LOS ANGELES (CBSLA) – Would a city-owned public bank address some of Los Angeles’ pressing issues — such as affordable housing, small business growth and financing for municipal projects — while also freeing the city from the influence of private banks who put shareholder interests over those of the public good?
That’s what L.A. City Council President Herb Wesson believes. In July, Wesson issued a challenge to the council to create the nation’s first ever city-owned bank.
The Ad Hoc on Comprehensive Job Creation Plan Committee will begin to debate the issue Wednesday.
The city currently does the majority of its banking with Wells Fargo through roughly 800 different accounts, but the City Council is exploring cutting ties with Wells Fargo following the scandal in which bank employees created more than 3.4 million unauthorized accounts as a way to meet aggressive sales goals set by management.
L.A. settled a lawsuit with Wells Fargo in September 2016 for $185 million.
Wesson’s motion cites the only current publicly-owned bank in the nation, the Bank of North Dakota, as a successful model for L.A. The Bank of North Dakota “was created in 1919 in a populist wave when farmers there were unhappy with decisions being made by major banks heavily influenced by railroads and out-of-state agricultural interests,” Wesson wrote in his motion.
BND, which in 2016 reported 12 straight years of record profits, does not have ATMS or debit and credit cards. It has only one location. Among its services, BND offers low-interest student and school construction loans.
A city-owned bank “may also provide the best financial solution to reducing the cost of the creation and rehabilitation of affordable and workforce housing in the City of Los Angeles, while at the same time providing low cost financial services for city residents and local governments,” Wesson said in his motion.
Read the full story here: LA Considers First Ever City-Owned Public Bank In US – CBS Los Angeles