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Treasurer and BLA present divergent public‑bank models; committee directs further work
Summary
Treasurer's task-force report and the Budget & Legislative Analyst presented differing models for a San Francisco municipal bank. The BLA recommended a phased non‑depository municipal financial corporation using limited investment‑pool earnings; the committee voted to continue the item to the call of the chair and form a business‑plan working group.
The committee held an extended hearing on Oct. 7 on a municipal bank feasibility report produced by the Treasurer’s Municipal Bank Task Force (March 2019) and a follow-up report by the Budget & Legislative Analyst (BLA).
Amanda Fried (Treasurer's Office) summarized three models — a reinvestment non‑depository, a divestment/depository option to manage the city’s cash, and a hybrid — and emphasized legal and fiscal constraints for using pooled city funds. She described rigorous financial modeling that showed large capital needs and long timelines to breakeven for full‑service depository models and urged caution on the investment‑pool uses mandated by California law.
Fred Brusseau of the BLA presented a contrasting, phased approach that recommends starting with a non‑depository municipal financial corporation (MFC) capitalized in part with earnings on a portion of the city’s pooled investment fund and limited general‑fund appropriations; the BLA model projects earlier profitability and immediate capacity to deploy loans for affordable housing and small businesses, while proposing rigorous underwriting and high capital‑to‑asset ratios to protect taxpayers. The BLA recommended launching an implementation working group to draft a business plan, test demonstration loans, and consider eventual conversion to a depository if appropriate.
Sushil Jacob (Lawyers’ Committee for Civil Rights of the SF Bay Area) and public‑bank advocates urged the board to adopt a BLA‑style phased plan and to treat the investment pool as a policy choice that the Board can responsibly manage under government‑code constraints; numerous callers representing community groups also urged moving forward with the BLA recommendations.
After testimony and public comment, the committee voted to continue Item 5 to the call of the chair and recommended forming an implementation working group and drafting a business plan before advancing legislative steps.
