Supporters and opponents of the plan to create a San Francisco public bank held dueling rallies Sunday, Aug. 30, at Mission Playground Park. Opponents gathered at 10 a.m. and supporters at 11 a.m.
Proposition B, which will appear on the November ballot, will give San Francisco voters a say on whether to accept or reject a city-owned bank.
A public bank would be a vehicle for San Francisco government to use taxpayer money to advance special interests, including those considered too risky for conventional lenders. It would make loans for social housing (a type of public housing), businesses without proven income and poor credit, and climate and green infrastructure initiatives.
The bank would initially be funded with city money, such as general-fund dollars or cash already invested by the treasurer. Current estimates are $325 million to $400 million. Later, it could draw on additional taxes, donations, or city deposits. The city would need to hire professional bankers to manage ongoing operations.
Members of the public would not interact with the bank. There would be no branches, ATMs, checking or savings accounts, credit cards, or loans for homes, cars, debt consolidation, or businesses.
Nor would it be like a credit union, which offers banking services while being member-owned. As not-for-profit financial institutions, they provide consumer education, low-cost accounts, and a wide span of loans, including for applicants with no or troubled credit histories.
If Proposition B passes, it would create a legal framework for a municipal finance corporation in San Francisco, a precursor institution to a full public bank. At that stage, it would be enshrined in the city charter.
Vote No on Proposition B rally
Speakers at the No on Prop B rally included Marie Hurabiell, founder of ConnectedSF; Tuan Ngo, founder of Asians Unite; Edward Escobar, founder of the Coalition for Community Engagement; District 4 Supervisor Alan Wong; Henry Karnilowicz, president of the South of Market Business Association; Larry Marso, an attorney and banking professional; and Francesca Pastine, president of the Inner Mission Neighborhood Association.
Wong said San Francisco should remain open to new ideas but exercise good judgment. He questioned why creating an entirely new city bureaucracy was the answer, how it would be capitalized, what risk the public would assume, and what would happen if it doesn’t work out as promised.
“San Francisco should absolutely be ambitious about affordable housing, small business, and infrastructure, but that ambition must be matched by discipline,” Wong said. “We’re making difficult choices about what we can afford and where public dollars can do the most good. And there’s no shortage of important work for San Franciscans to do.”
Voicing his opposition, Wong explained that a public bank would put San Francisco in an entirely new and specialized business, not just requiring significant public capital, but exposing the city to the serious financial and operational risks involved in running a bank.
Moreover, San Francisco already has community lenders, credit unions, nonprofit loan funds, and other financial partners doing similar work. For example, Citizens Bank recently committed more than $5 million in loans to San Francisco small businesses, $500,000 to the Main Street Launch Small Business Fund and $250,000 to the San Francisco Downtown Development Corp. JPMorgan Chase has separately committed $10 million to the fund.
Griffin Lee of ConnectedSF read a statement from District 2 Supervisor Stephen Sherrill, who also opposes the measure:
A public bank is a slow, costly answer to problems we could be solving today, with tools we already have,” the statement said. “San Francisco hasn’t fully leveraged its existing financing mechanisms, so there is little reason to believe a brand new, unproven institution would be utilized any more effectively. Rather than build an expensive new bureaucracy from scratch, with years of start-up costs and no FDIC approval, the city should double down on existing tools to start solving problems today.
“… when government gets into banking, the public ultimately carries the risk.”
— Henry Karnilowicz, President of the South of Market Business Association
And banking is hardly simple, said Karnilowicz. “A private bank has to manage deposits, make sound loans, control risk, comply with extensive regulations … when a private bank makes a bad investment, its shareholders take the risk. But when government gets into banking, the public ultimately carries the risk.”
In fact, California law would require such a bank to back every dollar of public deposits with an equal amount of security assets. This could tie up cash needed for essential operations. Pursuing social goals, like offering cheap, high-risk, nonrevenue-generating loans, could cause the city’s primary fund to lose money, too, not only in the short term but indefinitely.
