California Legalizes Public Banks

From the Standing Rock movement came Indigenous activities across the nation to divest from banks that supported the Dakota Access Pipeline. The growth of the movement to divest brought to light one of the biggest issues concerning economic justice in the United States: banks that do not support the real economy.

The Indigenous divestment movement engendered into public consciousness the need to better secure public assets, such as pension funds.  Banks into which state, local, and the national government invest public money that’s used in for-profit speculation rather than in local communities hurt the real economy. This issue raised the question of alternatives.

Gov Newsom Legalized Public Banking

California Legalizes Public Banking

California is one jurisdiction that provided an answer to that question.

In September, the California State Legislature passed Assembly Bill 857, a law that allows public banking in our state and the establishment of a banking framework that includes socially responsible charters, anti-corruption clauses, transparency, a board that includes community development professionals, and prohibitions on retail locations and on unbalanced competition with community banks and credit unions. Gov. Gavin Newsom signed the bill into law on October 2nd.

Sushil Jacob, a senior staff attorney for economic justice with the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area, explains that, somewhat like nonprofits, the boards of public banks are made up of community members who have business experience. It is then the responsibility of the community to monitor board members in staying true to community values, such as investment in affordable housing, making student loans more affordable, saving people from foreclosure, and creating more infrastructure to defend against the effects of climate change.

Jacob continues that, while it is important to pressure the federal government on such issues, real change is going to take place at the state and local levels.

For more information on public banking, see YES! Journalism for People Building a Better World, from which this information was taken, and The Los Angeles Times: Public banks can be formed in California: Newsom signs new law.

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