San Jose’s elected leaders are debating whether to endorse a state bill that would give Californians an alternative to mega-banks like Wells Fargo and Citibank—companies increasingly under scrutiny over ethical lapses, wage theft and dubious investments.
AB 857, introduced by assemblymen Miguel Santiago (D-Los Angeles) and David Chiu (D-San Francisco) would enable local governments to charter their own public banks. With the bill currently wending its way through the state Legislature, the San Jose City Council on Tuesday will decide whether to grant its official endorsement of the measure, which could lay the foundation for a first-of-its-kind public bank in Silicon Valley.
Unlike their shareholder-run counterparts in the private sector, public banks would be wholly owned by government entities such as a city, county or joint-powers authority.
The publicly owned alternatives would offer banking services to unbanked or underbanked populations and partner with other local financial institutions, such as credit unions and smaller community banks. They would also save taxpayers money by dispensing with the costly management fees charged by private institutions.
According to Chiu and Santiago, public bank funds—just like all banks in the United States—would be insured by the Federal Deposit Insurance Corporation (FDIC).
Council members Magdalena Carrasco, Sergio Jimenez and Raul Peralez, who teamed up earlier this year in a push for the public banking option, said the idea has a long history in the U.S. The Bank of North Dakota—widely considered a model for the public option—was established exactly a century ago in response to a farmers revolt against out-of-state banks foreclosing on their properties.
More recently, Bank2 in Oklahoma kicked off in 2002, around the same time as the Bank of American Samoa. Throughout the globe, about 14 countries operate some form of national, state or regional public banks.
“The city should be proactive in the legislative process and strongly consider how this bill could benefit the 10th largest city in America,” Carrasco, Jimenez and Peralez wrote in a shared in a shared memo supporting AB 857.
AB 857 is endorsed by about 100 organizations across the state, according to the California Public Banking Alliance, one of the bill’s main backers. Should the statewide bill pass, San Jose expects to launch an exploratory committee that would assess the feasibility of establishing a public bank to manage its billions of dollars in assets.
More from the San Jose City Council agenda for May 21, 2019:
- The city and Allied Waste have agreed to increase the maximum commercial solid waste rates by 1.85 percent, according to a contract up for consideration Tuesday.
- The city will consider a measure to rename the marijuana business tax the cannabis business tax. The measure would replace all mentions of the term “marijuana” and replace them with “cannabis,” the scientific name of the plant from which the cannabis drug is derived. The measure would also add manufacturing, distribution and laboratory testing to the categories of regulated cannabis businesses in the city. Currently, those categories of regulated cannabis are taxed by the city at 10 percent, but the council will discuss whether to slash that rate to somewhere between 1 and 4 percent. The new regulated streams of cannabis, according to a city memo, can bring up to an estimated $13.5 million for the renamed cannabis business tax.
WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260
> According to Chiu and Santiago, public bank funds—just like all banks in the United States—would be insured by the Federal Deposit Insurance Corporation (FDIC).
Silly me! I thought that sooner or later, progressives would run out of bad ideas.
They just keep coming!
A politician controlled bank insured by the taxpayers?
What could possibly go wrong?
Who in their right mind would entrust their savings to the mayor and city council? They can’t even fix our roads. They’d probably charge a monthly fee which they’d throw at the homelessness problem.
San Jose != North Dakota
Wells Fargo and other such criminal organizations should have been put out of business when their crimes were exposed. Their executives should have been jailed as well.
I’m all for alternatives to commercial banks, especially those that serve the retail market. We have alternatives already, which are credit unions. Credit unions provide all the same services as profit driven banks, but because they are nonprofit, they don’t have to set all those financial traps in order to keep growing to the point of being a risk to the economy.
There is also the idea floating around of having the US Postal Service provide banking services (remember, the USPS doesn’t operate with any tax money). So having an alternative to the criminal banks at the federal level (USPS), state level (what’s being proposed here) and at the local level (CUs), might not be a bad thing.
However, we know that Wall Street, home of the criminals, has a tight grip on the balls of Washington, regardless of party, so it won’t happen there. (Note there are a few people in Washington that aren’t scared of the banks, such as presidential candidate Elizabeth Warren, but that’s for a different time.)
Ditch the banks, people! Get an account at a local credit union!
Elizabeth Warren not a lackey for the banks……????
You need to get out more.
The banks are afraid of Warren. She’s onto their game, and she’s not taking their money, like all Repubs and most Democrats do. I’d like to keep her in her oversight role in the Senate, but if she does become Prez, she’ll be kicking some Jamie Dimon butt, with her first stop being to put the teeth and spine back into the CFPB.
