Response to the LA Times Editorial Board on Charter Amendment B
From the author: I wrote the following in a letter-to-the-editor to the Times the day after they published their horrendously dishonest endorsement of a ‘No’ vote on Measure B. I’ve waited a couple weeks in case they decided to print it, but they haven’t, so I’m posting it here so others can reference it. It’s a couple weeks old now, but I think it’s worth showing that we asked them to air some fraction of our point of view, to no avail. LA Times has printed their ballot recommendations and continue to call B “half-baked,” as if people want more weed puns rather than independent engagement with the issues. We expect more from the editorial board of the Times. This is a serious election where people deserve to know the best information available so they can make an informed decision.
Response to the LA Times from Public Bank LA, Sept. 21, 2018
I was disappointed to read the editorial board’s piece “Charter Amendment B is one of the most ill-conceived, half-baked ballot measures in years. Vote no,” not just because it recommends a No on B, but because it insists “There’s been no formal study, no plan, nothing of substance completed to determine whether a Bank of Los Angeles is even feasible, much less a good idea.” It also states that “Voters are being asked to approve a vague concept and put their trust — and their money — in City Hall to figure it all out.” Both of these assertions are false, and presume that city leaders should conceive new programs from whole cloth, rather than through an open democratic process. It also suggests that Charter Amendment B is permission for city council to found a public bank, and to spend a lot of money to do it. It is not.
Charter Amendment B is the first step in a process where Angelenos will decide what kind of bank they want to put their money in – the Wall Street banks that crashed the economy and invest in guns and oil – or a public institution that invests in Los Angeles.
LA Times has printed their ballot guide and continues to call B “half-baked,” as if people want more weed puns rather than independent engagement with the issues in this very serious election.
It’s true that Los Angeles hasn’t yet commissioned a feasibility study for a public bank, like Oakland or Santa Fe, or formed a task force like San Francisco. Those efforts cost taxpayer money. Los Angeles City Council chose, wisely in my opinion, to direct city staff to study the issue, rather than form a panel or pay expensive consultants. Furthermore, neither Oakland nor San Francisco has the same specific limitation in its charter that prevents the founding of a public bank. They are free to explore the idea without a vote. City Council rightly chose to check with the voters first, and then proceed from there.
Those city reports are enlightening and highlight the hurdles in law and regulation that a Bank of Los Angeles will face. The CLA report from 2017 cites the same Boston Fed report as the Times, and its poorly estimated $3.6B startup costs, a number derived from many leaps in logic and also totally unrelated to the Los Angeles case. This is a report studying a state bank with a very different reality than Los Angeles. Why the LA Times cites this number as gospel, while ignoring advocates who say a Bank of Los Angeles would roll out slowly and conservatively, is a strange conclusion for journalists to settle on.
It’s also frustrating to see this same distinction, that a state bank elsewhere is not applicable to our case, used to dismiss the success and prudence of the country’s only real public bank: Bank of North Dakota. The BND returned over $600M in value to the taxpayers in the last five years, and has changed quite a bit since it “was formed a century ago to help farmers there get credit.”
Policymakers and advocates are already hard at work on state legislation around municipal banks. A recent briefing paper from ACT-LA describes how a municipal bank can be founded, funded, and operated without any change to state or federal law.
The Times also excludes mention of the 2018 CLA report which demonstrates the urgent need for an alternative to the current banking industry, which underserves over 600,000 Angelenos living in banking deserts and has no answer to the crisis in housing. You could have cited the CLA saying that half of all black and “Hispanic” Angelenos are unbanked or underbanked, and it costs them real money. Instead you ask “Why is this measure even on the ballot?”
Sorry, but it’s not a “good question.”
A public bank will vary in cost based on its scale and purpose. The citywide dialogue the LA Times puts in scare quotes is how to structure and capitalize this multigenerational institution for the benefit and fiscal appetite of all Angelenos. This work starts with analysis from the city and independent work from advocates like Public Bank LA and ACT-LA. If voters approve this preliminary ballot measure, then a final, formal report and business plan will be drawn up.
The Times says that the Charter Amendment gives city leaders a blank check for a public bank. The same city reports and other legal memos available to the Times show that there would be many legal and political steps before a bank could move forward. From there, such a bank would still need approval from the Department of Business Oversight, which will be looking closely at the bank’s operations as well as its safeguarding of public funds.
We rely on newspapers to be impartial arbiters of the nitty gritty, and finance is an especially important area where regular people need an extra eye. Reprinting the Wall Street line on financial accountability is not becoming of the city’s paper of record.
Voters should reject simplistic naysaying like the Times’ endorsement and vote Yes on Charter Amendment B to restore financial independence to Los Angeles.
Legislative Director, Public Bank LA