A California bill that would allow San Francisco to open a city-run bank cleared a key state Senate committee on Wednesday.
Assembly Bill 857 paves the path for local jurisdictions to launch a public bank, which San Francisco and other California cities have been exploring for more than a year. It’s been urged forward by the idea to take the city’s $12 billion budget out of major banks that are known to invest in things like private prisons and oil companies and invest in issues like affordable housing, renewable energy, and low-interest student loans.
“The public’s money should serve a public purpose, not line the pockets of Wall Street investors,” said Assemblymember David Chiu, who represents San Francisco and introduced the bill in March. “Time and time again, we have seen big banks invest billions of dollars of our money in institutions most Californians are opposed to.”
Calls for San Francisco to open a public bank have grown increasingly loud in the past year, urged by the memory of the 2007-2008 financial crisis. After a draft feasibility report by the Treasurer’s Office was criticized as not going far enough, former Supervisor Malia Cohen called for a plan with more ambition. In February, the Board of Supervisors unanimously co-sponsored and approved a resolution urging the state to approve a bill like AB 857.
Instead of merely expanding loans or partnerships with credit unions, groups like San Francisco Public Bank Coalition and California Public Banking Alliance, and PODER are calling for a full-fledged public bank that may take years of transitioning. Unsurprisingly, Wall Street is not fond of the idea — the California Bankers Association called it “misguided” — and coalition organizer Kurtis Wu expects their lobbying to ramp up.
“The more we get deeper into this process, the more Wall Street is going to oppose it,” Wu said. “It’s interesting to see how their arguments are evolving.”
Wu said questions remain about how the report’s conclusions were reached and whether they thought of it as a cost versus investment. He hopes those questions will be answered at an upcoming fall hearing called by Supervisor Sandra Lee Fewer. Still, the Assembly vote instilled a sense of hope that the public bank is closer to reality.
“It’s a significant step forward but we’re not going to fully celebrate until we get to the end goal,” Wu said of the vote. “We know we have a big fight ahead of us.”