California may have a new type of bank by next year, the result of a bill signed Thursday by Governor Gavin Newsom that sets up rules for the creation of public banks. The new financial institutions would be owned by, and would primarily serve, public agencies and, unlike private banks, they’ll be required to put the public good over profits. Debbie Notkin, with the California Public Banking Alliance, predicts the agencies will save a ton of money. “Local public banks return the money that cities and counties now pay in fees and interest back to those cities and counties as bank profits.”
The only public bank in the U.S. right now is the Bank of North Dakota, which has been around for about a century and makes about 18 percent in profits each year. Wall Street banks have criticized California’s legislation, saying banking is too complex to be entrusted to government.
