Exploring public banking

Good Morning, I’m Annica Colbert….it’s Friday October 15th>>>>

How would a public bank work?

More on that next, but first... let’s do the headlines….######

On Thursday FDA advisers voted unanimously to recommend emergency authorization of a booster dose of the moderna vaccine.

Shira Abeles with UCSD health says the booster shots available now - for the Pfizer vaccine -- have been effective.

“for certain populations. in particular the high risk, they just don’t have that wiggle room with such a horrible disease.”

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The Biden administration says it plans to comply with a judge’s order to reinstate the “remain in mexico” policy in November. Also known as Migration Protection Protocols, the trump-era border policy forces asylum-seekers to wait in Mexico for hearings in U.S. immigration courts

However, reinstatement hinges on approval from the Mexican government. According to a court filing late on Thursday, Mexico wants to ensure that asylum-seekers have timely and accurate information about hearing dates and times, and wants cases to conclude within six months.

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San Diego will be in “near critical” wildfire conditions through saturday. Santa Ana winds could top off between 30 to 40 mph.

Cal Fire San Diego fire captain Frank Lococo says the winds are a big problem because Calfire's aircraft are grounded in anything above 30 mph.

‘it’s pilot safety and two, it really renders the drops, especially the retardant drops out of our fixed wing aircrafts, it renders them useless because it mists before it hits the ground.”

Lococo says cal fire san diego is well-staffed and prepared as we head into peak fire season.

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From KPBS, you’re listening to San Diego News Now.Stay with me for more of the local news you need.

A new California law sets up a commission to study the possibility of a state government backed public banking system -- offering zero fee banking for the thousands of Californians who cannot afford traditional bank accounts.

KPBS Race and Equity reporter Cristina Kim says some local leaders now want to explore how a public bank might work in San Diego.

California is taking the first steps to create a statewide public banking option that could help its estimated 1 million households that don’t have bank accounts. Most of those households are Black or Latino.

L3: Miguel Santiago, Assemblyman District 53

I grew up in a household where they kept money at home because financial institutions were foreign. And so you take a look at what I now know in my experience, and it makes sense that we should tackle one of the biggest barriers in this fight against income inequality.

That’s Los Angeles Assembly member Miguel Santiago. He authored the new law AB1177, along with San Diego assemblywoman Lorena Gonzalez. It will set up a commission to study how to create a public banking option. He hopes that will lead to the creation to what he’s calling CalAccounts.

L3: Miguel Santiago, Assemblyman District 53

This will allow consumers in the state of California to get a zero fees, zero cost, zero penalty savings account checking account banking account that's currently not available. And then one that they can trust. That is not after creating the highest profit.

So what does public banking really mean?

It includes public facing banks that individuals can use for normal banking business… that's what the new law is exploring… it could also be government-owned banks that cities or state agencies could use to deposit their funds and then finance public projects like bike lands, housing or other public goods.

Here in San Diego… County Supervisor Terra Lawson Remer says public banking options could address income inequality.

L3: TERRA LAWSON-REMER, County Supervisor

We know that it's easier to get access to capital, if you already have capital. So we're really stuck in a pretty vicious cycle of inequality, and I think we need to be looking at every tool in the toolbox to break that cycle.

She still has a lot of questions about how public banking would work in practice… But she likes the idea of a government bank funding public projects, instead of the county going through Bank of America or Wells Fargo.

L3: TERRA LAWSON-REMER, County Supervisor

I think there's a real need as well to look at creating access to capital to to do those kinds of investments and make those kinds of investments that we need at a larger scale to serve our community.

Until recently there were only public banks... in North Dakota and the Territory of American Samoa.

Then in 2019 a California law paved the way for up to 10 local governments to charter public banks. . This month the Los Angeles City Council passed a motion to start drafting a business plan for a public bank and San Francisco is also working on a plan.

San Diego could be one of the state’s 10 pilot programs, Jeff Olson, a local public bank advocate, are worried San Diego will miss out on the opportunity.

L3: Jeff Olson, San Diego Public Bank Advocate

San Diego has famously procrastinated so long on some things that we've lost out big time. I mean, I don't have to remind anybody that we waited so long to build a stadium that we no longer have a football team.

In the last round of budget proposals, 6 San Diego Councilmembers said they want to explore a public bank option. But it’s not in the city or county budget yet.

Joel Day… is running for City Council in District 6. He included public banking as part of his housing platform.

L3: Joel Day, City Council Candidate

We need an all hands on deck to deal with infrastructure, crisis and housing. We can do that by putting public money into a public bank to then work with those public assets to address the big crises of our time, like building affordable housing. A public bank allows us to do that much more efficiently than asking Wall Street to hold our money.

