Hilbert Morales EL OBSERVADOR
Photo Credit: Unsplash

This past Tuesday, 04.23.2019 a proposal developed by Supervisor Dave Cortese (District 3) and Supervisor Cindy Chavez (District 2), with President and Supervisor Joe Simitian (District 5) presiding was approved. The unanimous 5-0 vote initiated the very first step in the assessment process which may establish a public bank here in the County of Santa Clara.

What was authorized was having County Counsel do a thorough evaluation of legal issues and their impact upon any and all financial issues and fiscal policy implications. That assessment will be delivered to the Fiscal & Operations Committee. This committee will then evaluate and assess the research information provided in order to craft a recommendation to the Board of Supervisors.

This creates the next decision point; and so, this process will continue until the Board of Supervisors endorses the final proposal which authorizes the establishment of this county’s own Public Bank, owned and operated by We, The People who reside in this county. Or, the BOS decides to not create a public bank operated by this county.

Why should the County of Santa Clara evaluate and undertake the process of creating its own public bank? One reason is that the County of Santa Clara has an annual budget exceeding $6.5 billion. Its cash flow often contains large sums of money which are presently sent to selected Wall Street financial institutions, who in turn, invest those funds profitably. Prudent management of short-term funds invested could earn a return on funds invested right here in this county.

Such interest earned surpluses would be available to enable this county to fund affordable housing; to maintain and improve this county’s infrastructures (roads; provide for the unemployed or the disadvantaged homeless; and begin to cope with its long-term pension commitments. Using this county’s own Public Bank would eliminate costs and fees now going to Wall Street financiers.

Acknowledgement needs to be made to CA Assembly member David Chiu (D-SF) and his colleague Miguel Santiago (D-LA) who authored the public banking bill recently passed by the CA State Assembly.

It is prudent to take the steps to keep those interest earnings right here in this county rather than allow some unknown Wall Street financial mogul benefit from these temporary monetary assets without risk nor responsibility to share those interest earning with the County of Santa Clara.

Since We, The People, are the ultimate guarantors of the U.S. Treasury, why not evaluate having a public bank here which may have the mission in its future charter of specializing in making mortgage loans available to those low-income folks who currently lack the initial down payment? I know of one creative professional couple who purchased their home without having any down payment.

This couple benefitted from a special home mortgage loan program which was based upon 105% of the assessed value to the property. They were both professionals whose income would very likely increase over the years (it did). They made their mortgage payments regularly and were able to refinance their special mortgage with a conventional mortgage loan.

Today, they are within a few years of having earned total ownership of their home. In a few years they will have their home fully paid for. And with prudent management of their home equity, both children earned 4-year professional degrees with minimal use of student loans.

Many millennial professionals cannot purchase a home because of their student loan obligations. Our parish provides the down payment for its rector’s home.

The funds provided are secured by an agreement to share proportionately the increase (or decrease) in market value, when and if sold. This enables an individual without a down payment to begin ownership of a home; acquire an equity standing; begin to acquire family wealth.

The opportunity to have a local public bank would make certain programs available and accessible to local residents who simply need a hand up. This public bank could be operated in a manner that creates and makes available to certain low-income folks who have no collateral, but as an outcome of their professional training, have the prospects of higher future earnings which make loans to them a reasonable risk.

The current big banks do not do this at all – and if they do on occasion, it is to individuals who are well connected.  I am excited that the BOS took the first step by having its legal staff examine the impact of operation of a public bank upon the fiscal policies of this county. I anticipate that the County’s staff has the ability to define the future banking operations which result in being able to minimize risks while providing a hand-up to the many worthy of being enabled.

This is the sort of program activity which will give our community’s millennial youth to have as much access to opportunity to escape a life style of living from one monthly paycheck to the next. One’s positive outlook improves when one can see progress in reduction of personal debt coupled with increases in one’s home equity.

I project that a Public Bank will significant increase those programs which impact the economic growth potential of several diverse communities of color which traditional bankers red-line.  Once they witness win-win outcomes, they will flock to those neglected markets now deemed high-risk.

A public bank is a worthy adventure which will enable a broader distribution of family wealth over time. Let’s see if that can be made reality for this very diverse, creative community.