Seven months after convening the Municipal Public Bank Task Force and after, presumably, seven months of research, public bank advocates expected Treasurer Jose Cisneros’s office to present a full draft of a long-anticipated report at the last Task Force Meeting. The Treasurer, instead, had only a draft of a Executive Summary to show the public and task force members. Too many questions remain unanswered by the task force as it comes to a close in just 42 days.
For some background, the city currently entrusts $200 million of cash and $8 billion of investments to Wall Street banks like Bank of America, Citibank, U.S. Bank, and dozens more. Organizations have exposed Wall Street financing of fossil fuels, prisons, assault weapons, and weapons of war. Since the Great Recession — caused by reckless Wall Street banks — the economy has left behind the middle class and lower income people, while allowing for Wall Street to adorn their executives with generous bonus checks. Today, these far-off Wall Street shareholders and executives laugh their way to the bank with upwards of $69 million of our hard-earned taxpayer money each year as San Franciscans endure a permanently affordable housing crisis, lose legacy small businesses, set ambitious yet necessary renewable energy infrastructure goals, and sink into indentured servitude to pay off student loans.
Despite all these compelling reasons for a municipal public bank, the Treasurer has not clarified whether his office will be conducting a holistic cost-benefit-analysis of establishing a municipal public bank versus keeping city taxpayer money in the hands of Wall Street banks. If he wanted to, he would first define a municipal public bank, according to a handful of public bank experts with whom his office has had contact throughout the task force. He would then conduct a holistic cost benefit analysis including not just the expenses and benefits of establishing a municipal bank, but also the expenses and benefits of maintaining the City’s current relationships with Wall Street banks. The expenses of the latter should include the opportunity cost of earnings forgone from not investing city taxpayer money in sectors such as permanently affordable housing, renewable energy infrastructure, small businesses, and student loans, especially student loan forgiveness for teachers.
In his final report, the Treasurer could explain to the public the success of the public banks like Bank of North Dakota (BND) and Territory Bank of American Samoa, especially the key practice at BND of cooperation, rather than competition, with in-state credit unions and banks. This means BND does not originate its own loans, but rather partners onto existing loans in four major lending sectors: businesses, home mortgages, student loans, and agriculture. By recycling bank earnings into North Dakota’s General Fund, BND has alleviated taxpayer burdens by more than $3,300 per family since the early 1990s. The Treasurer can also assure skeptics that the BND is not FDIC insured, but is rather “guaranteed” by the state of North Dakota—meaning that if it were to ever go into the red, the state would simply raise taxes to save it. At the end of his cost-benefit-analysis, it would be helpful for the public to see how much a public bank could save current and future San Francisco taxpayers over next several generations.
Lastly, the Treasurer needs to provide in his final report a clear path to establishing a municipal-owned public bank, in case the City chooses to do so some day. Anyone who reads the bank organizing application to the California Treasurer’s office can infer that the first steps to establishing a municipal public bank are to put before San Francisco voters (1) mission and principles of the Bank; (2) a governance model with appropriate levels of autonomy, community representation, transparency, and accountability; and (3) “bank organizers” in the Treasurer’s office to facilitate the process of applying to the California Department of Business Oversight for a state charter, on behalf of the Bank’s Board of Directors. State legislators can help by codifying an official public bank license within the Department of Business Oversight that defines a public bank.
Thanks to bold grassroots movements in North Dakota and American Samoa, the public bank movement transcended the confines of a pipedream long ago. With a homelessness and displacement crisis on our hands, lofty but necessary renewable energy goals to achieve by 2030, and a student debt crisis, we need to find tried and true ways to finance our future. With public banking, we have nothing to lose but millions in debts, fees, and opportunity costs.