At the end of 2019, Governor Gavin Newsom signed the California Public Banking Act — or AB 857 — into law. It’s the first law in the nation that allows cities and municipalities to create public banks, and establishes some guidelines and protections.
Public banks are different from privately owned banks because they invest their money locally and aren’t motivated by maximizing profits. Establishing a public bank is a way to shift economic power from private shareholders to local communities. They can be owned by a city, county, or other local municipality, and invest in things like affordable housing and public infrastructure.
Right now, there’s only one public bank in the U.S.: the Bank of North Dakota, which was founded in 1919.
Under AB 857, public banks are required to obtain a banking charter from the California Department of Financial Protection and Innovation and meet the same financial and regulatory standards as commercial banks. They are also subject to transparency laws such as the Brown Act and Public Records Act.
The proposed legislation from Supervisor Fielder’s office would tax certain financial institutions — like credit card companies, consumer lending companies, and mortgage brokers — to create a public bank for San Francisco. According to reporting from Mission Local, it’s the most concrete step a city official has taken to create a public bank here since 2023.
The measure will need the support of at least three other supervisors to make it onto the ballot. If it makes it to the ballot, it’ll need to be approved by two-thirds of voters in November.
