The Los Angeles Public Bank could use the city’s existing deposits as its primary source of funding. Right now, the City of Los Angeles holds billions of dollars in checking and short-term investment accounts at commercial banks. These accounts generate little interest and come with significant banking fees. Much of the city’s money sits idle in low-yield accounts. The Reserve Portfolio alone holds over $7.2 billion, with about 75% invested in treasury bills that mature in 2.9 years and earn just 2.76%. These funds aren’t being put to work for Angelenos. Moving even a small portion into a public bank would allow the city to lower costs and reinvest public dollars into the local economy. Los Angeles currently spends over $340 million per year on banking fees and pays $1.4 billion annually in debt service, which includes both principal and interest.

A public bank wouldn’t replace the city’s existing financial tools, it would work alongside them. It would give the city more control over how its funds are managed and help keep money circulating locally for public priorities like affordable housing, transit, and clean energy. The bank would begin with a narrow focus and expand lending over time as it builds reserves and reinvests earnings.

Start-up capital could come from several sources: budget appropriations, earnings from city investment pools, voter-approved bonds, or federal grants. The mix of funding would depend on the size and scope of the bank.

Once it receives a California State Public Bank Charter, as allowed under the California Public Banking Act, the Los Angeles Public Bank can accept deposits from city departments and nearby public agencies. It may also receive funds from pension systems, socially responsible mutual funds, and other institutional investors. The bank can also partner with community lenders to move capital into projects that meet local needs.