Business

Coming Soon to California: A ‘Zero-Fee’ Public Banking Option

Proponents of public banking in California say Wall Street banks have failed low-income communities, particularly people of color. They also say the public banks will provide easier access to capital that will be critical to helping small businesses and neighborhoods rebound after the pandemic.

Published

3 years ago

October 20, 2021

Isabelle Price

A woman sits at her dining room table with laptop and financial reports doing her monthly budget. She is smiling at the ease of use as she works on her smart phone banking app to do monthly finances, pay taxes and save money for the future.

On October 4, Gov. Gavin Newsom signed legislation paving the way for a new public banking system in California.

AB 1177, known as the ‘California Public Banking Option Act,’ creates a zero-penalty, zero-fee, and zero-minimum-balance platform for basic financial services.

These services include direct deposit from employers and public benefits, automatic bill pay to registered payees, recurring payments and donations to account holders’ organizations or charities of choice, and an infrastructure to support account holders in building credit.

“AB 1177 will help Californians stay protected from overdraft fees and penalties and give them an opportunity to save money and build wealth while fighting the racial wealth gap,” said Assemblymember Miguel Santiago (D-Los Angeles), lead author of the bill.

“California is leading the nation’s public banking movement and we must keep working to provide no-fee banking services to all Californians,” he added.

Santiago wrote the bill with the intention to help close the financial services gap that leaves 1 in 4 Californians unbanked or underbanked. Modeled after the state’s public retirement program CalSavers, the bill forms a commission of representatives from the Treasurer’s office, the Department of Financial Protection and Innovation, financial access experts and community members to oversee market analysis on how the program should be implemented.

“Financial exclusion and scarcity have been a tool for oppression, discrimination and systemic inequity for too long. Public banking options such as BankCal, along with new technology that allows for free exchange over the internet, are urgently needed to decentralize power, privilege and financial control,” said Briana Marbury, executive director of the Interledger Foundation, a non-profit that advocates for standards and technologies that support an open and integrated global financial system.

Opponents of the bill believe that government-owned banks open the door for corruption and that the cost of any mismanagement of funds will come out of taxpayers’ pockets.

A 2015 article published by the Cato Institute critiques past public banking projects, highlighting shortcomings and failures.

Mark A. Calabria, who was chief economist to former Vice President Mike Pence and former director of the Federal Housing and Finance Agency authored the article.

He cites devastating losses Germany’s public banks suffered during the sub-prime mortgage crisis of 2008.

Calabria also points to public banking failures closer to home.

“The recent history of Fannie Mae and Freddie Mac, quasi‐ public banks at the federal level, illustrates that mismanagement and corruption are alive and well at the intersection of the public and private,” he wrote.

However, Trinity Tran, co-founder of the California Public Banking Alliance, argues instead that AB1177 does not create a new bank but “creates a statewide retail banking option through which every California worker can access zero-cost services.”

While California is known for its groundbreaking legislation, it will not be the first state with a banking system like this. North Dakota’s public banking system was founded back in 1919.

Marbury believes that the bill is only the first step toward a broader initiative that would revolutionize accessibility to financial growth and equality.

“This is an exciting development, but not far-reaching enough. Public banking initiatives should be introduced in other states across the U.S. to ensure equal access to financial services for the most vulnerable sectors of our population while elevating the economic health of society as a whole,” she said.

In addition, global financial inclusion should encompass both “brick and mortar” bank access for everyone and a more inclusive internet,” she added.

Isabelle Price

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State Controller Malia Cohen Keynote Speaker at S.F. Wealth Conference

California State Controller Malia Cohen delivered the keynote speech to over 50 business women at the Black Wealth Brunch held on March 28 at the War Memorial and Performing Arts Center at 301 Van Ness Ave. in San Francisco. The Enterprising Women Networking SF Chapter of the American Business Women’s Association (ABWA) hosted the Green Room event to launch its platform designed to close the racial wealth gap in Black and Brown communities.

Published

4 days ago

April 20, 2024

Oakland Post

American Business Women’s Association Vice President Velma Landers, left, with California State Controller Malia Cohen (center), and ABWA President LaRonda Smith at the Enterprising Women Networking SF Chapter of the ABWA at the Black Wealth Brunch.

By Carla Thomas

The Enterprising Women Networking SF Chapter of the American Business Women’s Association (ABWA) hosted the Green Room event to launch its platform designed to close the racial wealth gap in Black and Brown communities.

“Our goal is to educate Black and Brown families in the masses about financial wellness, wealth building, and how to protect and preserve wealth,” said ABWA San Francisco Chapter President LaRonda Smith.

ABWA’s mission is to bring together businesswomen of diverse occupations and provide opportunities for them to help themselves and others grow personally and professionally through leadership, education, networking support, and national recognition.

“This day is about recognizing influential women, hearing from an accomplished woman as our keynote speaker and allowing women to come together as powerful people,” said ABWA SF Chapter Vice President Velma Landers.

More than 60 attendees dined on the culinary delights of Chef Sharon Lee of The Spot catering, which included a full soul food brunch of skewered shrimp, chicken, blackened salmon, and mac and cheese.

