Build a public bank in S.F.

The Municipal Bank Feasibility Task Force has met twice since it formed and will submit a report outlining its recommendations for San Francisco following a sixth meeting in July. (Courtesy photo)

By  on May 17, 2018 (

San Franciscans deserve a public bank, one that invests The City’s money into local projects that reflect our values. San Francisco has nearly $10 billion we store on the balance sheet of big banks that could go to capitalizing a public bank.

The decisions of where we put our money fall to elected Treasurer Jose Cisneros. Cisneros should actively push for the creation of a bank, and for storing as many of our dollars as possible there. The Treasurer’s Office has repeatedly pointed to state laws around safety, stability and soundness to avoid moving money out of U.S. Bank and Citibank, and it is looking to those rules now to avoid building a public bank. This interpretation of state law is improper and overly constrained. A carefully constructed and well-governed public bank will be safe.

Last fall, nearly 10 years after the financial crisis, the treasurer launched an initiative that could lead to up to a mere $80 million worth of investments in San Francisco-based financial institutions over the course of a year. Impacting less than one percent of The City’s portfolio, this step is much too timid for a city as forward-thinking as San Francisco.

A public bank would serve San Francisco in many ways; first and foremost as a place to ethically store our public dollars. With a public bank, we can ensure that our deposits do not go toward fossil fuel emissions, gun manufacturing or purchases or support of unfair labor practices. We also provide that any profits made off our deposits don’t go to the bottom lines of big banks but rather get reinvesting into our community.

More pointedly, a public bank would save The City money we pay directly to big banks. We currently pay upward of $2 million each year in banking fees just related to The City’s bank accounts. With a public bank, these taxpayer dollars wouldn’t contribute to Wall Street profits, and would instead be invested in San Francisco. Similarly, the bank could also issue city bonds so we don’t have to pay investment bank fees, while the interest earned from public bank loans could be continually reinvested into projects that benefit The City.

With a public bank, we can decide where our dollars go. A public bank could start by helping to fund public infrastructure, provide a stable lending based toward affordable housing and to serve as a “banker’s bank,” which is just a fancy way of saying it could provide low-cost deposits to great local banks and credit unions that would provide bank accounts to local unbanked residents and personal loans and small business loans to folks who can’t access credit at large institutions. This lending to community banks would spur local economic growth and ensure that our pooled investment accounts go to benefit San Franciscans first.

Built on earlier efforts by former Supervisor John Avalos, supervisors Sandra Fewer and Malia Cohen stepped up and advocated for a public bank. Fewer went ahead a requested a detailed policy analysis. The report, delivered in November 2017, concluded that San Francisco had the legal authority to charter a public bank and outlined five key steps involved in setting up and funding an independent bank.

Under pressure, the Treasurer’s Office launched the Municipal Bank Feasibility Task Force, which has met twice.

The task force’s stated policy goals are worthy: to fill gaps in banking for equitable community development; to serve the under-banked, including individuals, small businesses and cannabis businesses; to invest in infrastructure and affordable housing; and to create an environment that confers public benefits related to banking.

After the task force’s sixth meeting, scheduled for July, it will submit a report outlining its recommendations. There are already strong indications that the task force is backpedaling away from a public bank structure and instead considering half-measures, such as a Community Development Financial Institutions Fund. While CFDIs have their place, such an institution wouldn’t begin to leverage the power of San Francisco’s public funds. We deserve better.

Modern technology tools make it possible to build, scale and maintain a bank more efficiently. We should establish an ethical, future-looking bank that reflects our values and benefits our city rather than focusing on how banks have been built in the past.

San Francisco can and should lead the charge in creating a public bank that operates with full transparency, in alignment with community values and in a way that reinvests in its residents. Too frequently, I have seen some elected officials choose the more comfortable, more conservative path rather than doing the more difficult but more publicly minded one. The Bay Area is known for disrupting industries, and it’s time the Treasurer’s Office took part in that disruption by building a public bank rather than serving the national ones.

Zac Townsend is the former chief data officer of California, the former co-founder of open-banking startup Standard Treasury and is currently a partner at Deciens Capital, a San Francisco-based venture capital firm focused on early stage financial technology.

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