Supervisor proposes first public bank in SF

Eliza Flynn

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Supervisor Sandra Lee Fewer proposed that San Francisco creates a task force to oversee the formation of a citywide public bank to help fund projects that benefit the public and address local issues.

The “Public Bank Planning Task Force” would comprise nine seats, seven appointed by the Board of Supervisors made up of three experts from financial institutions and four community representatives. One seat would be filled by the Office of the Controller, and the last by the Office of the Treasurer and Tax Collector, according to the bill.

“Colleagues, I’m thrilled to announce legislation to develop the business plan for the first public bank in San Francisco,” Supervisor Sandra Lee Fewer said at the Nov. 12 Board of Supervisors meeting.

Public banks use public funds to allocate low interest loans to private business projects that contribute to public life, such as affordable housing, infrastructure and transportation. The city of San Francisco currently uses Bank of America and U.S. Bank to allocate its $12.3 billion budget.

Housing advocates have long pushed for public banking in California as a proposed solution to the state’s affordable housing crisis.

California has the largest unhoused population of any state, with an estimated homeless population of 130,000 people, according to the United States Interagency Council on Homelessness. The figure makes up nearly a third of the homeless population in the United States.

“A public bank can and should balance both fiscal solvency and investments in residents, businesses, and sectors that reflect San Francisco values, advancing issues of social, economic, gender, racial and environmental equity,” Fewer states in a draft of the bill.

The proposal for a public bank in San Francisco came after the California State Assembly passed the Public Bank Act, AB 857, in October. Starting Jan. 1, 2020, local city and county governments are allowed to start or sponsor a public bank. 

The California bill states that public banks would help strengthen local economies. Assemblyman David Chiu (D-San Francisco) and Assemblyman Miguel Santiago (D-Los Angeles) authored it.

“Today’s signing sends a message that California is putting people before Wall Street profits,” Chiu told Los Angeles Times.

California is the second state in the country to authorize public banking. North Dakota established its public bank, the Bank of North Dakota, in 1919. 

San Francisco Treasurer José Cisneros mapped out the possibility of a public bank in San Francisco in a report released in March. The goal was to identify the local costs and benefits of a public bank. 

The report details three potential systems of public banking — reinvestment, divestment and combination.

A reinvestment bank would focus on lending funds to affordable housing and small businesses, a divestment bank would manage San Francisco’s budget and a combination bank would perform both functions.

“A municipal bank presents an opportunity to achieve community goals, such as divestment and reinvestment, in a sustainable and creative fashion,” the report states. “However, it is also a time-intensive and expensive endeavor.” 

Nonetheless, the report also recognizes that the long-term benefits of a public bank are uncertain.

In November 2017, Supervisor Fewer released a public bank report looking into “community-supportive banking” options, and how the city can start to invest in public banking.

“A public bank would allow the city to have a more local control, transparency, self-determination and expect investments in affordable housing, small business development, loans to low-income households, renewable energy and reducing student debt crisis,” Fewer said at the Tuesday meeting.