{"id":7900,"date":"2018-02-23T10:48:46","date_gmt":"2018-02-23T18:48:46","guid":{"rendered":"http:\/\/occupysf.net\/?p=7900"},"modified":"2018-02-23T10:48:46","modified_gmt":"2018-02-23T18:48:46","slug":"san-francisco-launches-high-profile-public-bank-task-force","status":"publish","type":"post","link":"https:\/\/occupysf.net\/index.php\/2018\/02\/23\/san-francisco-launches-high-profile-public-bank-task-force\/","title":{"rendered":"San Francisco Launches High-Profile Public Bank Task Force"},"content":{"rendered":"
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By<\/span>\u00a0STEVE DUBB<\/a><\/span><\/span>\u00a0|<\/span>\u00a0February 23, 2018 (nonprofitquarterly.org)<\/h5>\n<\/header>\n
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February 19, 2018:\u00a0\u00a0Next City<\/a><\/p>\n

\u201cState and local governments hold around $458 billion in deposits,\u00a0according to the Federal Reserve Bank of St. Louis<\/a>, while state and local pensions hold\u00a0$3.7 trillion in investments<\/a>,\u201d notes Oscar Perry Abello in\u00a0Next City<\/em>. Right now, these deposits are typically at the\u00a0Big Four<\/a>\u00a0banks of JPMorgan Chase, Bank of America, Wells Fargo, and Citi. But that may shift if\u00a0public bank advocates<\/a>\u00a0prevail.<\/p>\n

This month, in San Francisco, the city\u2019s Board of Supervisors launched a\u00a0municipal bank feasibility task force<\/a>, headed by the City Treasurer, to study launching a public bank. Included on the task force are representatives from community banking, a credit union, the San Francisco Chamber of Commerce, the California State Treasurer\u2019s Office, the Mayor\u2019s Office of Housing and Community Development, and the California Reinvestment Coalition.<\/p>\n

The public bank idea, as\u00a0NPQ<\/em>\u00a0has outlined<\/a>, is for cities and states to own their own banks. This may sound outlandish, but the state of North Dakota has operated its own bank since 1919. Today, that bank has $4.9 billion in deposits and $7.3 billion in assets, while making $4.8 billion in loans. The bank functions as a \u201cbanker\u2019s bank,\u201d helping capitalize community-based banks, rather than relying on individual accounts. As a result, \u201cNorth Dakota has\u00a0more banks and credit unions per capita than any other state<\/a>.\u201d The Bank of North Dakota also earns a profit for the state,\u00a0earning $136 million<\/a>\u00a0last year, its thirteenth consecutive year of record profits, the bank says. Abello reports that the bank annually contributes $30\u201350 million to the state\u2019s general fund.<\/p>\n

For San Francisco, Abello writes the city took in last year an \u201caverage of $508 million a month in revenues and put out $467 million a month in expenses. But in between, the banks that handle all that cash sometimes used public dollars in ways that, in the opinions of [San Francisco City and County Supervisor Malia] Cohen and others, contradict the reasons why that money is coming and going in the first place.\u201d<\/p>\n

\u201cThe existing banking and financial structures we\u2019re operating in don\u2019t always mirror our city\u2019s values,\u201d Cohen says. \u201cFor example, we had many people opposing the Dakota Access Pipeline. Many of the banks we bank with support the funding of this pipeline.\u201d<\/p>\n

Spurred by the fake accounts and related scandals at\u00a0Wells Fargo<\/a>, a number of cities\u2014including Portland (Oregon), Philadelphia, Chicago, Seattle, and New York City, to name a few\u2014have pulled their deposits. Certainly, this move makes sense, but moving money from Wells to, say, Bank of America has limited impact.<\/p>\n

San Francisco is not the only place to pursue a public bank. Other cities on this path include Oakland, Seattle, Los Angeles, Santa Fe, Washington D.C., and Philadelphia. Abello adds that state efforts are moving forward in New Jersey, where newly inaugurated Governor Phil Murphy\u00a0campaigned on creating a public bank<\/a>.<\/p>\n

In San Francisco, Cohen envisions that a public bank could help the city invest more in housing, as well as \u201cfinancing small businesses run by minorities, women, veterans\u2014those who don\u2019t have access to the same level of capital.\u201d<\/p>\n

The\u00a0California Reinvestment Coalition<\/a>, which has traditionally focused on ensuring that banks reinvest in low-income neighborhoods, is also supporting the public bank effort. Executive director Paulina Gonzalez says that, \u201cThere\u2019s a real interest in cities and states to think about what they can do to ensure that there\u2019s a banking model in place that is as able to reinvest tax dollars back into communities.<\/p>\n

Abello points out that, \u201cBased on population size\u2014approximately 758,000 in North Dakota and 865,000 in San Francisco\u2014a San Francisco public bank could eventually be as large and financially profitable as North Dakota\u2019s, if not more so, given the city\u2019s overall wealthier population and higher property values.\u201d<\/p>\n

Certainly, the public bank idea is gaining steam. But challenges remain. Chief among these is governance. Ellen Hodgson Brown, founder and chair of the Public Banking Institute, emphasizes that a public bank does not mean politicians approving loans. The North Dakota model makes sense, says Hodgson Brown, because the public bank supports local banks and those \u201clocal banks deal directly with the customers.\u201d Of course, the concept of arms-length governance is not new. As Abello points out, \u201cLocal and state housing finance agencies everywhere already issue tax-exempt bonds to finance affordable housing projects.\u201d<\/p>\n

Rebecca Foster, who heads the San Francisco Housing Accelerator Fund, also expressed support for the public bank concept. \u201cIf governments like the city or even the state could figure out more effectively how to link the investments of some of their deposits, even a very small portion\u2026to local activities they support, that could be incredibly powerful,\u201d Foster says.<\/p>\n

Last November, Abello reports, the city\u2019s Budget & Legislative Analyst\u2019s Office published\u00a0an analysis of community responsive banking<\/a>. The study affirmed the city\u2019s legal authority to charter a public bank. The study also found that a public bank could save the city money, such as the $864,000 a year San Francisco pays in fees just for short-term cash management accounts. The study has now also led to the creation of the city\u2019s task force, which just held its first meeting. The task force is scheduled to meet six times between now and August, before issuing recommendations. Legislation, Cohen says, should be expected in the fall.\u2014Steve Dubb<\/p>\n<\/div>\n