SAN FRANCISCO–The City by the Bay is the latest to explore the idea of creating a public bank in favor of placing municipal funds in traditional financial institutions—although credit unions would retain their position under any future bank.
The state of California passed legislation in 2919 allowing for the creation of public banks, following efforts and discussions in other states. The public bank concept D has been the subject of legislative proposals in Philadelphia and New Mexico, while the Bank of North Dakota, a public bank, is already up and running.
A workshop has already been held in San Francisco to move the idea forward. Jackie Fielder, co-founder of the San Francisco Public Bank Coalition, told the San Francisco Public Press and the podcast “Civic” that the economic downturn precipitated by the pandemic has likely spurred renewed momentum toward public bank initiatives.
“Every so often, looking back to the Occupy Wall Street protests, we see a wave of political will for public bank,” Fielder told the publication.
Working Group
The San Francisco proposal would establish a working group to develop a more complete plan for a public bank — or, more specifically, a municipal financial corporation, Fielder told the Public Press.
“This would not be a direct alternative to banks that consumers might deposit money in, or to credit unions,” the Public Press reported, adding, “In fact, the state law that paved the way for public banks stipulates that they may not compete with credit unions.”
“You definitely are encouraged to stick with your credit union,” Fielder was quoted as saying.
According to the publication, as currently envisioned, the bank would serve small businesses and developers of affordable housing with loans, and could not offer accounts to individual customers.
‘Profitable’ Investments
“I think of it as a lending vehicle to be able to demonstrate that these investments are profitable, and to rework some of the models of, for example, the Bank of North Dakota, without having the gigantic responsibility of being a depository institution,” Fielder told the Public Press. The idea, she told the publication, is for the institution to invest in affordable housing production and local small business infrastructure, and aim for profitability a year after its launch. “And from there, we’ll see that it demonstrates profitability, and then turn that into the public bank itself within five years.”