California set a course to offer the nation’s first zero-cost, public option platform for personal financial services, under a new law signed by Gov. Gavin Newsom.
Assembly Bill 1177, authored by Assemblyman Miguel Santiago, D-Los Angeles, calls for the state to conduct a market analysis of a state-backed program that would give Californians a public option for banking services like debit cards.
The study would aim to determine with that service would be viable within six years. The commission must complete the analysis by July 1, 2024. Then, the Legislature could decide whether to launch a public banking program.
Black and Latino families are more likely to lack access to commercial banks than white and Asian households, a trend that Santiago aims to reverse with a public bank.
“Creating a public option for banking and closing the racial wealth gap isn’t only a moral imperative, but is necessary to foster greater financial security for all of our communities. This bill is a much-needed step to address the needs of the unbanked and underbanked and moves us closer to building a more equitable economy after the pandemic,” Santiago wrote in a statement urging lawmakers to pass his bill.
His bill was part of a package of consumer financial protection bills that the governor signed into law on Monday.
“With the nation’s strongest state consumer financial protection watchdog and these new measures, California continues to have the backs of working families recovering from the pandemic,” Newsom said in a statement.
The governor’s signature was hailed by supporters of public banking, including Trinity Tran, lead organizer for the California Public Banking Alliance.
“Universal banking access would be life-changing for the millions of Californians who face barriers to opening or maintaining a bank account and bring in billions in local spending from savings from high-cost fees and interest,” Tran said in a statement.
The bill was supported by SEIU California, whose president, Bob Schoonover, said in a statement, “Gov. Newsom does more than create the groundwork for a public banking option in signing AB 1177 into law. He sets the foundation for rebuilding a stronger and more inclusive economy. A significant proportion of Black, Latino, and low-income Californians — many of whom are essential workers who do difficult and dangerous work — have had to pay a disproportionate amount of their paychecks to access essential banking services.”
Schoonover said that AB 1177 becoming law “puts the solution within our reach, but it is only the beginning.”
