EDITORIAL
California Bill Proposes a State-Run Bank – California has already spent $100B on a 171-mile bullet train from one farm town to another that after 15 years is still not done. The state has admitted to getting ripped off for $31B in fraudulent unemployment benefits in 2020 alone. Now, comes a state assembly bill that proposes that the very same state run its own bank. What could go wrong?
AB 1177, “The California Public Banking Option Act”, author Miguel Santiago (D) Los Angeles, has gathered strong partisan support for the bill which draws on California’s soaring unemployment rates, rising homelessness and an unprecedented wave of evictions looming as a result of the COVID-19 pandemic as the impetus for pushing the state into the financial services sector.
The bill states that “the financial stability of the state’s most vulnerable residents has become a matter of particularly urgent concern, not only to those individuals themselves but to the economic health of the state as a whole.”
The BankCal Program, as it is known, is claimed “would create for the purpose of protecting consumers who lack access to traditional banking services from predatory, discriminatory, and costly alternatives, by offering access to voluntary, zero-fee, zero-penalty, federally insured transaction account and debit card services at no cost to account holders.”
Assembly Bill 177 is already opposed by the California Credit Union League (CCUL) who claim that the bill “would create a high-cost government banking system that is completely duplicative of what is already offered by credit unions.“
The CCUL goes on to add; “California could spend a fraction of what AB 1177 would cost by instead partnering with credit unions that already offer low or no-cost access to a broad range of financial products and services. Credit unions stand ready to be the solution to the unbanked and underbanked. However, building an entire government banking system is not the answer.”
Adding insult to injury, they intend to look to the credit union industry itself to help administer many of these services while also looking to minimize or eliminate any fees to the state’s participants. Any way that you look at that, it looks like a major expense to the state which will doubtlessly add to the already massive tax burden the state imposes on it’s population.
AB1177 is expected to be brought to the Assembly Banking and Finance Committee and heard by the end of April. The same committee that last year approved California’s eventually failed AB 2501 which proposed a hold on all repossession and foreclosure activity in the state of California until one-hundred and eighty days after the end of the Federal Crisis.
And all of this is going on as ACR24 sneaks its way through committee running its clandestine investigation into “Whether the law should be revised that relates to creditors’ remedies, including, but not limited to, attachment, garnishment, execution, repossession of property (including the claim and delivery statute, self-help repossession of property, and the Commercial Code provisions on repossession of property), confession of judgment procedures, default judgment procedures, enforcement of judgments, the right of redemption, procedures under private power of sale in a trust deed or mortgage, possessory and nonpossessory liens, insolvency, and related matters.”
With the state doing all of this, President Biden wanting the CFPB to get into the credit reporting business, it makes one wonder just how far off we are from a nationalized banking system.
California and Nevada Credit Union Leagues – CCUL
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