A California bill that would charter the California Infrastructure and Economic Development Bank (I-Bank) as a depository institution passed out of the Senate Banking and Financial Institutions Committee yesterday. If the I-Bank becomes a depository institution, it would receive deposits of public funds.
The idea is rife with problems as discussed in the committee analysis prepared for the Committee. The track record of state government has been dismal. According to a report issued by the State Treasurer last year:
"All public banks have ceased to exist either by regulatory order, financial failure, or the state or municipality closing the public bank, with the sole exceptions of the Bank of North Dakota and the recently approved American Samoa Bank."
The bill is supported by the Democracy Collaborative (sponsor), Public Banking Institute, and SEIU-California. It is opposed by California Bankers Association, California Chamber of Commerce, and California Community Banking Network.