Public Banking Act Passes CA Legislature
September 12, 2019 - SACRAMENTO — Today the California State Legislature passed the Public Banking Act (AB 857) in a historic victory for economic democracy over Wall Street lobbyists. The bill now heads to Governor Newsom, who has previously expressed support for a California state public bank, for his signature.
The vote positions California to become the first state in the nation to empower city- and regional-level public banks as a safe and accountable alternative to the predatory Wall Street megabanks that crashed the global economy in 2007-08.
“Cities and counties across our state will finally have a pathway to establish publicly-owned banks and prioritize the common good,” said Trinity Tran, co-founder of Public Bank LA, a member of the California Public Banking Alliance. “We are deeply grateful for Assemblymembers David Chiu and Miguel Santiago’s leadership on this issue, the 19 legislators who stood with us as co-authors, and our grassroots coalition organizers and supporters for their work in securing this critical victory for all Californians.”
The bill launches a pilot program allowing 10 public bank charters to be issued over a seven-year trial period. It also guarantees at least three levels of regulatory oversight, including the Department of Business Oversight, FDIC, and the Federal Reserve.
These banks would be empowered to invest in affordable housing, infrastructure upgrades, small businesses, clean energy, and other local projects, giving municipalities a voice in determining the future of economic development in our communities.
“For too long, Wall Street has devastated California communities through discriminatory lending, mortgage fraud, and investments in private prisons and gun manufacturers,” said Sushil Jacob, senior economic justice attorney with the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area, another CPBA member. “Governor Newsom has talked before about the need to break Wall Street’s choke hold on state finances and reinvest in our communities. This bill does just that.”
More than 180 organizations ranging from labor unions to advocacy groups to cities and counties across the state, along with the California Democratic Party, have endorsed the legislation.
The California Public Banking Alliance (CPBA) is a coalition of public banking activists in California working to create socially and environmentally responsible city and regional public banks.