Credit unions may have recently received a local invitation inviting their leaders to participate in a gathering to discuss the creation of a public bank to serve local regions.
While the California Credit Union League is proud of its work on the public-bank idea within California’s Assembly Bill 857 from four years ago, industry leaders across the state must remain diligent in their advocacy efforts TODAY to ensure the amendments for credit unions are not forgotten or misinterpreted.
In 2019, the League worked diligently on AB 857, which provides authority and sets the framework for the creation of a public bank by local municipalities. The League ensured credit unions would not lose members to one of these public banks if they ever came to fruition by negotiating amendments that state a public bank shall conduct retail activities in partnership with local financial institutions and shall not compete with local financial institutions. Credit unions are included in the definition of “local financial institutions.”
Moreover, “retail activities” are defined as providing any kind of financial product or service to a person that is typically offered or provided by a local financial institution, including (but not limited to) the following:
Fortunately, these amendments in 2019 were offered and accepted. The intention behind the proponents of public banking was to fund large infrastructure projects through these public banks across localities and municipalities in California and take that money from Wall Street banks.
“However, we must stay alert,” said Diana Dykstra, president and CEO of the League. “Advocates of public banks across California are passionate about their creation and must be taken seriously. We remain skeptical that these institutions will be helpful to credit unions. The way they are currently envisioned, public banks are a potential threat to the credit union movement.”
She added: “Credit unions are already the people’s bank. We must continually remind public-bank proponents of the work we do in our communities each year — for the people.”