Cohen discussed the many economic disparities women and people of color face. From pay equity to financial literacy, Cohen shared not only statistics, but was excited about a new solution in motion which entailed partnering with Californians for Financial Education.

“I want everyone to reach their full potential,” she said. “Just a few weeks ago in Sacramento, I partnered with an organization, Californians for Financial Education.

“We gathered 990 signatures and submitted it to the [California] Secretary of State to get an initiative on the ballot that guarantees personal finance courses for every public school kid in the state of California.

“Every California student deserves an equal opportunity to learn about filing taxes, interest rates, budgets, and understanding the impact of credit scores. The way we begin to do that is to teach it,” Cohen said.

By equipping students with information, Cohen hopes to close the financial wealth gap, and give everyone an opportunity to reach their full financial potential. “They have to first be equipped with the information and education is the key. Then all we need are opportunities to step into spaces and places of power.”

Cohen went on to share that in her own upbringing, she was not guided on financial principles that could jump start her finances. “Communities of color don’t have the same information and I don’t know about you, but I did not grow up listening to my parents discussing their assets, their investments, and diversifying their portfolio. This is the kind of nomenclature and language we are trying to introduce to our future generations so we can pivot from a life of poverty so we can pivot away and never return to poverty.”

Cohen urged audience members to pass the initiative on the November 2024 ballot.

“When we come together as women, uplift women, and support women, we all win. By networking and learning together, we can continue to build generational wealth,” said Landers. “Passing a powerful initiative will ensure the next generation of California students will be empowered to make more informed financial decisions, decisions that will last them a lifetime.”

Oakland Post

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Business

Black Business Summit Focuses on Equity, Access and Data

The California African American Chamber of Commerce hosted its second annual “State of the California African American Economy Summit,” with the aim of bolstering Black economic influence through education and fellowship. Held Jan. 24 to Jan. 25 at the Westin Los Angeles Airport Hotel, the convention brought together some of the most influential Black business leaders, policy makers and economic thinkers in the state. The discussions focused on a wide range of economic topics pertinent to California’s African American business community, including policy, government contracts, and equity, and more.

Published

5 days ago

April 20, 2024

Oakland Post

Toks Omishakin, Secretary of the California State Transportation Agency (CALSTA), answers questions from concerned entrepreneurs frustrated with a lack of follow-up from the state. January 24, 2024 at the Westin Los Angeles Airport Hotel, Lost Angeles, Calif. Photo by Solomon O. Smith

By Solomon O. Smith, California Black Media

The California African American Chamber of Commerce hosted its second annual “State of the California African American Economy Summit,” with the aim of bolstering Black economic influence through education and fellowship.

Held Jan. 24 to Jan. 25 at the Westin Los Angeles Airport Hotel, the convention brought together some of the most influential Black business leaders, policy makers and economic thinkers in the state. The discussions focused on a wide range of economic topics pertinent to California’s African American business community, including policy, government contracts, and equity, and more.

Toks Omishakin, Secretary of the California State Transportation Agency (CALSTA) was a guest at the event. He told attendees about his department’s efforts to increase access for Black business owners.

“One thing I’m taking away from this for sure is we’re going to have to do a better job of connecting through your chambers of all these opportunities of billions of dollars that are coming down the pike. I’m honestly disappointed that people don’t know, so we’ll do better,” said Omishakin.

Lueathel Seawood, the president of the African American Chamber of Commerce of San Joaquin County, expressed frustration with obtaining federal contracts for small businesses, and completing the process. She observed that once a small business was certified as DBE, a Disadvantaged Business Enterprises, there was little help getting to the next step.

Omishakin admitted there is more work to be done to help them complete the process and include them in upcoming projects. However, the high-speed rail system expansion by the California High-Speed Rail Authority has set a goal of 30% participation from small businesses — only 10 percent is set aside for DBE.

The importance of Diversity, Equity and Inclusion (DEI) in economics was reinforced during the “State of the California Economy” talk led by author and economist Julianne Malveaux, and Anthony Asadullah Samad, Executive Director of the Mervyn Dymally African American Political and Economic Institute (MDAAPEI) at California State University, Dominguez Hills.

Assaults on DEI disproportionately affect women of color and Black women, according to Malveaux. When asked what role the loss of DEI might serve in economics, she suggested a more sinister purpose.

“The genesis of all this is anti-blackness. So, your question about how this fits into the economy is economic exclusion, that essentially has been promoted as public policy,” said Malveaux.

The most anticipated speaker at the event was Janice Bryant Howroyd known affectionately to her peers as “JBH.” She is one of the first Black women to run and own a multi-billion-dollar company. Her company ActOne Group, is one of the largest, and most recognized, hiring, staffing and human resources firms in the world. She is the author of “Acting Up” and has a profile on Forbes.

Chairman of the board of directors of the California African American Chamber of Commerce, Timothy Alan Simon, a lawyer and the first Black Appointments Secretary in the Office of the Governor of California, moderated. They discussed the state of Black entrepreneurship in the country and Howroyd gave advice to other business owners.

“We look to inspire and educate,” said Howroyd. “Inspiration is great but when I’ve got people’s attention, I want to teach them something.”