Driven by their mistrust of Wall Street and in search of ways to generate money for affordable housing and infrastructure, a growing number of elected leaders on the Central Coast are hoping to establish a public bank for the region.
Under the public banking concept, money collected in taxes by cities, counties and local agencies would be withdrawn from commercial banks and deposited in a new financial institution that’s not beholden to private interests. Free of the need to generate an ever-larger profit, a public bank could lend money to at low-interest rates and the returns could be invested back into the community to fund housing or other types of projects. It would be easier to ensure that public money is invested according to ethical principles, avoiding, for example, industries like tobacco, petroleum or firearms.
California legalized public banks last October with the support of Monterey County’s entire delegation to Sacramento (state senators Bill Monning and Anna Caballero, and assemblymembers Mark Stone and Robert Rivas). The legislation received backing from the Monterey Bay Central Labor Council and Monterey County Democratic Party and was opposed by no local groups.
The public banking movement gained momentum in the wake of the 2008 financial crisis and California is the first state to legalize them since then. (North Dakota established a public bank 100 years ago, and it is considered a success with $300 million generated for the state treasury in the past decade.)
On Feb. 11, the Santa Cruz County Board of Supervisors voted to reach out to nearby jurisdictions proposing a viability study, the first step in the creation of a public bank. A letter was sent to Monterey, Santa Clara, San Luis Obispo, San Benito and Santa Barbara counties and to the cities of Seaside, Monterey, San Luis Obispo, Watsonville, Scotts Valley, Santa Cruz and Capitola.
“The scale of operations for public banks is far too large to be undertaken by anything smaller than the largest cities or counties in California or multi-jurisdictional efforts,” the letter reads. “In this sense, this regional effort is somewhat similar to the highly successful recent creation of Monterey Bay Community Power and we are imagining that effort might prove to be a model of interagency collaboration for a Central Coast Central bank.”
Already, a number of local elected officials say they like the idea of a public bank. “Sitting around and waiting for someone else to solve our problems isn’t what we do in Monterey County,” County Supervisor Chris Lopez says. “We lead with solutions.”
Seaside City Councilmember Jon Wizard says public banking is a “phenomenal opportunity” and a “no-brainer.” He is joined by Monterey City Councilmember Tyller Williamson who says he has been in touch with the organizers of People for Public Banking Santa Cruz.
“This is the right direction for our region to take,” Williamson says.
Kevin Dayton, a representative of the Monterey Peninsula Chamber of Commerce and president of the Salinas Taxpayers Association, agrees that public banking could be a good idea: “This is a progressive vision that would have some crossover appeal for business.”