LA and Bay Area Assemblymembers Announce Bill to Fight Income Inequality Through Public Banking
The Public Banking Act Aims to Give California Cities Financial Freedom from Wall Street
Sacramento, CA – California State Assemblymember Miguel Santiago (D-Los Angeles) and Assemblymember David Chiu (D-San Francisco) are joint-authoring AB 857, to green-light the development of a public banking system in California. Under the current financial system, California’s resources generate profits for wealthy investors on Wall Street. A public banking system would see those dollars reinvested into projects that benefit communities.
“It’s pretty obvious that the Wall Street system of wealth distribution has created an income inequality crisis,” said Assemblymember Santiago. “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. With AB 857 we’re laying the groundwork for a financial system that will give Californians access to capital they can afford, and empower communities to invest in projects that improve everyone’s quality of life.”
Assemblymember David Chiu highlighted his vision for a public banking system in California at a press conference in San Francisco this morning, saying, “It is time that banks start working on behalf of people, not Wall Street investors. Time and time again, we have seen big banks invest our money in institutions most Californians are opposed to--oil pipelines, gun manufacturers, private prisons, and companies with unfair labor practices. This legislation allows us to take a first step towards ensuring the public’s money is used for public good.”
Assembly Bill 857 does not mandate the creation of a statewide public banking system. Instead, it establishes a charter that would allow local governments to form their own local or regional public banks. Those entities would be able to engage in both banking and retail activities that are not already provided by existing local financial institutions, barring the public banking system from competing with existing community banks or credit unions.
Municipal government leaders in Los Angeles are already lining up to support the measure, saying a public bank would put the city of four million on a path to better economic stability.
Los Angeles City Council President Herb Wesson added: ““Today we reject the idea that only one form of banking exists. We reject the belief that there is no alternative to the current system of for-profit banking that enriches a small portion of society while those who are kept out of it stagnate economically. A public banking system in our state will finally give power back to the people who’ve been hurt most by the banking industry’s predatory practices and give notice to Wall Street that we’re putting our communities‘ interests over theirs.”
“Property and sales tax form the foundation for local governments to provide necessary public services. Small cities often struggle to find the banking services that meet the complex challenges of a modern municipality. I am pleased to see efforts exploring how to provide this, while balancing the needs for accountability and equality”, said Los Angeles County Assessor Jeffrey Prang; former Mayor of West Hollywood.
Trinity Tran, founding member of the California Public Banking Alliance said, “With this legislation, we now have the opportunity to build a new alternative banking system through locally-controlled socially and environmentally responsible banks, enabling cities and counties to recapture public dollars and have a say over the financing of our own communities.”
Mark Gonzalez, Chair of the Los Angeles County Democratic Party added, “The Los Angeles County Democratic Party was one of the first to endorse last year’s effort to explore public banking. We believed then, and still do today, that public banking is a step towards social, economic, and environmental responsibility. For too long, private banks have been profiting on the shoulders of hardworking families. It’s time we take control of our local finances, and start focusing on Main Street instead of funding Wall Street.”
Gavin Pierce of Sunrise Movement said, “Every young person in the world today has a story about how climate change has impacted their lives personally, and that’s why we’re so determined to establish a new way of doing things through the Green New Deal. Public banking is how we can build an economy that works for the people who want to save this planet, not for the wealthy few who want to profit off of its continued destruction.”
In order to ensure the safety of all public money, any public banks created under AB 857 will be required to obtain and maintain deposit insurance with approval from the Commissioner of the Department of Business Oversight. Insurance can be provided through the FDIC, private share insurance, or self-insurance – which are the same rules followed by state-chartered Credit Unions.
The bill is currently being scheduled for a hearing.
Below is a link to audio from Assemblymember Miguel Santiago and the Entire Press Conference:
Assemblymember Miguel Santiago is the Chair of the Assembly’s Communications and Conveyance Committee, and a member of both the Assembly Public Safety Committee and the California Latino Legislative Caucus. He represents the 53rd District composed of the cities of Los Angeles, Huntington Park, and Vernon.
CONTACT: Jonathan.Underland@asm.ca.gov, (213) 620-4646