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What is a Public Bank?

A financial institution owned by public entities, such as a city/county/region, instead of private shareholders

Public Banking Made Easy

A public bank is owned and controlled by the people of the city, state, or region it serves. It takes revenue deposits from the governments in its region (and can take deposits from semi-governmental organizations such as EBMUD or BART). Because it is a public entity, rather than a completely profit-driven corporation, it is in a position to both save money and make money for its depositors and — much more important — for the people who live in the cities, states, and regions using the Bank.

Instead of being a retail bank, our Bank will work with local community banks and credit unions to make better, more favorable loans to local businesses, and local individuals. Public banking has several strongholds around the world, including Germany — where public banking profits are largely responsible for the green energy surge — Costa Rica, and Vietnam. Public banks currently hold about ⅓ of the money in circulation in the world.

Learn more about how PBEB Lending Priorities will benefit you & our communities.

Public Banks ensure our dollars are working for the public good by:

  • Allowing governmental agencies to divest public money from projects that don’t align with our priorities or community values like fossil fuels.

  • Investing in a circular, local economy that actively meets and adjusts to community needs.

  • Increasing public revenue without raising taxes.

What Public Banking is NOT:

  • A retail bank housing accounts for individuals and small businesses.

  • Competition for local financial institutions. Both the California Public Banking Act and our mission involve partnering with community banks, credit unions, and CDFIs to expand their reach.

  • An extractive drain on the community

Bailouts for All… At Whose Expense?

The FDIC decision to bail out all depositors in the failed banks simply illustrates that the banks are only private when they succeed, and a public trust when they fail.

Public banks are public from their inception; our successes build community wealth and meet local needs.

 

More about Public Bank East Bay

 

More about the Public Banking movement

 
 
 

The cities of Richmond, Oakland & Berkeley have all passed historic resolutions to collaborate with the Friends of Public Bank East Bay & Alameda County on building a regional financial institution that will catalyze investments & profits in our local economies.

 
 

PBEB Model

 

A Wholesale Partnership Bank

The Public Bank East Bay will be a wholesale bank allowing cities and counties in the East Bay to invest their funds locally. It will not take any retail deposits from citizens, but fulfill its mission by reinvesting public funds (money collected as taxes, fines and fees) into the local economy prioritizing the environmental, social and economic needs of the East Bay community.

As mandated by the California Public Banking Act (AB 857) and following the example of the Bank of North Dakota, it will achieve its mission primarily in partnership with existing local financial institutions, like community banks, credit unions and Community Development Financial Institutions (CDFIs). Different from Wall Street Banks which currently manage most of our cities’ and counties’ money and invest it primarily abroad and in extractive industries, these institutions have roots in the East Bay and are committed to invest local money locally. Through partnership programs the Public Bank will scale existing programs and launch new loan programs to fund important initiatives like housing electrification, affordable housing or micro-loans for entrepreneurs of color.

 
 
 
 

PBEB Mission

 

PBEB will invest public monies from participating governmental agencies to meet the needs of local communities. PBEB will seek to return a reasonable, but not excessive, profit to its stakeholders by making economically sustainable loans and providing a high level of service to its partners and stakeholders. It will adhere to the principles of the United Nations Declaration on the Rights of Indigenous People, and will prioritize environmentally regenerative, culturally equitable and participatory practices that reverse discrimination against members of economically and socially marginalized communities.

 

PBEB Executive Summary

 

Capitalization

  • Startup costs: $2.3M needed, $400K raised to date 

  • $40M by initial four members: Alameda County and the cities of Oakland, Berkeley, and Richmond (<0.5% of total assets invested). The cities of Oakland, Berkeley and Richmond have all approved the viability study and are committed to moving forward with public bank planning 

  • Accepts deposits only from cities, counties, nonprofits and special district government  agencies like BART or EBMUD - not individuals 

Liabilities

  • Short-term (1-3 year) bonds purchased by local governments 

  • Grows investments from ~$100M in year 1 to ~$200M in year 10 (1-2% of total governmental assets refinanced and/or diverted from Wall Street bond purchases) 

  • Potential for growth through deposits from special district governmental agencies (BART, EBMUD, etc.) and/or non-profits (unions, foundations, etc.) 

