Los Angeles voters are set to decide if they want the city to form its own municipal bank, and City Council President Herb Wesson and state Sen. Kevin de Leon this week encouraged voters to support the measure.
Wesson, who introduced the City Council motion that placed the measure on the ballot, held a rally with de Leon and supporters of the public bank in Arlington Heights.
“A municipal bank’s emphasis is on building stronger communities through smart, community-serving investments like affordable housing. We can no longer afford to do business with Wall Street banks more interested in making money on the backs of hard-working families than giving Angelenos tools to succeed,’’ Wesson said.
Wesson’s motion to place Measure B on the Nov. 6 ballot said that the city “shall not engage in any purely commercial or industrial enterprise, except upon a majority vote of the voters of the city voting on the question.’’
The idea of Los Angeles forming its own bank was first put forward by Wesson in July 2017, when he said the bank could be used to finance local entrepreneurs and affordable housing while also providing a safe avenue for cannabis businesses to do banking.
Since Wesson introduced the idea, the Ad Hoc on Comprehensive Job Creation Plan Committee has held several meetings on the topic, but many of the key details on how or if the city could create its own bank remain unanswered. Wesson’s motion acknowledged this, and said, “There are many milestones that must be met in order to achieve the formation of a municipal bank. Changes in federal and state law are necessary and significant decisions regarding the governance structure of a municipal bank must be made.’’
In December of last year, lawyers with the City Attorney’s Office told the committee that the public bank would be subjected to the same laws that any other bank is when it comes to marijuana businesses, and that because marijuana is still a Schedule 1 drug at the federal level, accepting deposits from cannabis businesses could violate the Banking Secrecy Act and open the city and employees at the bank to potential liability.
However, there are efforts both at the state and federal level to change current laws that would allow for cannabis businesses to freely use banks, including the SAFE Banking Act, which is under consideration by a Senate committee and would make banking legal for the cannabis industry in states that allow the sale of the drug.
No city in America has its own bank, and the only public bank in the nation is the Bank of North Dakota, which was created in 1919.
“California’s economy is the fifth largest in the world, but that doesn’t mean it works for everyone. Too many families get left behind because hey have no access to the capital they need to meet their needs and fulfill their dreams: buying a house, paying for college, making profitable investments,’’ said de Leon, D-Los Angeles, who is also challenging Sen. Dianne
Feinstein for her seat in the U.S. Senate. “It’s time we pulled Wall Street’s hands out of our communities’ pockets and built a public banking system that will prioritize Angelenos over their bottom line.’’