The new ordinance seeks to establish the preliminary infrastructure for a future public bank.

As businesses and workers around San Francisco struggle to keep up with the continually ballooning costs of the Bay Area and maintain economic stability in the throes of a pandemic, members of the Board of Supervisors are pushing to establish a public bank. 

Legislation introduced by Supervisor Dean Preston at the end of January, called the Reinvestment in San Francisco Ordinance, seeks to establish a working group, made up of four community representatives and three banking experts, that would finalize the details of establishing a public bank. The goal is to establish a fully functional municipal bank in five years. 

Modeled after the Bank of North Dakota (BND)— America’s only public bank, established in the early 20th century to help farmers devastated by ecological changes—the proposed San Francisco municipal bank would provide low interest business and student loans by collateralizing existing credit union loans. This would allow business owners or workers of the city the capital needed to stay solvent despite mass business closures and layoffs. 

The initial working group would establish a “municipal finance corporation” (MFC), a financial entity owned by the city overseen by the working group, that would draft a business plan and analyze solvency requirements. 

The ordinance is likely to pass with a host of supervisors already showing their support.  Supervisors Connie Chan, Matt Haney, Myrna Melgar, Hillary Ronen, and Board President Shamann Walton all spoke in support of the ordinance at a Jan. 26 press conference. 

“We need a city-run financial institution where our assets are invested in things that benefit our communities in San Francisco,” Walton said.

Local organizers in the city have spent years pushing for a publicly owned bank in San Francisco, with the roots of this political endeavor stemming from a protest movement thousands of miles away and five years old. 

Illustration: Chiara Di Martino

Jackie Fielder, a 26-year-old organizer and co-founder of the San Francisco Public Bank Coalition, was among protesters pushing back against the Dakota Access Pipeline in 2015. When she returned to the Bay Area, she realized that the financial institutions that control much of the city’s municipal funds are the same institutions profiting off the proposed pipeline. An ecological catastrophe in one state has ties to the economic viability of another, and the profits from said catastrophe benefit only the land and bank owners. 

“We don’t even see the wealth these corporations have accrued,” Fielder said in an interview with El Tecolote shortly after the Jan. 26 press conference.

In 2019, the San Francisco Treasurer’s Office published a study that presented a three-model approach to hypothetically establishing a municipal bank. Under the three-model approach put forward in the treasurer’s report, the bank would either function as a lender to the people of San Francisco, in a similar way to any other financial institution, or serve as a municipal lender. 

Critically, the treasurer’s report assumed that such a bank would take over city finances over a brief, less than a week, timespan. This runs contrary to the models put forward by the coalition that would seek to phase in the municipal bank. Under the phased in approach, the upfront costs would be dispersed over years rather than all at once. 

Kurtis Wu, SF Public Bank Coalition co-founder, during a Jan. 28 interview with El Tecolote, noted that the MFC would scale up to controlling the city’s finances rather than an essentially overnight change put forward in the treasurer’s report. The phase in or scale up approach gives the MFC, and by extension the municipal bank, a much easier opportunity to become profitable on a reasonable timeline and thus put money back into San Franciscans pockets quickly. 

He highlighted that while the MFC’s approach would need to be aggressive, the Coalition feels that, if the ordinance passes, San Francisco could expect a public bank in three to five years.  

“Wall Street doesn’t care whether the mom-and-pop small business in San Francisco goes out of business. All they care about is maximizing their profits.

Jackie Fielder

“It’s no surprise that in times of crisis the private financial markets don’t help people who need it, they don’t allocate money to people who need it the most. We’ve seen that illustrated really well with the PPP loan distribution, the big banks that were in charge of it, they targeted big corporations,” Wu said. 

This sentiment was echoed by Fielder who noted that during the COVID-19 pandemic, the Bank of North Dakota (BND) has established a series of small business loans with low, fixed interest rates that allow workers and business owners to avoid defaults and keep their businesses solvent. 

“Wall Street doesn’t care whether the mom-and-pop small business in San Francisco goes out of business. All they care about is maximizing their profits. What we care about in San Francisco is having a thriving small business community, having affordable housing and meeting our climate goals. That is what we call the public good. In order to preserve those facets of our city we need to have capital,” Fielder said. 

This desire to take democratic control of finance is a fervent cause across a variety of coastal cities including Philadelphia, Los Angeles and New York City. A key component of the loans issued by BND works by collateralizing the loans offered by smaller, local financial institutions like a credit union.  

“It would allow the city to use its funds to empower local financial institutions,” said Julian LaRosa, Communications and Political Organizer with the National Public Bank Alliance. 

The possibility and opportunity for more democratic control of finance is possible, but like in California, and a vast majority of the country, it requires the people to build the infrastructure for it. If it’s successful, it’ll be the people’s rewards, for once. 

“As San Francisco residents we are the shareholders. It can pass on the savings,” Fielder said.