Approach

  • Partners with Community Financial Institutions (CFIs) like credit unions, Community Development Financial Institutions (CDFIs) and community banks to expand their loan programs 

  • Mission-driven loan policy based on the values of racial equity, environmental regeneration, transparency and democracy. Provides loans and flexible lines of credit at 2-4% in areas of focus

 
 
 

PBEB Vision & Values

 

Equity

We are committed to a public bank which acknowledges and attempts to relieve the contemporary and historical burdens carried by disenfranchised communities, including low-income communities of color and other marginalized groups.

Social Responsibility

Decisions regarding loan recipients, sponsored projects, and who benefits from PBEB policies will all prioritize investing our money into the wealth and health of local communities and the environment.

Fiscal Responsibility

As stewards of public money, collected by depositing agencies from individuals and businesses in the East Bay, the Bank is committed to compliance with the directives and policies of state and federal regulators. It is equally committed to active and constant attention to managing risk and making fiscally responsible decisions so as to maintain PBEB in a safe and sound condition.

Accountability

The Bank is accountable to the residents of the East Bay, who have a right to fully transparent explanations of PBEB’s actions and choices.

Democracy

The Bank will be governed using inclusive and participatory processes which consciously and intentionally adhere to the values/principles listed here.

 
 

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PBEB Lending Priorities

 
 
Public Bank East Bay will focus on community reinvestment and reducing economic discrimination.

Collaborating on Economic Equity

In designing our viability study, we concentrated on how to address issues of income inequality, systemic racism, institutional racism by private banks, and building wealth in the BIPOC communities. With this in mind, we focused the initial bank priorities and financial projections on the following four loan programs. The detailed loan programs of the Public Bank are subject to change as further research is being conducted for the business plan and as regulatory agencies are going to review the proposed programs.

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PBEB Focus Areas

Promoting racial equity in small business lending will reduce income inequality and reduce the racial wealth gap. Ethical banks promote social justice and benefit all.

SUPPORTING SMALL BUSINESSES

PBEB would cooperate with community banks and CDFIs to scale their programs offering low-interest loans to underserved entrepreneurs with a focus on BIPOC small businesses. Through flexible lines of credit, loan guarantees and loan purchase programs PBEB would provide additional liquidity and reduce some of the risk of local non-profit lenders that are working hard to serve our local business community. The goal here is to support and grow the existing ecosystem of mission oriented lenders, and to rebuild trust with the BIPOC community that has been discriminated against by the banking industry for decades.

Prioritize DEEPLY AFFORDABLE HOUSING

Affordable housing is desperately needed, especially for people of color and other marginalized people. However, developers lack funding especially in the early stages of pre-development. PBEB would provide flexible lines of credit or short-term loans at rates as low as 2% that would allow affordable housing developers to bridge the gap between the initial acquisition of the land or property, securing the various sources of government funding and approvals and eventually building the housing. In addition PBEB would provide financing to Community Land Trusts, cooperative housing organizations and developers of accessory dwelling units, projects that are currently not served by existing lenders.

Green banking is key to mitigating the climate crisis and keeping our localities livable. Eco-friendly banks will permit local governments to divest from fossil fuels.

ACCELERATING OUR GREEN ENERGY TRANSITION

Cities and counties across the Bay are currently developing strategies to electrify their existing housing stock as an important path to reduce greenhouse-gas emissions (see e.g. the City of Berkeley’s 2021 report). PBEB could provide the funding to cover the up-front cost of those installations, particularly in underserved neighborhoods where utility bills are high. The Bank could partner with utilities to finance the repayment of these short-term loans through a charge on the utility bills. Additionally, PBEB could offer financing for solar or battery installations in partnership with local banks and credit unions.

IMPROVING MUNICIPAL FINANCES

PBEB would be able to start purchasing some of the cities’ and counties’ debt creating an additional source of funds for new bond issuings. Over time, and as PBEB grows its assets, it can start underwriting and issuing the municipalities’ bonds itself, reducing the costs for the cities and introducing transparency into an notoriously untransparent process, in which Wall Street and its lawyers pocket millions of taxpayer dollars every year. More money in city coffers means more resources and services for the most vulnerable.

 

Learn more about PBEB & the Public Banking Movement: