California State Public Bank Bill AB 310 Moves Forward in 2021
Reinvest, Rebuild and Recover from COVID-19
By Brett Garrett, Rick Girling, Susan Harman, Debbie Notkin, Trinity Tran
Public banking took a gigantic step forward on Monday as the Senate Governance and Finance Committee under Chair Senator Mike McGuire heard informational testimony for AB 310, which will establish the California state public bank to address the catastrophic economic consequences of COVID-19. This historic hearing confirmed that Treasurer Fiona Ma and Controller Betty Yee will work closely with the California Public Banking Alliance (CPBA) and legislative authors Assemblymembers Miguel Santiago (D-L.A.) and David Chiu (D-S.F.) in the coming months. With their support, the bill is likely to be passed and signed into law during the next legislative session in 2021.
While abbreviated legislative sessions resulting from the pandemic postponed a vote on AB 310 until the next session, the support of the Treasurer, the Controller, and the chair of the Senate Governance and Finance Committee has given public banking advocates and financial experts a chance to refine the proposal to grow its support, popularity and efficacy, and see it passed and signed into law next year.
“AB 310 is about shifting power away from big Wall Street banks and back into the hands of our real shareholders; the taxpayers,” said Assemblymember Santiago. “As we deal with the ghastly economic crash from the pandemic, we simply do not need to be suckered into the predatory banking practices of Wall Street. The state bank is a direct, efficient, fast way to give small businesses, local governments and the people of California financial peace and justice.”
“We made history together with AB 857 last year, which made our state the first in 100 years to allow locally-chartered public banks. A state public bank builds on this progress and makes an overdue investment in our financial infrastructure to promote the social good. I look forward to revisiting this conversation next year and continuing to ensure that the public’s money works for the people,” said Assemblymember Chiu.
In a letter to Chair McGuire, Ma commended the AB 310 authors “for trying to address the economic impacts due to Covid-19 as well as supporting historically marginalized communities across California” and said that she looks “forward to working with the advocates over the next 6 months on coming up with a workable solution.”
Within a few weeks of the bill’s introduction, AB 310 garnered unprecedented support from over 80 organizations and 220 delegates of the California Democratic Party, including endorsements from United Food and Commercial Workers Western States Council, SEIU California, and Los Angeles County Federation of Labor, AFL-CIO. Union President John Grant made clear labor support for the legislation. “On behalf of the over 30,000 members of the United Food and Commercial Workers Local 770, we strongly support the creation of a public bank for the State of California. In this moment of crisis, grocery, retail drug and packing house workers are struggling in very basic ways as essential employees. If nothing else, the global pandemic gives us the opportunity to rethink equity and how we best respond to a likely imminent global recession. A public bank is a necessary part of the overall recovery.”
Public banking proponents Sushil Jacob from the Lawyers’ Committee for Civil Rights of SF and Paulina Gonzalez-Brito of California Reinvestment Coalition presented powerful arguments for a state bank. They reminded everyone that communities of color have been the first and hardest-hit victims of the economic crisis with 42% of African-American-owned small businesses shuttered compared to 17% of white-owned businesses. Access to capital is vital to rural and urban municipalities that have been robbed of tax revenue due to business closings and record unemployment. AB 310 reimagines banking by providing California with an alternative to Wall Street banks, keeping funds in the state rather than siphoning money to out-of-state actors. Under AB 310, funds in the state coffers will be efficiently utilized for reinvesting and rebuilding devastated communities, leading to a vibrant and sustainable recovery from COVID-19.
The state bank will provide a counter to the global banks that have mishandled and profited substantially from funds allocated to address the current financial crisis. Wall Street banks gave priority to large corporations in distributing Paycheck Protection Program (PPP) funds, leaving little or nothing for struggling small businesses. The Federal Reserve Bank handed out billions to the largest banks at near-zero interest with no strings attached while making municipalities beg for funds at above-market rates with onerous constraints. As Jacob explained, AB 310 is a better way. “We can invest our state and local dollars in job creating, income producing and climate-change adapting projects. That is the promise of AB 310.”
Public banking has a long history in growth-oriented economies such as Germany’s, as well as our own home-grown public Bank of North Dakota celebrating 100 years of successful operation. These are times that require new approaches, and fortunately Treasurer Ma and Controller Yee together with Senator McGuire are contributing their expertise to a collaboration with public banking advocates, California labor, and other stakeholders to find the right solutions for ensuring that California’s money does the most it can to help Californians.
The desperately needed California state public bank will allow us to thrive again sooner, setting the pace for the nation.
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.