“Should Los Angeles establish a public bank?” LAist asked. Councilmember Eunisses Hernandez says yes, and we agree! With deficits growing and federal financial systems prioritizing profit over the public good, LA needs local control over its capital. A public bank lets the City do more with what it has – without raising taxes or cutting services.
Bank lobbyists have spread misleading claims. Los Angeles has never operated a bank. The failed LA Community Development Bank wasn’t a true bank, it was a loan fund that was “private sector-oriented.” It wasn’t chartered, didn’t take deposits, and lacked the structure and oversight of a regulated financial institution.
The LA public bank would be fundamentally different as a state-chartered, professionally managed, and fully regulated public bank – and accountable to the people, not private shareholders. It would be designed for long-term financial sustainability and public benefit, not private profit.
Opponents cite technical differences between the Bank of North Dakota’s (BND) reporting and GAAP (Generally Accepted Accounting Principles) standards, which is a weak excuse to discredit a century-old public institution. There is no financial mismanagement. The BND holds an A+/Stable rating from S&P, making it safer than Wall Street banks. It remains a successful public bank in the U.S., delivering 18% returns last year, with strong capital reserves, low default rates, and strong partnerships with CDFIS, community banks, and credit unions.
At a time when cities are being forced to do more with less, LA deserves a financial engine that actually works for Angelenos and our communities, not Wall Street profits.
Photo credit: Eric Kelly.
LAIST: SHOULD LA START A PUBLIC BANK
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