Divestment Activists in San Francisco are Fighting to Establish a Public Bank that will Invest in Their Community

Peg Hunter

Peg Hunter

We spoke with Jackie Fielder, the indigenous organizer for the San Francisco Public Bank Coalition who decided to work on establishing a public bank after large Wall Street banks funded the construction of the Dakota Access Pipeline through her community’s territory. She discussed how public banks can strengthen local economies and allow communities to control their tax revenue and invest in projects that benefit them.

This interview has been edited for brevity and clarity.

MFU: Why is establishing a public bank important?

JF: Right now, the way that cities manage their taxpayer dollars is by putting them into Wall Street banks, so while we sleep, those dollars are being put into industries that do not necessarily reflect the values, priorities, or crises that our cities are going through. One of the most powerful ways that a public bank could help reinvest in cities is by giving cities the option to reinvest in our own affordable housing, small businesses, renewable energy infrastructure, public infrastructure like education, healthcare, and low cost student loans.

MFU: Can you talk more about how San Francisco is currently managing its tax revenue?

JF: We have a ten billion dollar pooled investment fund that’s divvied up among a couple dozen different Wall Street banks. They invest that money into who knows what. We get an idea only because of news reports about how Wall Street banks spend their money, having to do with private prisons, immigration detention centers, pipelines going through indigenous territory, privatization of water, luxury development, you name it. That’s the ten billion dollars. But we don’t need that money right away, that’s why it’s invested. As for the cash that we do need to make payroll, to purchase office equipment and other regular expenditures for the city, we have a bank account with mainly Bank of America and two other Wall Street banks, and that’s an account with on average two hundred million dollars a day.

MFU: How would you say a public bank will affect the local economy in San Francisco?

JF: In general a public bank, because it has such a low cost overhead, is going to bring interest rates down for so many different sectors over a long period of time, which will eventually lower the cost of living for everyone. It can also provide deeply affordable housing by taking entire buildings off the market. It can make building cheaper. It can create markets for small businesses to even come back if they’ve been displaced. It can get us to the point where we’re meeting our climate goals by 2030. It can do everything that Wall Street banks are not doing right now, which is prioritizing housing for everyone, clean water, clean air, clean soil, fast infrastructure for transit, education, and health.

MFU: Can it also protect the economy in the case of a financial crisis?

JF: Yeah. The Bank of North Dakota is the only public bank in the United States right now. They’ve been around a hundred years. They started out in 1919 with a two million dollar one-time fund into the bank to capitalize it. They survived the recession and also made a profit during that year. Public banks are counter-cyclical in that they’re not affected by the globalized market of credit, so a public bank would be able to survive a recession.

MFU: How will the bank be structured? Who will make decisions and control it?

JF: The people who are making decisions on the daily are the staff, the bankers. As for what the bank actually invests in and how it operates, that thrust will be mainly held in its founding documents—it’s usually called a charter, or articles of incorporation. Whoever manages the bank from the top down, whether that’s a commission, or a board of directors, or some mix of that, they will have to abide by the founding documents. So right now the San Francisco Public Bank Coalition is coming up with the mission, principles, and financial rules to make sure that whoever is guiding the ship of the bank, and starting it up, has the guidelines that they need to make sure that we’re not becoming another Wall Street bank, and that we’re actually putting the public interest first.

MFU: What do you foresee being the bank’s relationship to underserved communities?

JF: We hear a lot from people that being poor is super expensive. They face high interest rates, fees, and penalties for simply needing cash now. It’s a highly regressive system—payday lending and other check-cashing services. Wall Street banks even consider disability checks risky, even though they’re backed and distributed by the government. You have to understand so much of banking does not happen in a vacuum, it happens in the structures of power that currently exist, that criminalize and blame poor people for their circumstances, in a racist hyper-capitalist society in which some communities are more secure and safe and investable than others. That’s where you get redlining. A public bank would, as I said before, be grounded in the mission, principles, and financial rules, and we have a principle of making sure that this bank serves underserved but also exploited communities that have gotten the short end of the stick. 

MFU: Can you talk about what types of loans the bank would offer, and the types of investments it would and would not make?

