California cities could open their own banks under bill backed by Democratic lawmakers
BY Andrew Sheeler - The Sacramento Bee
Two California Democratic lawmakers have introduced a bill that would develop a state-owned banking system, modeling it on a program run by one of the smallest states in the union.
California Assemblymen Miguel Santiago, D-Los Angeles, and David Chiu, D-San Francisco, have introduced Assembly Bill 857, which would enable local governments to charter their own public banks.
North Dakota, with a population of fewer than 1 million people, has America’s only state-owned bank. The Bank of North Dakota this year is celebrating its centennial anniversary.
Santiago and Chiu would bring a similar system to California’s 39 million residents, arguing that a public institution might better serve the interest of low- and moderate-income households.
“It’s pretty obvious that the Wall Street system of wealth distribution has created an income inequality crisis,” Santiago said in a statement announcing the bill’s introduction. “And nowhere is that more visible than right here in my district, where luxury condos loom over Skid Row. Instead of making rich men even richer, our resources should be invested in community development: parks and green spaces, free community college, new schools, smooth roads, and cleaner air.”
Unlike the North Dakota system, AB 857 wouldn’t create a state-owned, statewide bank. Instead, it would empower local governments to charter their own such public banks.
The bill “also encourages partnerships between a public bank and existing local financial institutions to provide retail services, enabling public banks to provide affordable loans and lines of credit to local businesses and nonprofits, and increase the lending capacity of the local banking system,” according to the fact sheet.