LA City Measure B would enable Los Angeles to start a City-owned bank, although it would not mandate its establishment. Currently the City Charter (like the U.S. Constitution but for our city) prohibits the creation of commercial enterprises without voter approval. This initiative allows the city government to begin exploring what it would like to establish a municipal bank, how it might be designed, and ultimately whether it makes sense.
Government-owned banks are not as new as you might think. In 1919, the State of North Dakota created a public bank; it’s operated successfully for the last century, surviving every financial catastrophe since its establishment and having revenues that exceed expenses every single year since 2004, despite the Great Recession. As one reporter put, “it supports the most vibrant community bank network in the country, with more branches and higher lending totals per capita than any other state.” During the 2008 financial crisis, not a single bank in the state failed.
There are many possible benefits to a municipal bank here in Los Angeles. The City has massive cash reserves, approx- imately $10 billion at any given time, to pay its bills. That money is deposited in mega-banks, like JPMorgan Chase and Citibank, which charge the City fees and also use the money to make profits through investing it in loans and trades. With our own bank, we wouldn’t be wasting money paying fees to Wall Street firms that don’t have our public
interests at heart and aren’t investing in our communities. The $100 million currently paid in fees could do a lot of good if we kept it local. Administrative costs would likely be much lower than the $100 million cost of fees, which are inflated by banks’ interest in making a profit.
With our own bank, we could invest in projects that align with our values, while staying away from bad actors, like the fossil fuel industry. The money sitting in the accounts could be invested in projects for housing and infrastructure that could earn a profit and help the community, as well as worthwhile projects around the world.
Indeed, Measure B got its start from the work of activists to get the City to divest from any banks that were investing in the Dakota Access Pipeline. When they succeeded in getting the city to remove its funds from Wells Fargo, they realized that banking alternatives were limited. Credit unions and small community banks were not equipped to deal with government funds. That meant the only place to put the city’s deposits was another Wall Street giant, likely not much better than Wells Fargo and likely still invested in fossil fuels and other destructive projects. That’s why the folks from the DivestLA coalition have been at the forefront of the Public Bank LA campaign.
While people can argue about the ethics and wisdom of any particular investment, a municipal bank would certainly give us more control and options for where to invest our tax dollars, including the option to keep them here at home where they can be lent to support local businesses and infrastructure project. Sounds like a great option for our City to have, right?
SUPPORTERS
Social justice and community groups: Alliance of Californians for Community Empowerment (ACCE), Alliance for Community Transit (ACT-LA), American Indian Movement Southern California, Clergy and Laity United for Economic Justice (CLUE), Coalition for Economic Survival, Courage Campaign, Democratic Socialists of America-Los Angeles (DSA-LA), Indivisible Suffragists, Investing in Place, Koreatown Immigrant Workers Alliance
Alliance (KIWA), LA Voice, Los Angeles Alliance for a New Economy (LAANE), Little Tokyo Service Center, Strategic Actions for a Just Economy (SAJE), Thai Community Development Center, and Trust for Public Land.
Environmental groups like Climate Hawks Vote, SoCal 350, and Fossil Free California.
Los Angeles County Democratic Party and Democratic Clubs of North Valley, Pacific Palisades, San Pedro, Pasadena Foothills, and San Fernando Valley.
OPPONENTS
Los Angeles Times