JF: Yeah. This started out from a divestment movement. We basically drew a line in the sand with respect to the Dakota Access Pipeline, a pipeline being built through the Lakota territories in what is now South and North Dakota. That’s where I come into it, as I’m part Lakota and both my grandparents grew up along the Missouri river, through which the Dakota Access Pipeline has been built. So we have started this whole movement from an understanding and an insistence that Wall street banks don’t represent us. Their financial decisions are gambling away our futures, and livelihoods, and have done so for a long time. We don’t want to be investing in luxury developments, pipelines, prisons, and certainly not in the militarization of law enforcement, as the Bank of North Dakota did for the state of North Dakota during the Standing Rock protests against the Dakota Access Pipeline. Secondly, we want to make sure that the bank is as much in partnership with local credit unions and local banks that already adequately serve communities here in the area, and they’re certainly not all amazing, but we want to make sure that we are helping the local smaller financial institutions and filling gaps where need be. For example, the Bank of North Dakota has what’s called participation lending with in-state banks and credit unions, so they either buy up mortgages from those smaller banks or they participate in loans that are originated by those banks, to the furthest extent possible. The only direct lending that they do is for student loans, otherwise everything is participation, and we are looking to do the same. Of course there will be some ways in which we may not participate. So it’s hard to say exactly when this bank is up and running who the person or individual who needs a loan will go to, whether they’ll go to a credit union or public bank, but we want as much participation and cooperation with local banks as possible.

MFU: What are the steps you have taken to get this public bank established and what are the remaining steps needed?

JF: You basically have to think, okay what does it take to be considered a bank? In the state of California there are two licenses available for people who want to organize a bank: there’s a credit union license, and there’s a commercial bank license. A public bank fits more under the commercial license, but it’s not necessarily the same thing; the main difference being the public mandate rather than an implicit default goal to maximize profits for shareholders. Technically the public, the city of San Francisco, is the shareholders of the bank. The first step, walking back from that, is to apply to the state for a charter, a license, that requires having a really solid plan for obviously the business, what the lending areas are, what are some pro formas and predictions, who’s on the board of directors—they actually ask for very personal information about the board of directors to make sure they are of good standing in the world. They also want to see that there are plans for insurance, and collateralization, and capitalization, and all of that intricate financial, more in the weeds stuff. That should be handled by people with experience in starting banks, with financial experience, who have a demonstrated commitment to the mission, and principles, and financial goals that we as a city, as an electorate, want in our bank. And so working back from that, in order to have the mission, principles, and goals, you need to first write them and figure them out. That’s what we’ve been trying to do for the past year or so, create these goals and visions for the bank, shop them around to different stakeholders, especially homeless advocates, deeply affordable housing advocates, renewable energy and public education folks, labor, and climate and environmental justice orgs. We also need small businesses to take a part, we need legislators to see what kind of arrangements are possible for governance. And as far as actually getting something into law and changing it, it’s looking like there will need to be some strong move to change the city’s law, whether that’s a charter amendment or ordinance, the difference being that the charter amendment is much stronger because it’s actually changing the charter of the city which is kind of like its constitution, whereas an ordinance is just changing the city code, and that can happen with a majority of the Board of Supervisors.

MFU: Do you know of other similar efforts outside of San Francisco, California, or the United States, and are you partnered with any other groups outside of San Francisco?

JF: Yeah, so to begin, there are more than 500 public banks in the whole world. I think Germany has the most robust public banking network, with a national public bank, regional public banks, and then county-level public banks. All of those public banks around the world hold dozens of trillions of dollars in assets. So it’s nothing new. The only public bank in existence in the continental US is the Bank of North Dakota, otherwise there’s the Territorial Bank of American Samoa. As far as other efforts across California and the country, we’re apart of an alliance called the California Public Bank Alliance. San Francisco, Eureka, Los Angeles, Oakland, Santa Barbara, San Diego, Santa Rosa, and Santa Cruz all have small but mighty groups that are organizing at the grassroots around this issue, and we’re all pushing for this public bank license to be created at the state level. As far as nationally there are groups in D.C., New York, Santa Fe, Vermont, Seattle, I think Portland, Denver, and a few other places.

MFU: What has your team been doing to get traction and support amongst San Francisco residents for this idea?

JF: Right now we need to get eyes on legislation, so we’ve been meeting with as many stakeholder groups as possible and trying to convene groups in the next month or so, to get more serious discussions on that. For now our reach to San Francisco has been limited to social media and to other kinds of media like radio and newspapers. We definitely want to expand into the Chinese-speaking and Spanish-speaking communities, and other non-English-speaking communities, because this is an issue for everyone. We definitely need translators for that, and certainly capacity. Right now we’re pretty much all volunteer and have been for a couple years, so it’s an all-hands-on-deck effort that takes a lot of time.