- Key insight: San Francisco voters will decide on Nov. 3 whether to approve a governance framework that would make the city the first municipality in the country to establish a public bank.
- Expert quote: "San Francisco has every ability in the world to do a safe, successful public bank. But they need laws that are attuned to the differences between private banks and public banks." — Earl Staelin, legal advisor to the Public Banking Institute
- Forward look: California's authorization for municipal public banks sunsets in 2028, which is pushing supervisors to move now rather than wait for a proposal that includes a funding source. Even if voters approve the measure, separate legislation will be needed to actually capitalize the bank.
San Francisco voters will decide this November whether the city becomes the first municipality in the country to launch a public bank.
By a 9-2 vote, the San Francisco Board of Supervisors approved placing a measure on the Nov. 3 ballot on whether to create a "municipal financial corporation." The board's July 7 vote set forth a governance framework that would allow a public bank to operate if voters approve the measure.
If passed, San Francisco would become the second public bank in the U.S., after the century-old Bank of North Dakota, which is generally cited as the only public bank currently operating in the country. A 2025 poll by the San Francisco Public Bank Coalition found approximately 67% of likely voters supported the establishment of a municipal public bank.
Supervisors Alan Wong, who represents the Sunset District, and Stephen Sherrill, whose district includes the Marina and Pacific Heights, cast the dissenting votes.
The proposed bank would focus initial lending on three areas: affordable housing, green energy and small businesses. The legislation explicitly prohibits the bank from lending to fossil-fuel corporations or weapons manufacturers.
Governance appointments would be split among the city attorney, controller, treasurer-tax collector, mayor and board of supervisors, with day-to-day operations run by professional bankers under public oversight.
"A public bank would open the doors to build an engine for affordable housing, a lifeline for struggling small businesses and the financial backbone for our climate goals," Supervisor Chyanne Chen, one of five co-sponsors of the legislation, told KQED.
Earl Staelin, legal advisor to the Public Banking Institute, an advocacy group, said that a public bank for San Francisco is "totally aligned with the interest of the city." The bank's goal would be to "protect the city's economy, make it strong, make it stable, and to invest locally in the city," rather than chase "whatever makes the highest profit," Staelin added.
Notably, the measure heading to voters does not include a funding mechanism. The bank is expected to need hundreds of millions of dollars in startup capital before it could begin issuing loans.
Supporters have floated several possible paths to capitalization, including a tax on major financial institutions, philanthropic funding or a union trust arrangement.
Supervisor Jackie Fielder, a longtime public bank advocate, acknowledged to KQED that "further legislation is definitely going to be needed to actually capitalize the bank." Fielder added that she would "like to see a tax on major financial institutions to fund the public bank," though she also put private philanthropic dollars on the table.
Misha Steier, spokesperson for the San Francisco Public Bank Coalition, framed the November vote as low-risk for the city precisely because the measure does not touch the funding question. "This is looking like it's in a strong position, given that we're just asking voters to pick a good set of rules for the bank," Steier added in comments quoted by KQED.
Wong, one of the two "no" votes, grounded his objection in the city's institutional track record and current "budget challenges."
"A public bank would represent a major new responsibility for local government and would require substantial expertise, oversight, and financial risk management," Wong said in a statement to American Banker. "Before asking taxpayers to support an undertaking of this scale, the City should be able to clearly demonstrate how it would be funded, governed, and held accountable."
The dissenting supervisor also encouraged voters to "learn from history," highlighting public banks that have failed in the U.S.
"A public bank may be well-intentioned, but good intentions alone are not enough. The City has a responsibility to carefully consider the financial risks and long-term obligations that come with operating a lending institution," Wong wrote.
The push to put the measure before voters this year is tied to a legislative clock.
California legalized municipal public banking statewide in 2019 under the California Public Banking Act. San Francisco's board of supervisors created a reinvestment working group two years later, which released a report on the costs and benefits of a public bank in 2023 — a plan the board adopted that same year. The state's current authorization for cities to pursue public banks is set to expire in 2028.
"We really want to take advantage of this; otherwise, we will not have the legal context to allow San Francisco to make this legislation," Chen said. "If the state law expires, then we have to work on a new state law before we can have this conversation again."
Under the 2019 state law, municipal public banks must obtain a formal banking charter and meet the same financial and regulatory standards as commercial banks — including obtaining deposit insurance from the Federal Deposit Insurance Corp.
Staelin said that the FDIC's guidance on collateralization of public deposits is "really a killer" because the city does not "even have $50 million sitting around that they can easily part with for capital, let alone $200 million for capital for 110% collateral."
"That law just completely puts San Francisco in shackles until that state law is changed," Staelin added. "San Francisco has every ability in the world to do a safe, successful public bank. But they need laws that are attuned to the differences between private banks and public banks."
