Public Banking Will Be on the Ballot in L.A. this Fall

[brooklynite]

Next City:

The Los Angeles City Council is moving forward with a proposed ballot measure that would ask voters this fall whether they want to create a publicly owned bank.

In a unanimous vote, council members on Tuesday, June 26, gave the go-ahead to begin the process of adding a measure on the November 2018 ballot that would amend city charter in order to create a city-owned bank. The city’s code currently prohibits it from entering into a “purely commercial venture,” unless it’s approved by voters.

To advocates, this move is a historic one that can set the tone for other public banking movements happening across the nation.

“The outcome will reflect the pulse of the national movement,” says Trinity Tran with the Public Bank LA campaign.

[haele]

1. Interesting. Will it be a credit union or an actual chartered "bank"

with augmented funding from investor shareholders that expect a significant return on any profits, or a mix of member shareholders and investor shareholders where the profits are split between members and investors on a fixed rate of return?

Will it be a straight up commercial checking/line of credit, savings (including education/HSAs, and basic retirement) and basic loans (mortgages, signature loans, auto), or will there be other financial products (insurance, non-savings based investment products, and SBA/International business services)?

I've always been a proponent of the idea of basic service Post Office banks, that have free or low flat fee checking, savings, and bill paying services for the average person or someone who may not have a stable address and/or is receiving government assistance.

I would hope that a public bank like this might serve a similar purpose; it would certainly give the average person a far better options to the Check Casher/Payday lenders and Money Transfer boondoggles that litter low income regions of the city of LA.

Haele

[Blue_true]

2. I am not sure that a public bank is a good idea.

People that would need to use it typically don't have a lot of money and are likely to overdraft at a high rate. The city is better off offering debit cards that people can have pay checks and other funds routed into, the city can set up no fee ATMs in city facilities where people can get some of their cash. It can also offer no fee debit card payment for things like utility bills and fees for city or state services. The debit card can come with a small monthly fee to fund things like ATM setup and maintenance. The advantage of a debit card for the city is that it can't be over drafted like a checking account can, so the risk to the city is minimized while it provides needed services to people that can't get traditional bank accounts.