‘The Case for California’s State Public Bank’ calls on policymakers to implement California’s first state public bank, highlighting its potential to promote financial inclusion.
For Immediate Release
Media Contact:
Brian M. Maxey bmaxey@rise-economy.org, 510-813-7552
LOS ANGELES, Aug. 1, 2024 – Rise Economy, a leading California-based housing, economic and racial justice nonprofit organization, and the California Public Banking Alliance announces today the release of a landmark report titled “The Case for California’s State Public Bank,” which calls on policymakers to implement California’s first state public bank and highlights its potential to enhance economic stability, promote financial inclusion and close the widening racial wealth gap.
This comprehensive study, conducted by Neha Singh, a fellow at the Goldman School of Public Policy at the University of California, Berkeley, outlines the strategic framework required to transition the California Infrastructure and Development Bank (IBank) into a state public bank to serve historically marginalized communities better. It provides a detailed analysis of the shortcomings within the current banking system and offers a robust set of recommendations aimed at enhancing the IBank’s capacity to address critical issues such as affordable housing, climate change mitigation and support for small businesses.
“Traditional banks have long perpetuated exclusionary practices that disproportionately impact Black, Indigenous, and People of Color (BIPOC) and low-income communities, contributing to the persistent racial wealth gap,” said Paulina Gonzalez-Brito, Rise Economy Chief Executive Officer. “It’s an unfortunate reality that, in 2024, BIPOC communities continue to lack access to capital and wealth-building opportunities which further compounds economic inequality. Establishing a state public bank in California is crucial for providing equitable access to low-cost capital and fostering financial inclusion, empowering BIPOC and low-income communities to build generational wealth and create a more just economy.”
Key findings and recommendations in the report include:
- Empower IBank by enabling it to accept deposits, facilitating fractional reserve lending to drive economic growth and support California’s communities.
- Create a model demonstrating how a state public bank can offer below-market-rate loans, particularly for affordable housing projects.
- Collaborate with specialized entities like Community development financial institutions to expand the bank’s effectiveness.
- Ensure the IBank’s board includes representatives committed to community service and transparency.
- Enhance internal controls and explore external audit oversight to strengthen governance practices and public confidence.
“A State Public Bank is a strategic tool for directing investment to meet California’s needs, providing resilience in volatile times. By managing public funds, it will support municipalities by lowering borrowing costs, increasing credit, and helping fund key projects in infrastructure, affordable housing, and renewable energy,” said Trinity Tran, Co-founder of the California Public Banking Alliance. “By partnering with statewide lenders and reinvesting profits locally, the bank can amplify its impact—a $1M loan can generate up to $10M in community investments. A public bank could tackle California’s housing crisis and safeguard local economies during downturns by keeping resources within communities instead of with Wall Street banks.”
With California’s dire affordable housing crisis, infrastructure deficiencies and worsening climate crisis, the need for a public bank in California is now more critical than ever.
“We’ve known that underserved communities need alternatives to the traditional banking model, one that improves their economic opportunities,” said Singh. “This study, which employs a comprehensive methodology, including bill analysis, case studies, comparative analysis, and extensive stakeholder interviews, provides a clear roadmap for addressing some of California’s most pressing economic needs.”
California has the opportunity to lead the nation in public banking innovation by leveraging the existing infrastructure of the IBank and expanding its capacity, according to findings in the study.
DOWNLOAD THE REPORT
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About Rise Economy
Rise Economy, formerly the California Reinvestment Coalition (CRC), is a member-led alliance focused on creating a more equitable society where Black, Indigenous, and People of Color have access to resources and opportunities to build generational wealth. As the largest statewide community reinvestment alliance in the country, Rise Economy advocates for policies and practices that promote racial and economic justice and that address the root causes of inequality, redlining, and systemic racism.