Later this year, on the midterm ballot, voters in Los Angeles, California, will be asked an uncommon question: Should the city be to allowed to create a public bank?
L.A.’s referendum, which would not itself create a public bank, has attracted the support of left-wing figures like New York congressional candidate Alexandria Ocasio-Cortez and filmmaker Michael Moore, in addition to advocates for legalized cannabis. And the idea is gaining traction to other blue cities and states. New Jersey’s Democratic governor, Phil Murphy, campaigned on the creation of a public bank. City officials in Washington, D.C., held a public meeting last month to discuss the possibility. The movement has also spread to New York City and Oakland.
A public bank is what it sounds like: a financial institution owned by the government, funded with taxpayer money, and directly accountable to elected officials and civil servants. For this reason, supporters believe they offer a transparent alternative to private banks like Bank of America, which was fined $42 million this year for lying to customers about its management of stock trades, or Wells Fargo, fined $185 million for opening fraudulent accounts for customers without their consent.
But the appeal of public banks extends beyond consumer protection to sound fiscal policy. The argument, as articulated by Demos in a 2011 report, says banks can offer lower debt costs to city and state governments, fund public infrastructure projects, and encourage entrepreneurship by providing loans to small businesses at lower interest rates and with lower fees.
“It’s a way to keep our money here as opposed to holding it in these large Wall Street banks that we pay egregious interest and financial fees to,” Kayvan Khalatbari, a mayoral candidate in Denver, told Westword. “This is not a new idea, these exist all over the