California Opens Door For San Francisco Public Bank

California Governor Gavin Newsom has signed legislation allowing for the establishment of public banks in the state, and advocates in San Francisco are jumping at the opportunity.

Governor Newsom signed the state’s Public Banking Act last week, which, The Guardian reports, enables city and county officials to sponsor public banks, which proponents say could offer significantly lower interest rates than private institutions.

State Assemblyman David Chiu, co-author of the legislation, described last week’s bill signing as an initiative that “sends a strong message that California is putting people before Wall Street profits.”

Affordable housing is one of the focal points of the regulatory initiative, and advocates say creating a public bank would enable the institution to prioritize affordable financing over profits. These institutions would connect other public entities to financing, reports explained, so they can fuel various projects to support the local community.

Already, efforts to establish a public bank are underway in San Francisco, where the San Francisco Public Bank Coalition is applauding the governor’s decision to sign the bill into law.

“We want to get as much of our city’s taxpayer dollars out of Wall Street so we can recapture that money and invest in our city,” said the coalition’s co-founder Jackie Fielder in an interview with the San Francisco Chronicle last week.

Small businesses are another top focus for proponents of public banks, particularly in California’s legal marijuana industry.

However as reports noted, the legislation sets out a path to create a public bank that would take years, and public support for such an initiative has been in flux largely thanks to complexity of doing so. A state-run bank could connect small businesses in the cannabis sector with legal banking and other financial services while the future of federal legalization of marijuana — and of banking the sector — remains uncertain.

California’s legislation would allow no more than two public banks to receive a license per calendar year, and caps the total number of public banks at 10.

According to reports, the nation’s only public bank currently operates in North Dakota, and was established in 1919.