Pastine, a longtime community activist, said she has never heard a constituent or neighbor call for a public bank.
“There are plenty of other needs, wants and desires,” she said. “A major concern in my neighborhood is a lot of history of Mission supervisors investing their energy in ideology rather than reality.”
Vote Yes on Proposition B rally
Speakers at the Yes on Proposition B rally included District 9 Supervisor Jackie Fielder, District 11 Supervisor Chyanne Chen, District 5 Supervisor Bilal Mahmood, former San Francisco Supervisor Dean Preston, and Misha Steier, spokesman for the San Francisco Public Bank Coalition.
Members of the San Francisco Labor Council, the Democratic Socialists of America, and Indivisible SF also attended.
“This is about every day, working-class people,” Fielder said. “Having our city dollars, which amounts to $16 billion, actually work for us, recirculate in our own economy in affordable housing financing, support for small businesses to open and expand, support for renewable energy to meet our climate goals has always been the vision for a public bank.”
Fielder said supporters are up against people who do not believe in “democratizing the economy” and who believe the city serves only the wealthy.
“There’s a lot being said right now across the city about what it takes to recover our economy, and I think not enough is given to what is necessary to recover the small businesses,” Mahmood said, explaining that they need capital, but traditional banks often refuse them.
“With a public bank, which doesn’t have to operate by pure financial profit motivation, they can get and provide a loan for small businesses, without that risk of credit initially.”
— Bilal Mahmood, District 5 Supervisor
“They don’t have any credit, so they can’t get a loan,” said Mahmood. “With a public bank, which doesn’t have to operate by pure financial profit motivation, they can get and provide a loan for small businesses, without that risk of credit initially. That’s just one example. It helps homeowners; it helps with lines of credit.”
Although Mahmood acknowledged there is misinformation surrounding the public bank proposal, several of his claims were confusing.
First, the San Francisco Public Bank would not be a direct lender. It would operate on the wholesale-partner model, working behind the scenes instead of serving small business owners directly as a bank or credit union would.
Also, not all business owners would be equal under the plan. The San Francisco Reinvestment Working Group explicitly states that minority-owned businesses would be designated as a primary priority population.
Nor would the San Francisco public bank offer mortgages to conventional home buyers or home equity lines of credit to homeowners, as Mahmood’s remarks implied.
A call for clarity, not confusion
Following the Yes on B rally, Mahmood and Chen did not respond to requests for comment. Preston and Fielder were also unavailable.
Steier, however, addressed critics’ concerns that a public bank could be costly, unnecessary, and put public money at risk. He pointed to the Bank of North Dakota (BND) as a successful model.
There are crucial differences between the BND and what the Bank of San Francisco would be, though.
The BND is state-run, not city-run, and focuses on funding agriculture, commerce, and industry. It does not offer unsecured working capital loans to risky borrowers. North Dakota state law prohibits investments and financial decisions based on social or ideological metrics. Because its underwriting is extremely conservative, it maintains an exceptionally safe credit profile.
Steier also claimed that private lenders seek out risk because it brings them bigger returns. There is a “whole universe of lower risk, higher return loans that private lenders aren’t as interested in because there isn’t the potential for high profits,” he said.
Yet this is exactly the opposite of how private banks function. They pursue profit and accept only the risk they can price, structure, and monitor. Lenders lose money when borrowers default, so their incentive is to avoid risk, not pursue it.
Unlike the No on B rally, where speakers were eager to offer detailed and specific answers, the Yes on B side provided information that was often vague or conflicting.
“It’s a bait and switch,” Escobar said. “We’re there to discuss details, at nauseam if necessary. That’s what we do. I’m a product of the Mission. Born in S.F. Those folks are tech bros, self-entitled. They claim to speak to communities of color. There’s no rational thought. They want to gamble with taxpayers’ money.”
