Los Angeles voters reject public bank
Los Angeles voters on Tuesday rejected a ballot measure that would have put the city one step closer to establishing its own public bank.
Just 42% of voters approved Charter Amendment B, which would have altered the city charter to allow Los Angeles to establish a “purely commercial” entity. Banking industry groups said Wednesday that they were vindicated by the results, but public banking advocates described the process as a good first step and indicated they would keep pushing the idea.
“We’ve been opposed to the idea of a public bank in Los Angeles since the city started discussing this a year ago,” said Beth Mills, a spokeswoman for the California Bankers Association. “We felt the city had failed to show that the current marketplace was not meeting the city’s financial needs. … Certainly the results show there’s skepticism from the voters about the idea of a public bank.”
That skepticism is understandable, said Ellen Brown, founder and president of the Public Banking Institute, which backed the measure. The question was added to the ballot just four months ago and contained scant details about exactly what the public bank would entail. Proponents simply did not have enough time or money to rally support for it.
The nail in the coffin may have been the L.A. Times’ editorial stance against the proposal, Brown added.
In a Sept. 20 editorial, the paper called the measure “ill-conceived” and “half-baked” and criticized the lack of a formal plan or study to accompany it. Voters were essentially being asked to rubber-stamp a “vague concept,” the paper’s editorial board said.
By contrast, public banking proposals elsewhere have generally involved a thorough study early in the process, Brown said. She pointed to Washington state as an example, where the legislature had approved $480,000 to come up with a business plan for a public bank.
“There is merit to the L.A. Times’ contention that the voters didn’t really know what they’re voting on yet,” she said.
There are just two public banks in the United States today: the Bank of North Dakota, established in 1918 in response to a local agricultural crisis, and the Territorial Bank of American Samoa, which received its routing number this year. In the latter case, public leaders tried to persuade other commercial banks to do business in American Samoa when the Bank of Hawaii pulled up stakes. They established the public bank after those efforts failed.
Many other cities and states have recently considered public banks for myriad reasons, ranging from a desire to cut ties with Wall Street firms to banking the nascent legal pot industry. The ballot measure in Los Angeles, however, was the first time that question had been put to a public vote.
City Council President Herb Wesson cited a number of those reasons when he proposed the public bank last year, but he later framed the ballot question as a way to simply gauge voter interest in a public bank.
Brown did not dwell on the question’s defeat, instead focusing on what Public Bank L.A., the local group advocating for Charter Amendment B, had accomplished. The group had reached thousands of voters and racked up over 100 endorsements in just a short period of time, she said.
“To us, it’s a lesson of how you can work with your legislators, not of what they did wrong but what they did right, and we’re just very impressed with how far they got,” Brown said.