Repeat: kick Wells Fargo and BofA to the curb! Go to your local credit union, you won’t be disappointed.
When my credit union went bankrupt it gave my $2500 to the state, It took a year and a half, hours of letter writing and several trips to have my documents stamped by a CPA and notary at $25 bucks a shot. SC Crazy just deposit all your money in the IRS, just don’t tell them you a Republican or you’ll never see another dime.
Really you’d trust Princes Pocahontas with money, I think I’ll start a bank!
> but if she does become Prez, she’ll be kicking some Jamie Dimon butt, with her first stop being to put the teeth and spine back into the CFPB.
I don’t know enough about Jamie Dimon’s butt to have an opinion about what kind of treatment it deserves.
But the CFPB is a HORRIBLE idea!
It’s a a rogue financial regulatory boiler room operation created inside of the Federal Reserve and funded by the Federal Reserve’s revenues. It is completely beyond the reach of the President or of Congress. It is an unaccountable zombie bot of some kind which apparently does what it damn well pleases and harasses institutions that leftist ideologues think need harassing.
The only good thing about the CFPB is that it doubles the incentive for blowing up the Federal Reserve. It makes it easier to justify launching two cruise missiles instead of just one.
SCC resident, start by fighting the local corruption in this county where even local non-profits agencies are corrupted. Their executives make big money out if their homeless clients’ needs. Are you afraid? Are you part of the solution or the problem?
> SCC resident, start by fighting the local corruption in this county where even local non-profits agencies are corrupted. Their executives make big money out if their homeless clients’ needs.
Are you sure you’re allowed to say that?
I was always told that non-profits were just people with big hearts.
Sorry to disappoint you bubble. Check salaries of local non-profit executives and you will find out they make more money than some of our local officials. Their clients are the least fortunate including the homeless. Yet, they plan their expensive retreats and eat out events at expensive places. You see these executives always being picture with DA, Liccardo, county supervisors, Zoe Lofgren…it is just a big corruptions of county insiders.
> Sorry to disappoint you bubble.
I’m SOOOOOO disappointed.
They all seemed like such nice people.
Are we idiots? Why would we even consider this?
Any time you mix money and politics and allow one to capture the other, you are robbing citizens of both their money and their freedom.
Consider Fannie Mae. Although it is supposed to be independent, politicians appoint people for the top roles. Fannie Mae was defended over and over by politicians from its own auditors who said they were playing accounting tricks. This culminated in bailouts in the HUNDREDS OF BILLIONS of dollars, which could have been prevented if politicians had not actively obstructed their auditors from doing the jobs.
To top it off, two political appointees Jamie Gorelick and Franklin Raines, paid themselves BONUSES of $118 MILLION during this time of book-cooking.
Please believe me. They will try to make the case that there are people who “deserve” credit but can’t get it. Politicians will blame a litany of causes and -isms for why those people are not receiving credit, without acknowledging the obvious: those people cannot consistently pay their bills.
This hack of a bank will get exclusively the worst credit risks of all, but through pandering for votes and through evidence-blind ideology, the bank will set “favorable” rates for all, absolutely guaranteeing defaults and bailouts.
We all lived through the subprime crisis.
Apparently, some people had no interest in learning any lessons from it.
Let’s not forget that the financial crisis of 2008 was all squarely in the hands of the private sector. It was the private sector banks that allowed borrowers to take loans they could not afford, and then these banksters would turn around and package up all those mortgages together and sell them to others, saying they were great investments.
That was a major private sector fail. That’s one lesson to learn.
Are you saying the Government never forced banks to make loans everyone know should have never been made, all on the basis of “equality and fairness”???
No wonder there are Democrats, they just just don’t know any better.
That plan to force loans onto everyone (banks, auto companies) came from George Bush and his buddies. The subsequent administration inherited that crap plan.
I remember that plan specifically. George Jr and his cohort of Repubs went to Congress with a one page draft bill that basically said, Give the Treasury Dept $700B for a bailout. That was it.
Does it really matter which party in Government forced the bad idea onto us? It was Government all the same.
Dear SC Crazy,
As usual you are wrong, the 2008 banking crisis started way back with Jimmy Carter. Banks were Red Lining loans that could not be repaid by barrowers, this lead to charges of racism and bias by the Social Justas crowd. The Community Reinvestment act was born to force banks to loan Federal Guaranteed money to people that could not possible pay it back. This latter went on to include more stupid regulations called the Dodd/Frank act. GW had nothing to do with this, matter of fact he tried to warn congress about it. But like today congress they were to busy trying to destroy the country and the president.
