Supervisors Sandra Fewer and Malia Cohen are advancing the idea of launching a municipal bank; this is going to end San Francisco’s use of large national commercial banks that are profit-driven for banking services. The efforts of the two supervisors have led to a report of a new city on the idea released recently. A task force to research on the idea will be assembled by late Jan., with a report expected in six months.
In the U.S, the only public bank is the Bank of North Dakota, which is state-owned and operated; it dates back to the year 1999 and remains profitable. However, others may finally follow suit as the financial institutions on Wall Street are getting under increased criticism mainly for investments in fossil fuel and banking practices.
Also, public banks are gaining traction in the legalized recreational cannabis era. Those in the business of cannabis are not able to use banks because the drug is still illegal under federal law. In November, John Chiang, who is the California treasurer, recommended examining, opening a state bank for people in the industry of cannabis to open bank accounts as well as pay taxes.
Recreational cannabis becomes legalized on January 1 with Proposition 64 that was passed last year. The industry of cannabis is expected to have over 7 billion dollars in sales and an estimated 1 billion dollars in tax revenues.
Eleven other cities or states, including New Hampshire, Vermont, Philadelphia, Oakland, and Santa Fe, have proposed or are considering their public banks.
The benefits of SF were named in the report of a new Budget Analyst requested by Fewer, and it was released last week. Profits don’t motivate a public bank like private banks. That means that the public banks have interest rates that are lower on loans.