Yesterday, I wrote about legislation that would authorize local governments to form their own local or regional public banks. Senator Ben Hueso has a somewhat different idea. He has introduced a bill, SB 528, that would establish the California Infrastructure and Economic Development Bank (IBank) as a depository institution. Established in 1994 pursuant to the Bergeson-Peace Infrastructure and Economic Development Bank Act, the IBank currently has statutory authority to issue tax-exempt and taxable revenue bonds, provide loans to state and local governments for public infrastructure and economic expansion projects and loan guarantees to help small businesses.
Senator Hueso's bill would authorize the state, local agencies, as defined, and quasi-public nonprofit entities to establish a deposit accounts with the IBank. The bill would also require the IBank to become a member of the Federal Reserve System and the Federal Home Loan Bank System.
Senator Hueso introduced his bill after a Joint Informational Hearing held in February by the Assembly's Banking and Finance Committee and Local Government Committee. A background paper prepared for that hearing noted:
"The conversion of the IBank to a depository institution poses operational risks and implementation challenges that could negatively impact the effectiveness of existing IBank programs."
Based on the written testimony at this hearing, advocates see the establishment of the IBank as a "true" bank as a means to preclude investment of public money in investments that are "antithetical to California’s progressive values" such as fossil fuels, private prisons, arms manufacturers and predatory lending.
Reminder: Lenders licensed under the California Financing Law must file their 2018 Annual Reports with the Department of Business Oversight by March 15, 2019. The report must be filed online (instructions are available here). The Department does not grant extensions.