Tonight, Richmond city council members will discuss whether to chip in money to fund a study about opening a public bank in Oakland. That city has already gathered $100,000: $75,000 from its own coffers and an additional $25,000 from Berkeley. But Richmond is still considering adding to the pot, the first of many steps in establishing the Bay Area’s first public bank.
Susan Harman, a longtime public-banking advocate, said a major reason to participate is that a private bank’s “motive is profit and a public bank’s motive is the public good.” She argued that a local public bank wouldn’t be beholden to shareholders, and could save the city of Oakland a fair amount of money.
In 2016, the city of Oakland paid $56 million in interest to Wall Street, she said. Harman said that this money could be funneled back into the city and used for public projects, such as infrastructure, schools, and local businesses instead.
Public banking became a topic of conversation again after the 2008 financial crisis. Some proponents argue that a public bank would allow California cities to increase revenues by collecting tax revenue from marijuana sales more easily. But this might make the bank more vulnerable, as it would not be in compliance with federal regulations.
Critics also say that it will be difficult to establish good-governance practices for public banks. They claim that it would be nearly impossible to protect the bank from partisan and private interests, as well as corruption.
In recent years, public banking has come into vogue in California. Former Oakland mayoral candidate Dan Siegel included the formation of a public bank in his platform. Former Richmond city council member and candidate for lieutenant governor Gayle McLaughlin wants a statewide public bank, too. Many cities around the country are assessing the possibility of forming public banks as well.
“San Francisco, L.A., Santa Fe, Philadelphia, Boston, Minneapolis, Seattle—all are at some stage of doing this,” Harman said.