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Establishing a Public Bank is Possible
(and we are working on making it even easier)
A recent article in the Press Democrat (linked here) highlighted the local public banking movement, which Shelly Browning became involved with 7 years ago after California paid her small business in IOUs due to state budget shortfalls. She and the Friends of Public Banking Santa Rosa have worked tirelessly to educate local officials on the benefits of a bank that was owned and operated by the local government. Promoting a little-known approach to a complex industry like banking is hard work, but worth the effort.
That tireless work continues locally and is progressing at the state level. This summer, a coalition of regional public banking activities from across the state came together in San Francisco and joined forces as the California Public Banking Alliance (CPBA). This group, including a team of social justice lawyers from the Bay Area, has been hard at work to put forth a bill that will make public banking easier to understand and implement.
The Friends of Public Banking Santa Rosa are grateful for the PD's coverage, and has one correction to make to the article's statement:
“...California cities will have to get approval from the state Legislature to open such an institution.”
In fact, the proposed state bill will just be making what is now a difficult, obscure process a straightforward charter application with its own requirements and classification, separate from those of commercial and retail banks. Any public bank, however, does need approval from the state Department of Business Oversight, just like commercial banks. This will not change under the proposed legislation.
Interview with KSRO
KSRO recently interviewed Philip Beard about the ongoing efforts of Friends of Public Banking Santa Rosa. He described various uses of a public bank, beyond cannabis; the roadblocks are to creating one; the potential benefits to the community; the City of Santa Rosa's stance on creating one; and the legacy of the Bank of North Dakota. Listen here.
New Mayoral Support for Public Banking?
Newly elected mayor, Tom Schwedhelm, said in a recent Press Democrat article that he wanted to turn some attention to the city’s climate policies and was interested in a discussion of the benefits of a public bank that could underwrite local businesses, including those in the cannabis industry. Incoming City Councilwoman Victoria Fleming said she was interested in learning more about the concept given the interest in the community.
Sounds like the start of a constructive conversation for 2019.
Voting Against Debt is Voting for Change
It is no secret that Santa Rosa is in a financial crisis, only exacerbated by post-fire rebuilding. Measure N, a housing bond, was on Santa Rosa's November 2018 ballot in an effort to address the housing and homelessness emergencies (among the biggest nationwide). The measure was defeated, reflecting a sentiment opposing continued bonded indebtedness. Two Friends of Public Banking Santa Rosa, Philip Beard and Deborah Hammond, make a clear argument for a new approach in their recent Press Democrat article, Close to Home: Time for a Public Bank in Santa Rosa
Public Banking was on the Rise Last Fall
In Los Angeles, responsible and sustainable economics was on the ballot in the form of Measure B. Arguably one of the most important midterm ballot items in the country, it was ultimately defeated but received overwhelming grassroots support, and that support continues to grow. Read more about it here and here.
Study Finds Public Cannabis Bank Too Risky
For some time, those who want cannabis money safely banked and those who want to see the public banking option become a reality have been hopeful for a mutually supportive solution.
Outgoing CA Treasurer, John Chiang was so hopeful, he chaired a Cannabis Banking Working Group (CBWG) and sponsored a feasibility study. On December 27, 2018, this study was presented to the working group.
Not surprisingly the study determined that banking, especially for a singular industry, and one that happens to be federally illegal, is risky business.
Public banking, however, is still a viable option. Cannabis never was the only reason to start a public bank- far from it. Inequality, housing, and climate change are urgent issues requiring strategic financing solutions and have no place being stymied by fiscal fear.
The California Public Banking Alliance (CPBA) is working on a comprehensive response to the study explaining how and why we can move forward in the establishment of a public bank. This document will be sent to Fiona Ma and published publicly and included in the next newsletter.
In the meantime, Chiang’s cannabis banking study can be found here.
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