The only public bank in the U.S. is the Bank of North Dakota, headquartered in Bismarck. That may soon change as growing momentum around public banking has governments across the country talking, including in Monterey County.
Monterey County is too small to establish its own public bank, which would first require a feasibility study that could exceed $500,000 and capital to invest. However, a 4-1 vote on May 4 by the Monterey County Board of Supervisors signaled openness to exploring its options in a partnership with Santa Cruz, Santa Barbara, San Luis Obispo and San Benito counties to establish a Central Coast public bank.
The proposal, led by the Santa Cruz County Board of Supervisors, remains in its infant stages, as does the legality of public banking in the state of California. Gov. Gavin Newsom signed AB 857 in 2019, allowing governments to establish such banks. Soon after, the pandemic shifted priorities for local governments.
If established, a Central Coast public bank would not be a retail bank open to individual customers but one which finances public projects, such as infrastructure and affordable housing. Reed Geisreiter of the local advocacy group People for Public Banking and a retired executive with Comerica Bank, told the supervisors a public bank would have myriad benefits. Since the bank is not focused on delivering profits to shareholders, it could offer loans at lower interest rates.
Monterey County Treasurer-Tax Collector Mary Zeeb said a public bank could be appealing; but she said she’d oppose any public bank that would require the county to leverage its already established investments in order to fund it. Supervisor John Phillips, the lone no vote, said he was concerned about counties getting involved in the banking business, calling it “completely outside our lane.”
For the proposal to advance, the other counties would need to commit to financing part of the feasibility study. Santa Barbara County has so far joined Monterey and Santa Cruz in initial support.