Public Banking Bill a Landmark in California

In the spring of 2019, Assemblymember Mark Stone (D-Scotts Valley) signed on as co-sponsor of AB 857—a bill introduced by David Chiu (D-San Francisco) that would pave the way for publicly owned banks by authorizing counties and cities to charter banks within their jurisdictions. 

The bill was signed into law in October.

Jennifer Wadsworth reported in Good Times in June that the legislation would allow for the creation of banks, mandated to operate in the public interest, modeled on an institution launched a century ago in North Dakota.

“The Bank of North Dakota is considered the only truly public bank in the U.S., and it’s held up as an archetype by advocates of alternative financial systems,” Wadsworth wrote.

“Founded 100 years ago to extend credit to broke farmers and ranchers, the Bank of North Dakota has evolved into a reliably profitable financial powerhouse. According to its 2016 annual report, the state bank recorded its 13th straight year of record profits, garnering more than $136 million in income while expanding its loan portfolio by $449 million.

“Proponents of the North Dakota model credit the publicly owned bank for helping the state glean from the booms and weather the busts inherent in today’s economy,” Wadsworth stated.

Similar efforts are under way in New Jersey, Oregon, Vermont, and Washington, D.C.

Read Jennifer Wadsworth’s article on AB 537 in Good Times.

Read an analysis of public banking legislation, including AB 857, in The New York Times’ California Today.

Read a deep dive about the roots of public banking, from Scotland to North Dakota, on the Web of Debt blog.