In summary

A bold plan to help California’s local communities: Establish a public bank that would provide economic recovery loans to small businesses and local governments.

Profile Image

By Miguel Santiago, Special to CalMatters

Assemblymember Miguel Santiago, a Democrat from Los Angeles, represents the 53rd Assembly District,

The data is in: We now know for certain who really benefited from federal efforts intended for small business recovery. The biggest banks made billions of dollars in fees from the Paycheck Protection Program. 

Wall Street private equity firms – “vulture capitalists” who deliver no real value to working people – received millions in PPP funding, despite being barred from accessing the program. Meanwhile, the small businesses in California that need the money most struggled to access the program and now many face permanent closure.

California’s 482 cities are predicting a collective loss exceeding $6 billion over the next two years due to the pandemic, prompting layoffs and furloughs for public workers, which will further compound economic losses and cuts to basic services such as sanitation, public safety and housing.

And the federal PPP rollout has only exacerbated racial inequality. Nationally, an estimated 41% of Black-owned small businesses closed between February and April, compared to 17% of white-owned small businesses. By relying on national banks with a track record of discrimination against Black and Brown borrowers, the PPP led to vast disparity between white and minority business owners receiving PPP loans. As a result, only 2% of PPP loans went to Black-owned small businesses and only 6% went to Latinx small businesses.

What if there was a better way out of this economic mess?

Assembly Bill 310, the Bank on California Act, is a bold plan to save California’s local communities. By establishing a public bank, it will provide immediate economic recovery loans to small businesses and local governments while providing long-term stability for state finances. The bill will do this through a proven public banking model used around the world while cutting enormous Wall Street banking interest and fees.

By unlocking just 10% of the Pooled Money Investment Account, money that would otherwise be invested in big out-of-state corporations, AB 310 releases a deluge of recovery investments into our state economy. And it does this while preserving the state’s need for safety and liquidity.

AB 310 invests in an existing state finance authority which was created to support California’s small businesses and cities. That authority, the Infrastructure Bank, or IBank, is a well-rated agency that already supports small businesses. AB 310 expands the IBanks’s capacity and activity, while protecting the state’s investment and generating comparable returns AB 310 converts the IBank into a state public bank, enabling it to access the Federal Reserve’s cheap credit, which will help to finance our longer-term economic recovery and place us on a solid financial footing for the next generation.

It’s time our state stops feeding the coffers of Wall Street and begins to use our taxpayer funds for vital economic programs.

North Dakota’s public bank shows us what this kind of investment model can do during disasters. It is no accident that North Dakota secured more PPP funds than any other state by workforce numbers. While North Dakota was first on the list, California was 13th. The difference is explained by the state public Bank of North Dakota, which quickly launched an emergency COVID relief loan program for small businesses to layer on top of the PPP.

AB 310 provides a similar response: A rapid rollout of a statewide bridge loan for local governments and a separate recovery loan for small businesses, 100% backed by the IBank. By targeting these loans to disadvantaged borrowers in rural communities and communities of color, AB 310 advances a just recovery.


Assemblymember Miguel Santiago and Assemblymember David Chiu, a Democrat from San Francisco, are the co-authors of Assembly Bill 310. 

We want to hear from you

Want to submit a guest commentary or reaction to an article we wrote? You can find our submission guidelines here. Please contact CalMatters with any commentary questions: