California lawmakers seek charter for local public banks

Monday, March 11, 2019

By Mark Anderson  – Sacramento Business Journal

Two California assembly members have introduced a bill to allow local governments to form their own public banks. 

Assembly Bill 857 by Miguel Santiago, D-Los Angeles, and David Chiu, D-San Francisco, seeks to create a public banking option to keep local money under local control.

The bill is a response to municipalities across the state that have shown interest in opening their own banks, said Jonathan Underland, communications director for Santiago. The legislation wouldn't create a bank, but would allow local jurisdictions to create a charter. The idea is for local governments to collect the benefits and earnings on large municipal accounts that Wall Street is taking now. Unlike private banks, which prioritize shareholder returns, a public bank could consider community needs in its decisions, Underland said.

“It’s pretty obvious that the Wall Street system of wealth distribution has created an income inequality crisis,” Santiago said in a news release. “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."