San Francisco — The Board of Supervisors took a historic step last Tuesday as they unanimously passed an ordinance that starts the process of founding the nation’s first municipal public bank. The public bank would be run by the City and would reinvest millions of dollars of public revenue in economic recovery, affordable housing, small business loans, and green infrastructure.
Support for a municipal public bank has steadily grown since the 2008 financial crisis in which private investment banks recklessly bet away billions in pensions and were subsequently bailed out with public funds. In San Francisco, the SF Public Bank Coalition has been advocating that the city divest its more than $12 billion in public revenues from private banks and put it instead in a State-chartered, city-owned bank.
In January of this year, the SF Public Bank Coalition partnered with Supervisor Dean Preston to introduce the Reinvest in San Francisco Ordinance. The Coalition also partnered with the California Public Banking Alliance to introduce AB 1177 at the State level to close the racial wealth gap by creating publicly administered checking accounts for all Californians and finally expand the right to basic financial services to California’s unbanked residents, comprising roughly 25% of the overall population and nearly 50% of the state’s Black and Latinx population.
Supervisor Preston, who championed this ordinance, said in a press statement “The pandemic has laid bare the deep disparities that exist along social, economic, and racial lines….As we chart a path to economic recovery, we need to look beyond corporate banks that prey on our most vulnerable communities.”
Since today San Francisco banks with over a dozen Wall Street giants, the billions in public funds collected by the City are currently invested in opaque and risky financial instruments. In contrast, a public bank — as any public institution — would serve to invest in the needs of San Francisco voters rather than the profits of shareholders. The funds would also be reinvested in San Francisco’s businesses, infrastructure, and people.
“COVID-19 crisis has plunged communities that were already struggling into further poverty and homelessness,” said Reina Tello, a community organizer at grassroots activism nonprofit PODER. “A public bank in San Francisco will provide an economic lifeline to San Franciscans for years to come. We can invest in what our people need, such as financing affordable housing, investing in small businesses, and building an economy that meets people’s needs.”