Angelenos, say hello to the Los Angeles public bank – or at least a debate about it.
The board endorses Amendment B, which would amend the city charter to allow it to create its own public banks. The passage of this measure wouldn’t force the city to start creating a public bank, but merely allow it to.
Such a move would move the taxes paid toward the city away from private banks and into one owned by the city, effectively creating a treasury of its own. This would prevent taxpayer money from financing big banks, which have a history of conning their customers.
Of course, the feasibility of a public bank is still up in the air. Critics have pointed out that such a bank would need large amount of capital investment in the first place. Running a bank also brings its own risks, with taxpayer money at stake.
Supporters point toward the Bank of North Dakota, which has posted 14 consecutive profitable years, as a model for a successful public bank. However, the CEO president of the bank has said that the public bank model doesn’t necessarily work everywhere and each area should determine on its own if such a model would work.
And that’s a determination the city of Los Angeles should carefully make, if the measure were to pass. Big banks have wantonly abused the trust put in them by customers, from Wells Fargo opening unapproved customer accounts to multiple banks abusing foreclosure practices following a financial crisis they helped set up. While there are few other choices for the city, trusting taxpayer money with these banks is a disservice to the public.
For now, the idea of Los Angeles setting up its own public bank deserves discussion, if only for the possibility of an alternative to the greed of big banks.