Cities and counties in California will be allowed to create their own public banks, making the state one of just two to legalize institutions of that kind.
The California governor, Gavin Newsom, on Wednesday signed the Public Banking Act, or AB 857, which will allow city and county governments to create, or sponsor, public banks. Those banks will in turn provide public agencies access to loans at interest rates much lower than they could find at private banks.
Supporters say the change sets the stage for funding infrastructure demands or providing loans to developers to help meet affordable housing needs.
Assemblyman David Chiu, who co-authored the legislation with assemblyman Miguel Santiago, said the bill’s “signing sends a strong message that California is putting people before Wall Street profits”.
The Democratic congresswoman Alexandria Ocasio-Cortez tweeted her support on Wednesday after Newsom signed the bill, writing: “Public banking is next level!”