Treasurer José Cisneros announced the release of the Municipal Bank Feasibility Task Force Report

Friday, March 22, 2019 - Treasurer José Cisneros announced today the release of the Municipal Bank Feasibility Task Force Report, the first report of its kind to provide detailed analysis of the financial costs and benefits of creating a municipal public bank.  The Municipal Bank Feasibility Task Force (Task Force) worked for more than a year to identify and prioritize the goals of a municipal bank and the associated lines of business. The Report outlines three potential models for a municipal bank as well as other opportunities to leverage the City’s banking and investment practices to promote community goals.

“I understand the urgency of the public banking movement: Wall Street banks have been bad for all but the wealthiest Americans,” said Treasurer José Cisneros. “As the City’s banker and chief investment officer, I am proud that this Task Force successfully balanced fiduciary responsibility and visionary leadership. Now, our policymakers and the public have clear financial models for municipal banks to help them determine how best to proceed.” 

The formation of the Task Force was recommended by the Board of Supervisors in resolution 152-17 to “advise the Treasurer… the Mayor, the Board of Supervisors and relevant City Departments regarding the creation of a Municipal Public Bank.” The Task Force brought together advocates working to improve access to credit for low-income, communities of color; finance professionals with years of experience in traditional consumer banks, credit unions and community development financial institutions; and government officials with expertise in banking, investment, affordable housing and public finance. The Task Force met eight times over the course of about a year to investigate the concept of a public bank. Using a consensus-based process, they created and finalized a set of guiding principles to inform the work of the Task Force and enumerated and prioritized the goals they wanted to see a municipal bank achieve. After laying this framework, the Task Force and staff researched and discussed various bank and governance structures, lines of business, and options for bank capitalization and deposits.

“The Task Force has provided a report which adds significant research and input into the discussion of a public bank both in the Bay Area and elsewhere,” said Marc Franson, Partner at Chapman and Cutler LLP. “While each member may come to the table looking through a different lens, the report reflects all points of view and digests and summarizes an enormous amount of material and viewpoint in providing guidance on if, and how, to proceed.”

Given the diversity of expertise and opinion on the Task Force, this report does not opine on whether a municipal bank, or a particular municipal bank model, is the right option for the City. Instead, the report seeks to provide enough specifics to guide future policy decisions by the Board of Supervisors and the Mayor. Members of the Task Force were given the opportunity to opine on their recommendations via letters, which will be transmitted to the Board of Supervisors with the final report.

In a letter to the Board of Supervisors, Task Force members Sushil Jacob (Lawyers’ Committee for Civil Rights of the San Francisco Bay Area), Paulina Gonzalez-Brito (California Reinvestment Coalition), Ky-Nam Miller, and former Supervisor John Avalos wrote,  “The report gathers critical data, provides initial analysis and is the beginning of the conversation about how the City can create a safe, accountable and transformative banking solution that will benefit all of its residents.”

The centerpiece of the report is the presentation of three financial models for a municipal bank: 

Model One: Reinvest

A $1.1 billion bank that performs affordable housing and small business lending and requires $184 million in funding before it achieves financial sustainability.

Model Two: Divest

A $3.1 billion bank that performs the City’s cash management and commercial banking functions and requires $1.6 billion before it achieves financial sustainability.

Model Three: Combination

A $10.4 billion combined divestment and reinvestment bank that requires $3.9 billion before it achieves financial sustainability.

“I agree with our models’ results, namely that the cost of establishing and running a municipal bank can be quite large and persistent, depending upon the bank’s goals and broader macroeconomic factors,” said James Clark, former Deputy Assistant Secretary for Federal Finance at U.S. Department of the Treasury. “Should policymakers deem both the size and uncertainty of these costs acceptable, however, I also believe that significant benefits could accrue to the people and businesses of San Francisco.”

The report also outlines policy considerations associated with starting a municipal bank, such as detailing the sources of funds that can and can’t be used for capitalization, start-up costs and deposits; and governance structures.

“A municipal bank could easily be the wrong tool,” said Ben Mangan, Executive Director, Center for Social Sector Leadership at UC Berkeley. “Some of the economic models illustrate that San Francisco would incur billions in losses to eventually, maybe have such a bank function effectively. There are hundreds of thousands of low-income San Franciscans who urgently need housing, social services, healthcare, transportation, education, childcare, job training, legal aid and more. Are we willing to accept the trade-offs that will be required to launch a municipal bank that will materially decrease our ability to provide these things to San Francisco families?”

Additionally, the report includes alternative options that could achieve similar aims as a municipal bank and offers next steps should the City choose to move forward with creating a municipal bank. These next steps include:

  1. Convening City agencies performing lending work to evaluate expansion

  2. Lobbying for and enacting change to state law to create a public bank charter

  3. Developing governance structure, hiring bank organizers and creating a leadership team

  4. Hiring a consultant to develop and draft the bank’s business plan

“San Francisco’s economy is rare among cities and regions in being able to command the resources to accomplish bold new projects to confront the existential issues of equity, sustainability and justice,” said Lauren Leimbach, Executive Director of Community Financial Resources, and Task Force member. “The City has the opportunity now to take a lead in the developing Public Banking movement, just as it has played a leading role in the Cities for Financial Empowerment movement.”

The report will be submitted to the Board of Supervisors, which is expected to hold a hearing to discuss next steps.  To see the complete report and appendices, and the biographies of Task Force members, visit: