A city-owned bank? Fresno enters the chat on public banking

A group of local and statewide poverty-fighting organizations want Fresno to reimagine how it does its banking.

Fresno, which ranked ninety-seventh out of 100 in small business lending in a national study just over a year ago, lags behind the rest of the country in providing its residents access to capital.

Some proponents believe a model relatively new to American soil (with the exception of one state) could change that.

That example is what’s known as a public bank. 

Unlike the Chases and the Wells Fargos of the world, public banks are owned by local governments and operate as nonprofits. 

Their deposits are made up of local tax revenues. They offer loans to finance local needs, such as affordable housing and infrastructure projects. As loans get repaid, it generates more revenue for future local projects.

Proponents say the model keeps public dollars working for the community, instead of for national bank chains’ shareholders.

“We know that Wall Street isn’t going to give us the pass that we need,” said Eric Payne, executive director of the Central Valley Urban Institute.

“It’s going to have to come from us.”

Payne’s organization was one of the local sponsors for an event at Fresno City College’s West Fresno Center on Thursday evening, where leaders pushing for public banking at the state level pitched the concept to Fresno residents.

The event was co-hosted by the Academy of Financial Education, the Central Valley Immigrant Integration Collaborative, Education & Leadership Foundation and End Poverty in California.

Payne, alongside leaders from the California Public Banking Alliance, also gave a presentation on the topic at Thursday’s Fresno City Council meeting.

The public banking model has worked in other places like North Dakota, where a state-owned bank has reinvested hundreds of millions to the general fund over its 100 years of operation, presenters shared.

And in California, a state law passed in 2019 paved the way for cities here to follow suit and set up their own public banks.

Other cities like Los Angeles are now in the process of authorizing a feasibility study on a public bank.

Organizers of Thursday’s event said their goal is to get a feasibility study going in Fresno as well, although they added that it’s not yet clear whether there’s any appetite from the city council. There were no questions or discussion from councilmembers following Thursday’s presentation on public banking. 

And while attendees at the West Fresno Center meeting voiced interest in the model, many also had questions about whether a local government-backed bank would indeed promote equitable access to capital. 

“I love this model. This model makes so much sense to me,” said Alondra Vasquez, CEO of Trifecta Development and Consultation Company. “My apprehensions are, once we establish it, it starts bringing in large amounts of money, what’s going to happen? Are we going to end up right back in the same situation?

“It’s just,” she added, “we’ve had a long line of corruption here.”

How a public bank works

Public banks aren’t run by the city or state that creates them.

Nor are they run by “hippies,” said Trinity Tran, the lead organizer with the California Public Banking Alliance.

They’re separate legal entities with their own governing boards.

“The day-to-day operations are run by public bankers and finance experts,” Tran added, whose lending patterns must align with the mission and mandates established through a business plan laid out prior to its formation.

The banks are also wholesale rather than retail financial institutions — meaning they’re not the kind of bank where individuals can set up accounts or access loans directly. 

Instead, they support the community banks, credit unions and Community Development Financial Institutions (CDFIs) in a given area. 

It helps those local banks “do more than they would without the wholesale financial institution,” according to Oscar Perry Abello, a senior economic justice correspondent with Next City. He was in Fresno on Thursday for a separate event on the community banking model.

“On the back end, the public bank would provide liquidity, secondary market buying, loan participations,” he said, “or other ways that wholesale financial institutions support retail financial institutions.”

Bank access in Fresno

Vasquez’s business, Trifecta Development and Consultation Company, offers support services to small business owners in Fresno looking to scale up.

She was inspired by her family’s own experiences struggling to access banks in Fresno.

“Since I grew up in southwest Fresno, the proximity to a bank from our home, it was not in walking distance. You had to get in a car,” she said.

Not developing that in-person relationship with a bank early on can make it more difficult to navigate the system as an adult, some experts believe.

And Vasquez isn’t alone in her experience.

In south Fresno, outside of downtown, it’s difficult to find any bank locations at all.

In southwest Fresno, the neighborhood’s first credit union ATM opened as recently as last June, the Business Journal reported.

That’s why Vasquez and other longtime residents hope a new model like a public bank can make a difference. 

“It’d be great to build something like that, that my children can access in the future,” she said, “so they don’t have to struggle as much as I did.”