You are obviously to young to remember these things, and are prone to making the same mistakes your Socialist predecessors have made. It was the social engineers, and liberal Do-gooders in government that created the 2008 banking crises, and it was the tax payers and investors that payed it off and got screwed as usual.
No, the 2008 crisis didn’t start with Carter. It started with Clinton and that Repub congress at the time. They repealed most of the Glass–Steagall Act. Read about how that happened, and its effects here. This is what I remember, so I vouch for its accuracy.
And BTW, how come you resort to name calling? Kinda shows your immaturity. Or maybe you’re a Russian bot. I’m thinking the latter.
A much better approach:
If you want to make the market even more free and fair, look into peer-to-peer lending such as Lending Club and Prosper. This can cut out the payday lenders, credit cards, and banks.
The big financial players are very afraid of peer-to-peer lenders. Starting in 2009 they tried to get them shut down by forcing onerous amounts of regulation on them, which was almost entirely inappropriate. Banks can afford thousands of lawyers, they LOVE regulation to stifle competition.
They know that peer-to-peer will eventually eat them alive. People can pay 15% interest on a credit card, or pay 10% to a regular person on Prosper, and that person can get much better interest on their savings than the 1% paid at the bank. People win.
San Jose (and the county) can help by lending political muscle to allow the Peer to Peer lenders to grow. E.g., help cut the legal red tape required for vendors to accept a P2P credit card, or pay their property taxes in bitcoin.
These are market driven solutions that don’t end up enriching just a few people at the top, and don’t end with a taxpayer bailout.
Peer to peer has a place, but here we are talking about full banking services, not just lending/borrowing. Basic banking services includes checking accounts (daily movement of cash and payments), savings accounts, etc. As I read through the Assemby’s analysis of the bill, there are a lot of interesting objectives specified. I won’t mention any here, but leave the exercise to the reader to ferret those out (pro tip: it’s not difficult).
> As I read through the Assemby’s analysis of the bill, there are a lot of interesting objectives specified.
Probably a wasted effort on your part.
The lizards and weasels in Sacramento and Washington are much too cagey to specify their dirty work in understandable prose in a single bill or law.
The mischief is done by distributing the treachery in a hundred different interlocking pieces across a hundred laws and regulation all across and up and down the legislative spectrum.
You probably cannot find a single “law” that says that the Hillary Clinton campaign can hire a British spy to get information from the Russians and pass it to FBI insiders and get a secret warrant to spy on the Donald Trump presidential campaign.
But, it is apparently in the law somewhere and in some form that Hillary can do that.
@lloyd Alaban: The link to AB 857 is the wrong bill. This is the one you should link to:
Ya sure I’m a Russian bot.
Glass-Steagall had laterally nothing to do with 2008, your article even pointed that out.
Oh darn he read it!
This was all about “Social Justus” and “Redistributing of Wealth” a continuation of “The War on Poverty”
AKA “Restitution” to the former slaves that worked at Jimmy “Georgia Peanut Farm” to easy the guilty feelings of the Democrat party and their followers. Of course someone else should pay, “The Tax Payers” and the rest of us that had to barrow money at 11-20% interest rate. So we have paid over and over for slavery. People that never owned a slave to people that never were slaves. No one in 2008 was paying 20% interest. They just couldn’t pay back the money Barney Frank promised that Fanny Ma and Freddy Mac said they could cover. He lie his ass off.
Name calling; your not using your real name SCCRESIDENT is your Handle M.T.GUNN I mine, since I first added a comment on SJI I have been called names, I’ve been threatened, when I used my real name, my car was egged tire flattened, Tool boxes vandalized, I have thick skin, and I have had to deal with human hemorrhoids since I was in grade school. Got beat up, I stand up for my opinions, and when meet a bully, I’ll dish it out in kind.
You have a first amendment right to your opinion, as does everyone else here. Free speech is not a Sunday social, it’s a roller derby of words and you seem to be capable player and I enjoy sparing with you. Fire away!
This is a really bad idea, and the first step towards communism. It’s just another angle on control the money and control the votes.
Don’t get snowed by another “we are helping the people” bill. This will costs you, the taxpayers a lot of money to keep this going and it will get screwed up just like everything else they touch.
Mr. Licardo and his team should concentrate on making our day to day lives better through better services that are already existing. We need to stop voting for the same people running this place.