L.A. City Council votes to identify $460,000 for public bank study amid budget concerns
City-run bank study passes LA City Council
The Los Angeles City Council voted 11-3 to identify $460,000 for a feasibility study on establishing a city-owned public bank. Supporters say a public bank could help finance affordable housing, small businesses and infrastructure while keeping more money local.
LOS ANGELES - The Los Angeles City Council voted 11-3 Wednesday to move forward with efforts to identify $460,000 for a study examining whether the city should establish its own public bank, reviving a proposal that has stalled amid budget pressures.
The vote drew sharp criticism from Councilmember Traci Park, who questioned whether Los Angeles should spend money exploring a new banking system while struggling to address existing city needs.
"We can’t even manage our own damn finances," Park said during the council meeting.
Supporters argue a public bank could help finance affordable housing, support small businesses and invest in infrastructure, while allowing the city to keep more of its money local.
"A public bank has the potential to finance affordable housing, supporting small businesses, and invest in infrastructure that serves instead of private profit," Councilmember Ysabel Jurado said.
Park questioned whether businesses and residents would trust a bank operated by the city.
"Who in their right mind would do their financial businesses and banking with the Bank of the City of L.A.? Absolutely no one," Park said.
A proposal years in the making
The effort to establish a Los Angeles public bank dates back several years. In October 2021, the City Council voted unanimously to study the viability of creating a city-owned bank and develop a business plan.
In June 2023, the council approved $460,000 for the first phase of a feasibility study. Then-Councilmember Nithya Raman, who is now running for mayor, championed the proposal.
"What’s really exciting is, we have a potential to fill the gaps that our overreliance on commercial banking has left us," Raman said during a June 2023 council meeting.
The funding was later swept back into city reserves amid budget pressures, delaying the study.
The latest council action directs the city to identify funding for the study, including exploring the potential use of discretionary funds from council offices. The motion does not itself establish a public bank.
In a statement Wednesday, Raman’s office said the city had already committed to studying the proposal and that the latest vote would help move that work forward.
"Councilmember Raman supported today’s action so that work can move forward and provide the City the information it needs to judge whether a public bank could responsibly serve Angelenos," her office said.
Raman’s office also said her district allocated $15,000 in discretionary funds to the Public Bank Feasibility Study last year.
The renewed push comes as Los Angeles continues to face budget challenges, with a projected budget gap of nearly $100 million.
What would a public bank look like?
Unlike a traditional retail bank, a public bank would be owned by the city and designed to manage public funds and potentially provide financing for projects that serve the public interest.
Eli Lipmena, executive director at MoveLA and a member of the Public Bank LA Coalition, said a public bank would hold public revenues, such as taxes and fees, rather than operate like a conventional bank where customers open checking accounts and withdraw cash from ATMs.
The model could allow the city to direct financing toward affordable housing, small businesses and infrastructure projects. Supporters also argue it could reduce the fees Los Angeles pays to private financial institutions.
"The city spends millions each year in fees to pay private banks. A public bank would let us keep that money here in L.A.," Jurado said.
However, Thomas Tarter a banking expert from Andela Consulting Group Inc. warns that creating a public bank would carry financial and operational risks.
"The use of taxpayer money. The potential for political influence, the potential for credit risk and operational risk," Tarter said.
Park also criticized the cost of hiring another consultant to study the proposal, pointing to other needs across the city.
"Half a million dollars for another consultant when we have streetlights out across the city is ridiculous," Park said.
The council’s latest vote does not mean Los Angeles will open a public bank. The city must identify funding for the feasibility study, which is intended to help officials determine whether the proposal is financially viable and could responsibly serve Angelenos.
Mayor Karen Bass does not vote on City Council motions. FOX 11 reached out to her office for comment on the proposal but had not received a response.
The Source: This report referenced information from Wednesdayâs Los Angeles City Council meeting, previous council actions and statements from councilmembers, former Councilmember Nithya Ramanâs office, MoveLAâs Eli Lipmena and banking expert Thomas Tarter. FOX 11 also reached out to Mayor Karen Bassâ office for comment.