Information on The Municipal Bank of Los Angeles (MBLA)

Apr 25, 2025

The Urgent Need for a Public Bank
A Financial Lifeline for Equity and Resilience

Los Angeles faces intersecting crises—from wildfires and unaffordable housing to aging infrastructure and systemic inequity. Amid these challenges, big banks drain $1.4 billion annually in debt service and financing costs from the City, as outlined in the City’s 2024/25 Budget. This substantial sum could rebuild neighborhoods, fund disaster resilience, recapture public dollars for local reinvestment, reduce costs, and support long-overlooked marginalized communities.

The Municipal Bank of Los Angeles (MBLA) is a proposed nonprofit, city-owned, tax-exempt wholesale bank that manages the City’s finances while collaborating with local lenders to maximize community impact. It leverages municipal funds to finance affordable housing, green infrastructure, and equitable recovery efforts. Operating without retail services (e.g., branches, ATMs, checking accounts), the bank maintains low overhead, focuses exclusively on amplifying public resources, keeping profits within LA.

The MBLA is governed by an independent board and managed by bankers and financial experts separate from City Hall, ensuring strict state and federal regulatory oversight while aligning every dollar with the City’s equity and sustainability goals.

1. Accelerate Affordable Housing

• Today’s affordable housing requires 12+ revenue sources, a maze of grants, tax credits, and private loans that delays projects by years and significantly inflates costs.
• A public bank is a one-stop financial engine, consolidating funding streams and offering low-interest loans to fast-track construction.
• A public bank can quickly and efficiently finance affordable housing development and preservation, keeping more LA families stably housed sooner.

2. Disaster Response That Works

• Provide immediate financial relief to families and small businesses post-wildfires.
• Fund fire-resistant grids, landslide stabilization, and climate-ready infrastructure.
• Recent Executive Orders at the federal level have jeopardized recovery funding. A public bank ensures LA maintains fiscal autonomy during uncertain times.

3. Save Millions Annually

• Nearly 50% of housing and infrastructure costs are currently wasted on banking fees.
• By using its own capital and credit, Los Angeles can save millions in fees, interest, and debt service currently paid to private banks.
• Diverting these funds into a public bank allows the City to offer low-cost loans for schools, roads, and disaster resilience.
• Through fractional reserve lending, each dollar deposited can generate up to ten dollars in lending power, with loan repayments reinvesting back into the public bank.
  

4. Proven Success: Bank of North Dakota (BND)

• State-owned public bank established in 1919. Over 105+ years of successful operation.
• BND prioritizes residents and remains profitable, earning 18% return on equity (2023).
• Public reinvestment: Transferred over $1 billion to ND’s general fund, directly supporting small businesses, schools, infrastructure, and public services.
• Rated A+ by S&P—safer than Wall Street banks; exceptionally stable public institution.
  

5. Feasibility & Impact

• Backed by rigorous research. Lending models show the LA Public Bank can generate profits while funding 17,000+ affordable units in its first decade—reinvesting earnings into schools, parks, and climate resilience.
• Transitioning to a low-carbon, climate-resilient future demands long-term financing. Public banks can catalyze this shift by bridging financing gaps for green projects that private lenders often leave unaddressed.
• Fund public projects with recycled city funds instead of tax hikes or additional borrowing and debt. The City will generate more revenue from property taxes on housing projects than from U.S. Treasury Bill investments (1.74% as of Sept. 2024). 
• Public bank profits return to LA communities instead of private shareholders, cutting red tape for critical projects from green energy to modernized schools.
  

Next Steps
The Los Angeles City Council unanimously approved the public bank feasibility study under California’s Public Banking Act in June 2023 and May 2024. Now, the City must allocate $460K to fund the RFP so consultants can start their work. This minimal investment will save millions in the short term and build the financial infrastructure needed before the next crisis strikes.

Why This Matters: Our Money, Our Values, Our Bank.

• Fiscal responsibility. Funds city needs without raising taxes, cutting essential services, or borrowing more and increasing debt.
• Urgency. Disasters won’t wait—LA needs a bank that can act fast in the public interest.
• Accountability. Transparent, city-owned bank with robust public oversight and ethical guardrails.
• Equity. Prioritize marginalized communities, counter predatory lending, keep wealth local. 

Supporting Resources

• What a Public Bank Can Do For L.A. – Jain Family Institute / Berggruen Institute
• California Public Banking Alliance Technical Brief
• Public Bank LA Resource Booklet

This information is being provided as a courtesy to the community and is not an endorsement by the West Adams Neighborhood Council.

Information Submitted by Trinity Tran, Executive Director of California Public Banking Alliance & Public Bank LA.