Gov. Newsom Signs AB 1177, the California Public Banking Option Act

Assembly Member Miguel Santiago (D-Los Angeles) authored AB 1177, the California Public Banking Option Act which initiates an innovative program to close the financial services gap that leaves 1 in 4 Californians unbanked or underbanked.

(Sacramento, CA) -  Labor and community sponsors of the California Public Banking Option Act released the following statement following Gov. Newsom’s historic action to close the financial services gap for unbanked and underbanked Californians.

“AB 1177 will help Californians stay protected from overdraft fees and penalties and give them an opportunity to save money and build wealth while fighting the racial wealth gap,” said Assembly Member Miguel Santiago, lead author of AB 1177. “California is leading the nation’s public banking movement and we must keep working to provide no-fee banking services to all Californians.”

“Gov. Newsom does more than create the groundwork for a public banking option in signing AB 1177 into law,” said Bob Schoonover, President of SEIU California and Executive Director of SEIU 721. “He sets the foundation for rebuilding a stronger and more inclusive economy. A significant proportion of Black, Latino, and low-income Californians—many of whom are essential workers who do difficult and dangerous work—have had to pay a disproportionate amount of their paychecks to access essential banking services.”

Big banks and check cashers have profited from the financial insecurity of millions of Californians during the pandemic, and it’s galvanized more than 200 racial and economic justice groups and labor unions across our state to respond to the urgent need for alternatives to high-cost financial services.  AB 1177 puts the solution within our reach, but it is only the beginning. We’re more determined than ever to mobilize our members and our communities to break down the barriers to financial security that low-income Californians and communities of color have had to endure for far too long. We look forward to partnering with Gov. Newsom’s administration, our state legislature, Treasurer Fiona Ma, and our community and labor partners to ensure the success of the nation’s first public banking option program.”

“Today Gov. Newsom affirmed the state’s commitment to building a more just economy in which every Californian has access to banking services necessary to building financial stability,” said Paulina Gonzalez-Brito, Executive Director of the California Reinvestment Coalition. “For generations, banks have effectively shut out low-wage Black, Brown, Indigenous, and immigrant families from accessing affordable basic financial services, leaving 1 in 4 Californians and nearly half of Black and Latino California households either unbanked or underbanked.  The passage of AB 1177 is a breakthrough in the fight to end the predatory, discriminatory and costly financial services that have unfairly targeted low-income communities and communities of color.”

“AB 1177 is a testament to the growing grassroots movement to create an alternative to Big Banks and predatory check cashers,” said Trinity Tran, the Lead Organizer of the California Public Banking Alliance. “Universal banking access will be life-changing for millions of Californians. This is the second public banking law signed by Governor Newsom in two years, marking the state’s shift from profit-driven financial institutions draining our communities. AB 1177 is a watershed moment for the statewide movement to create a public financial infrastructure, grounded in equity and inclusion. With AB 1177, we will have a powerful and much-needed tool to put the needs of our local communities above Wall Street profits.”

Modeled after the success of the CalSavers program, the California Public Banking Option Act, forms a commission comprised of financial access experts, community members, and representatives from the Treasurer’s office and the Department of Financial Protection and Innovation to oversee a market analysis on how the CalAccount program could be implemented. The CalAccount program. once approved by the legislature, would establish a state-sponsored retail banking option for every Californian, offering a zero-fee, zero-penalty debit account and debit card, direct deposit from employers and public benefits, automatic bill pay to registered payees, recurring payments and donations to account holders’ organizations or charities of choice, and an infrastructure to support account holders in building credit.

The California Public Banking Option Act’s joint authors include Wendy Carrillo (Los Angeles), David Chiu (San Francisco), Eduardo Garcia (Coachella), Lorena Gonzalez (San Diego), Ash Kalra (San Jose), Alex Lee (San Jose), Phil Ting (San Francisco), Buffy Wicks (Oakland), Mike Gipson (Carson) and Adrin Nazarian (Los Angeles). Co-authors include Assemblymembers Laura Friedman (Glendale), Reggie Jones-Sawyer (Los Angeles), Luz Rivas (Arleta) and Senators Maria Elena Durazo (Los Angeles), Lena Gonzalez (Long Beach), Ben Hueso (San Diego), Scott Wiener (San Francisco), and Josh Newman (Fullerton).

Assemblymember Miguel Santiago is the Chair of the Assembly Committee on Communications and Conveyance Committee and the Assembly Select Committee on Los Angeles County Homelessness. He also sits on the Assembly Committee on Health, Public Safety, Higher Education and Utilities and Energy. He represents the 53rd District composed of the cities of Los Angeles, Huntington Park, and Vernon.