Public bank plan reaches key stage
The fate of a nascent effort to create a bank owned by the city of Los Angeles could be decided by voters this fall.
The City Council on Tuesday will vote on whether to start the process of placing a measure on the November ballot, asking voters to let the city create a “purely commercial enterprise”— something prohibited by L.A.’s charter.
If voters approved such a charter amendment, it would remove one of a handful of hurdles standing in the way of a city-owned bank, something city officials have been studying for nearly a year since Council President Herb Wesson raised the idea ahead of the Jan. 1 legalization of recreational marijuana sales.
He said a public bank not owned by shareholders could provide services to scores of local cannabis businesses, which are shunned by most banks because of federal drug laws and are often forced to deal entirely in cash. It also could offer loans to other small businesses and help finance affordable housing.
But creating such an institution would be expensive and legally tricky, especially if it set out to serve the cannabis industry. A February report from the city’s chief legislative analyst found it “would be a very difficult process, would be very costly, and would result in an institution that would not likely qualify to receive city business.”
One of the key issues raised in that report is that the city charter prohibits the creation of industrial or commercial enterprises without voter approval.
The motion the council will consider Tuesday was brought by Wesson and would direct City Atty. Mike Feuer to write a charter amendment and start the process of putting it on the November ballot.
Even if the council approves the motion, it would need to take additional steps to place a measure on the ballot.
And even if voters approve a measure, a cityowned bank would be far from a done deal. Echoing the legislative analyst’s report, Wesson’s motion acknowledges that the creation of a public bank may also require changes to state and federal law.