Dakota established the nation’s only public bank, San Francisco’s city officials are working to launch the second one.
Supervisor Sandra Fewer introduced legislation Tuesday that would establish a nine-member task force to create a business plan for launching a public bank. The first report toward this goal would be due by June 30, 2020.
An actual launch of a public bank would take years, but city officials are striving to become the first in California to do so under a new state law.
The legislation “moves us one step closer” to dropping the use of private banks for investment and banking, Fewer said at a rally outside City Hall before she formally introduced the legislation at the Board of Supervisors. Fewer previously called for a study of the idea in 2017.
San Francisco currently uses the financial services of Bank of America and U.S Bank. The City’s current budget is $12 billion and “requires banking services like that of a large multi-national corporation,” said a March 2019 Municipal Bank Feasibility Task Force report. “Annually, San Francisco generates approximately eight million payment transactions amounting to approximately $13 billion,” the report said.
The legislation comes after Gov. Gavin Newsom signed into law earlier this year the Public Banking Act, or AB 857, which allows charter cities like San Francisco and Los Angeles to apply to the state for approval to launch public banks after following a specific process.
That process includes approval by the Board of Supervisors and the creation of a detailed plan, which Fewer’s legislation requires the task force to complete.
The law was introduced by Assemblyman David Chiu, D-San Francisco and Assemblymember Miguel Santiago, D-Los Angeles.
“The vision of public banks is that our public monies should be invested in industries and communities that have a public purpose,” said Chiu, who joined Fewer at the rally. He said that public dollars “should be invested in local communities, local infrastructure, local housing, not be used to line the pockets of the most wealthy Wall Street banks.”
SF Public Banks Coalition organizer Jackie Fielder said that the recent push for public banks grew out of two movements, Occupy Wall Street and protests against the Dakota Access Pipeline (DAPL).
“This is a movement,” Fielder said. “We are one of many cities looking to establish our own bank, after years of being tired with the way Wall Street spends their investments, our investments in private prisons, in pipelines running through indigenous territories, in luxury development when many of us are going unhoused.”
The first deadline the task force would need to meet is to submit a “a business and governance plan” to the Board of Supervisors by June 30, 2020 that would move The City toward launching a public bank.
The June 30 plan would present a financial model for an Economic Development Financial Institution (EDFI) owned by The City that doesn’t accept deposits or require state approval, but expands The City’s ability for using public dollars to make loans and invest more in affordable housing and infrastructure.
By advancing this initial plan, The City could better position itself for ultimately applying to launch a public bank under AB 857.
The task force would have to submit by December 31, 2020, a plan for the EDFI to become a Public Bank.
The plan would call for applying to launch a public bank within three years of the EDFI’s establishment and “becoming operational as a public bank within five years of its establishment; the Public Bank providing comprehensive banking services to the City within five years of its becoming operational.”
The board would appoint seven task force members with certain qualifications and the remaining two by the Controller’s Office and Treasurer’s Office.
The task force’s work will build on the previous work completed by the Municipal Bank Feasibility Task Force, established by Treasurer José Cisneros. A final report was released in March.
The state-run Bank of North Dakota was launched in 1919 and remains the only public bank operating in the states. American Samoa, a U.S. territory in the South Pacific, launched a public bank last year.
Supervisor Shamann Walton, who also joined Fewer at the rally, recalled how when “years ago” both he and Fewer served on the board of education they spoke about the need for a public bank.
“It is always exciting to see something come into fruition,” Walton said.
He said that “equitable opportunity for all levels of income to be able to enjoy benefits of banking — that’s what I’m looking forward to.”