What is it?

Prop B would authorize SF to create a City-owned Municipal Finance Corporation (MFC) now, and a Public Bank later. It provides no money for either one. The MFC would only be created if the Treasurer-Tax Collector determines there is enough funding and the City secures the capital it requires. The Public Bank would only be created after the MFC has been running for at least three years and obtains state and federal regulatory approval.

The MFC would be able to lend money to the City, nonprofits, and private businesses for affordable housing, homeownership, small business, and environmental projects. The Public Bank would do the same, but could also hold deposits.

Both bodies are not allowed to invest in "predatory lending, fossil fuels, tobacco, weapons, prisons, and businesses that break labor law." It does not define any of these terms, so the commissions would decide what counts.

Governance

Each institution gets a public oversight commission and a corporate board, and the corporate boards, not the City, will run daily operations. The Board of Supervisors appoints four of the nine commission seats, more than any other branch or elected official. The Mayor appoints two, and the Treasurer-Tax Collector, Controller, and City Attorney one each. Current and recent politicians are not eligible.

Read the full annotated legal text →

Why vote No?

San Francisco does not need a public bank, especially when the law creating it, Prop B, is riddled with errors.

You should vote against Prop B on the merits. Not only will it fail to solve the problems it claims exist, it requires FDIC deposit insurance, which the Bank of North Dakota does not have and which the FDIC will not grant a government-owned bank, and it exempts the bank's overseers from San Francisco's Sunshine Ordinance. If this were a more modest proposal to, for example, provide advantageous financing for infrastructure and construction projects, then we would be more sympathetic. But its ultimate goal is to hold taxpayer money in a bank where City Hall picks everyone who picks the bankers.

One central tenet of the public bank is to move the City's money "out of Wall Street," but this claim doesn't survive contact with reality. The City's roughly $17 billion in cash isn't sitting in a Wall Street vault or invested in risky stocks; the Treasurer invests it mostly in safe U.S. Treasury and federal agency securities.

It also has a fundamental internal contradiction: it cites the Bank of North Dakota as an example of a successful public bank while banning San Francisco from one of that bank's signature lending lines: fossil fuels. Prop B conveniently ignores the fact that the Bank of North Dakota is a significant energy lender, including oil and gas, at about 9% of its loan book. The bank's S&P rating notes its "substantial concentrations relative to most rated U.S. banks, including" energy and agricultural lending. North Dakota is so committed to its oil industry that it sued the federal government over the costs of policing the Dakota Access Pipeline (DAPL) protests, and won a $28 million settlement.

Here are a few more inaccurate claims in the measure:

Claim: The Municipal Finance Corporation can become a Public Bank once it "seek[s] all necessary regulatory approvals."
Verdict: Blocked by the FDIC.
Reality: State law requires a public bank to obtain FDIC deposit insurance, and no government-owned bank in America has it. The Bank of North Dakota is not an FDIC member; its deposits are guaranteed by state taxpayers instead. The FDIC has told American Samoa it will not insure its territorial bank unless the government sells it. A bank owned by the City of San Francisco would face the same answer.

Claim: "Existing financial institutions have historically failed [...] to provide adequate lending products to serve the unmet financing needs for affordable housing."
Verdict: Misleading.
Reality: Banks are the main private funder of subsidized housing, supplying about 80% of low-income housing tax credit equity nationally. They do it largely because the Community Reinvestment Act pushes them to invest where they take deposits, which is why CRA-motivated banks bid credit prices up in big cities and leave "CRA deserts" in rural areas. San Francisco is no desert. What stalls projects here is a shortage of subsidy, not lenders: San Francisco Planning counts a gap-funding backlog of more than $1B for affordable projects that are already approved, and a 199-home senior project in the Outer Sunset paused this year for lack of gap funding, not for lack of a loan. A public bank makes loans that must be paid back; it cannot fill a subsidy gap. Subsidy is what Prop C provides.

Claim: The City's deposits would give the bank money to lend out.
Verdict: False.
Reality: California requires banks holding government deposits to pledge collateral worth 110% of every dollar deposited. City deposits wouldn't free up capital to lend; they'd consume it. Even the Public Banking Institute's legal advisor calls the collateral rules "really a killer."

Claim: "Public banking has a long history of success supporting equitable economic development internationally and domestically"
Verdict: False.
Reality: The most cited study of the question, Government Ownership of Banks by La Porta, Lopez-de-Silanes, and Shleifer, found the opposite: government ownership of banks was associated with slower financial development and slower growth in per capita income. Domestically, there are only two public banks: North Dakota, opened in 1919, and American Samoa, opened in 2016.

Claim: "one quarter of the world's assets [are] currently held in public banks"
Verdict: False.
Reality: The true number is closer to 10%, or under 5% if you exclude the Chinese Communist Party's state-run banks. The "one quarter" claim traces to academic research counting roughly 900 public banks holding just under $49 trillion, the same figure the Public Banking Institute promotes. That is close to a quarter of global banking assets, which notably excludes assets like land, buildings, machinery, infrastructure, companies, etc. The Financial Stability Board estimated $256.8 trillion in non-bank financial assets as of 2024, and puts that at 51% of all global financial assets, which would place public banks closer to a tenth of global financial assets. The four largest banks in the world are all Chinese state-owned lenders: Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, and Bank of China. They hold about $25.5 trillion between them, roughly half the $49 trillion held in public banks globally. The figure is not evidence about community-reinvestment municipal banking. It is mostly a fact about the Chinese Communist Party state-run banking system.

And after all these errors, remember what Prop B actually provides toward building a bank: nothing. Its own text concedes the corporation "cannot be established unless the City secures the required capitalization," and the tax that would have supplied the money was withdrawn in March. San Francisco is facing a $643M two-year deficit, and the Controller prices the corporation and bank at $310M to $460M over eight years. Let's at least get our own finances in order before trying to run a bank. Vote no on Prop B.