One hundred years ago the legislature of North Dakota created a public bank for the state and its people.
Today, moments ago, Governor Newsom signed into law legislation passed last month by the Legislature enabling the creation of public banks in California. It is the first such legislation to be enacted by a US State in a century (but like much that California does, quite possibly in the near future not the only such).
Unlike North Dakota's legislation, the new law (effective January 1st, 2020) does not establish a public bank of California. Rather, it lays out the process for how a municipality may create a public bank for itself or join together with other municipalities and jurisdictions to create a jointly-operated (aka, Joint Powers Authority) public bank.
This legislation is a milestone on a path that began at least ten years ago in California. In 2013 a Public Banking conference was held in Marin County, bringing together activists from all over the state and country. In 2014 Ellen Brown, a principal advocate for public banking and author of books on the subject, ran for State Treasurer with public banking being a major plank of hers — she received more votes and a higher percentage of them as a third party (Green) candidate that any other such candidate to date. Oakland, San Francisco, Los Angeles and other cities began looking seriously at public banking, commissioning reports and feasibility studies.
It became evident that while there was nothing, per se, prohibiting a California municipality from starting a public bank, neither was there any clear regulatory path for a city or joint powers authority to do so. The public banking movement needed a firm foundation. Local groups, including Public Bank for the East Bay (formerly Friends of the Public Bank of Oakland, nee Strike Debt Bay Area) banded together to form the California Public Banking Alliance.
After much hard work and many hours of volunteer effort, early 2019 saw Asssemblyperson David Chiu of San Francisco and Assemblyperson Miguel Santiago of Los Angeles introduce "AB 857, Chiu. Public banks."
Needless to say, Wall Street and their lobbyists opposed the measure, but somehow public banking activists prevailed. And while it is not likely that Wall Street will crumble at this setback, perhaps today there are at least a few minor tremblors in the bedrock beneath Manhattan.
Now comes the next phase. Having established the mechanism for creating a public bank, activists must demand of local politicians the will to actually create one - or many. Prospects include a coalition of cities in the East Bay, and San Francisco, Los Angeles (despite having rejected the idea in a referendum in 2018, before AB 857 had been introduced), Long Beach and San Diego independently.
It won't be easy. But insofar as public banking activists have been going strong, never giving up over the last ten years despite multiple trials and setbacks, betting against them may not where the smart money is placed at the casino that is Wall Street.