San Francisco’s break-up with Wall Street could happen in just a few years.
by Ida Mojadad • 11/12/2019 (SFWeekly.com)
One task force down, two to go in San Francisco’s quest for a public bank.
Armed with permission from the state, San Francisco may soon establish it’s second task force on the topic thanks to legislation introduced by Supervisor Sandra Lee Fewer on Tuesday. A previous task force met for nearly a year simply to discuss the feasibility.
Moving San Francisco’s money from Wall Street banks into its own bank would allow the city to choose how taxpayer funds are invested, advocates say. Instead of private prisons and oil pipelines, the city could pick something more in line with its priorities, like affordable housing and renewable energy.
“A public bank in San Francisco would allow the city to have more local control, transparency, self-determination, and deepen critical community investments in affordable housing, small business development, loans to low-income households, public infrastructure, renewable energy, and addressing the student debt crisis,” Fewer said in a statement. “San Francisco should lead the pack in this effort, and today’s legislation moves us one step closer to realizing the creation of a public bank.”
The latest task force would ease San Francisco into the change by first coming up with a business plan for a bank known as an Economic Development Financial Institution (EDFI) that’s not fully developed and doesn’t take deposits. This would limit the first phase of the bank strictly to lending focused on affordable housing production and preservation, small businesses, and public infrastructure.
The nine-member task force would meet at least monthly and be required to submit the plan by June 2020. By December 2020, another plan would be due to enter the trickier, second phase: turning it into a fully-fledged public bank capable of taking deposits.
Under the hard-fought Assembly Bill 857, put forward by San Francisco Assemblymember David Chui, the state can issue two public banking licenses a year. That requires a feasibility study and business plan, which San Francisco is ahead on.
But the ability to obtain a license sunsets in seven years. Though it could be extended, Fewer’s legislation requires the EDFI to apply for a public bank license within three years of its launch, and to become operational as a public bank within five years. Creating an EDFI first allows San Francisco to begin a soft launch without going through the steps of obtaining FDIC insurance and other regulatory hurdles required by AB 857.
“We are trying to be careful and intentional about how we are planning for a public bank,” said Chelsea Boilard, Fewer’s legislative aide. “We are closer than we’ve ever been.”
The push for a public bank within City Hall can be traced back to 2011, at the height of the Occupy movement when then-Supervisor John Avalos sought a study and helped keep the issue alive throughout the years. Progress stalled until former Supervisor Malia Cohen called for a feasibility task force, which met throughout 2018, propelled by divestment activists. After some bumps, the Treasurer’s Office released its report in March that estimated a fully-fledged bank would take $119 million in start-up costs and 56 years to break even. (A hearing on how they got to this number is anticipated for December or early January.)
“This is a result of the grassroots movements led by working-class organizers who just want a fairer economy and livable planet for future generations,” said Jackie Fielder from the San Francisco Public Bank Coalition, of the legislation.
Now, the public bank fever has hit City Hall. The Board of Supervisors unanimously co-sponsored and passed a resolution calling for a bill like AB 857 in March and have pushed the Treasurer’s Office to think bigger. Before its introduction, Fewer’s legislation had Supervisors Shamann Walton, Gordon Mar, Aaron Peskin, Vallie Brown, and Matt Haney as cosponsors.