LOS ANGELES — Los Angeles City Council President Herb Wesson said Monday that he will propose establishing the city’s first public banking institution.
Wesson said he’ll file a motion this week calling for the council to authorize a search for a “banking expert” to help the city get a public bank up and running. The move comes several days after Gov. Gavin Newsom signed into law AB 857, which allows statewide establishment of public banks.
“I do believe that this is the way that government is supposed to work, where we partner with the people … together trying to affect change,” Wesson said. “Rarely do people have the chance to make history, and I just want to say to everyone standing beside me and behind me, that you folks have made history.”
Public banks are intended to focus local investment by offering business loans and could be used to finance public supportive housing among other projects, according to proponents of the system.
The public banking system gained national notoriety in 2016 after activists at the Dakota Access Pipeline called for divesting from large banks that financed portions of the project. North Dakota has had state-run banks for the last 100 years.
Assemblyman Miguel Santiago, D-Los Angeles, who supported AB 857, said public banking was the one controversial issue he’s seen where the public’s voice was effective enough to sway the Legislature’s vote without a lobbyist’s involvement.
Trinity Tran of Public Bank LA and the California Public Banking Alliance said divesting from public banks could keep the money within local communities. The city could also partner with credit unions, and the bank would be a government nonprofit organization overseen by an independent board of directors and managed by professional bankers.
“Our cities in California, cities across the nation, spend billions in debt services to borrow money from Wall Street banks that leverage our public funds to finance these destructive, harmful industries that our communities actively fight against,” Tran said.
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