LA City Council To Consider Motion Aimed At Developing Public Bank

Los Angeles Sentinel

The Los Angeles City Council today considers allowing the Legislature Secretary to look for contractors or consultants to help the city establish a public bank. Voting takes place almost two years after former City Council Chairman Herb Wesson announced a motion to establish the city’s first public banking institution. The motion, introduced on October 11, 2019, was endorsed by councilors Mike Bonin and Paul Collets and passed 14-0 on December 4, 2019.

Members of the council proposed a motion shortly after Governor Gavin Newsom signed AB857, which allowed the establishment of public banks throughout the state. “Public banks are a huge and essential step in better recovery from the COVID crisis and recession,” Bonin said in a statement to the City News Service on Monday.

“With a public bank, you can invest in your neighborhood, promote affordable housing, help small businesses struggle, support a fair transition to a green economy, and increase equity. Is not a special concern, but an exciting opportunity to create a system of advocacy for people, and thank you for the opportunity to talk with friends, colleagues and neighbors. ”According to system proponents, public banks Aims to focus on local investment by providing business loans and may be used to finance publicly supported housing, among other projects.

The motion came out of the Economic Development and Employment Commission on May 11, with unanimous recommendations from members of the Commission. According to the CLA report, although not required by state law, the city must seek voter approval before establishing a bank. In 2018, before AB 857 was signed by law, LA voters denied the city the power to set up a public bank on ballots, 44% in favor of setting up a public bank, and 56%. I opposed it.

The motion, if approved today, requires the Legislature to draft and release a request for proposal within 60 days to seek the services needed to establish a public bank to serve Los Angeles. Allow to. The consultant or subcontractor of choice must have experience working and researching at a public bank or other mission-based financial institution and facilitating consultation with community stakeholders.
Public bank operations include:

— Credit access for small businesses, especially small businesses owned or employed by nearby residents who are considered socio-economically disadvantaged.
— Affordable Social Housing Finance.
— Climate change mitigation and investment in green energy, governance and accountability.When
— An innovative credit program for economic growth and maintaining and developing ownership of workers and tenants. The CLA also reports to the city council on the timeline for establishing a public bank.

The idea of ​​a public banking system received national attention in 2016 after activists in the Dakota Access Pipeline sought a sale from a major bank that funded part of the project. North Dakota has been a state-owned bank for the past 100 years.

Rep. Miguel Santiago of D-Los Angeles, who supported AB 857, saw at the time that public banks were effective with enough public voice to influence parliamentary votes without the involvement of lobbyists. He said it was one of the controversial issues.
Public Bank LA’s Trinity Tran and the California Public Banking Alliance said in 2019 that a sale from a public bank could retain funding within the local community. The city can also partner with credit unions, making the bank a government non-profit organization overseen by an independent board of directors and managed by professional bankers.

The California Banking Association opposed the AB857 signature, stating that public banks are at high risk and could undermine future local government projects. Earlier this year, the association also opposed AB 1177, which was resolved by the Los Angeles City Council, or the California Public Bank Options Act.

The California Public Bank Options Act, which passed Congress on September 9, will consider creating a “Bank Cal” program. This is the first state-wide program in the United States to provide residents with free, penalty-free access to bank accounts. Debit cards, automatic invoice payments, direct deposit capacity, and infrastructure for account holders to build credit. The bill was co-authored and introduced by Santiago. The bill was submitted to Newsom, but has not yet been signed, according to the state’s legislative information site.