But not everyone in San Diego likes the idea…. In a 2020 San Diego Union Tribune article, economists from SANDAG, and several professors from major local universities said they were against the idea. Private sector leaders like Michael Lea, a principal at Cardiff Consulting Services agrees with their concerns.

L3: Michael Lea, Cardiff Consulting Services

I think a reason that a lot of advocates like the idea of a bank like this is they're going to lend to activities and individuals and entities that, you know, the private sector isn't lending to now. Well, there's a reason why the private sector doesn't lend there, and it's often times that there's more risk associated with that.

While local leaders debate setting up a public bank, California is also pressing ahead. The statewide study has to be done by 2024.

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A proposed housing development on a trolley station parking lot won approval on thursday. KPBS metro reporter Andrew Bowen says the approval came despite questions about lost parking spaces.

AB: The project features 390 apartments with rents that are affordable to low- and middle-income households. It will be built on the underutilized parking lot at the Palm Avenue trolley station in the South Bay. Metropolitan Transit System board members delayed a vote on the project last month over concerns about the loss of parking. But Jesse O'Sullivan of Circulate San Diego says that's misguided.

JO: The more parking that MTS requires, the less housing it's going to be able to build. And the other goal of meeting our housing affordability crisis is also not served by building more parking.

AB: MTS staff are now working on a strategy to reduce demand for parking. That could include improving access to stations via bus, biking and walking. Andrew Bowen, KPBS news.

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The executive director of California SEIU has resigned. This comes after the leader of California's largest labor union was charged with tax fraud and other felonies. The California report’s Angela Corral has the story.

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Coming up.... San Diego has one of the highest inflation rates in the nation. More on that next, just after the break.

San Diego has one of the highest inflation rates in the nation, according to data recently released by the U.S. Bureau of Labor Statistics’ Consumer Price Index for the month of September.

The increased inflation rate is indicative of the heavy economic toll of the years-long pandemic. As the holiday season approaches, higher prices and a greatly stressed supply chain are uncovering what experts are calling a “greatly overstimulated economy” - one where consumers end up paying the price.

Phillip Molnar is a senior business reporter for The San Diego-Union Tribune, who’s been covering the story.. He spoke with KPBS midday edition host Jade Hindmon. Here’s that interview.

Speaker 1:
San Diego has one of the highest inflation rates in the nation. According to data released by the U S bureau of labor statistics is consumer price index. For the month of September. The increased inflation rate is indicative of the heavy economic toll of the years, long pandemic. As the holiday season approaches higher prices and a greatly stressed supply chain are uncovering what experts are calling a greatly overstimulated economy. One where consumers end up paying the price. Joining me with more is the San Diego union Tribune, senior business reporter, Phillip Molnar, Philip. Welcome back to the program.
Speaker 2:
Thank you so much for having me. So can
Speaker 1:
You give us a snapshot of this increased inflation rate what's causing this jump and why are things particularly bad in San Diego? Okay,
Speaker 2:
So we've seen inflation really rising throughout 2021 across the entire nation, but San Diego typically is hit a little bit harder because in Western markets, especially in California, we have higher housing costs and gas prices. So that's why we're always sort of at the top end of inflation. But what's been sort of interesting this year is, you know, a lot of the experts, especially even the federal reserve were saying that inflation rate is going to go really high up as soon as we're out of all these pandemic restrictions. And then just everybody calmed down. Cause after that's over, it's going to level out. What we've seen is the inflation rate keeps going up and that's why I've been reporting on it like every two months. So last month was 6% inflation rate, which is pretty wild to begin with. And then this month was 6.5%. So it's, it's growing and it's, it is a cause for concern.
Speaker 1:
So where are some of the biggest areas where consumers are feeling the effects of inflation?
Speaker 2:
So we're consumers are feeling it most is for gas, unleaded. Regular is up 40.4% in a year. It's a huge jump. And other jumps are for used cars and trucks up 23.4% and energy in general, which is up 31.3%.
Speaker 1:
And you note that we're seeing some of the highest prices in all of the pandemic is that expected to drop anytime soon,
Speaker 2:
Most experts I talked to for this article do not anticipate a major drop, which is sort of frustrating because it really, when there's these high price gains, the people that are always hit hardest are the low income workers in San Diego. We have to pay more out of pocket because in general they just make less money. So there's a lot of things going on. There's a really stressed supply chain right now, which is creating more demand for products which rises the prices. Uh, one of the things is that a lot of people that do need all that stimulus money that was pumped into the economy. Now they're doing much better. Their, their financial pictures better, especially if you were a stay at home worker. So a lot of those people have more money than they did at this time last year. And that really a lot of spending power for all these goods that we're talking about, that drives up the price. Cause everyone's got money to buy them.
Speaker 1:
Are these rising prices causing employers to consider permanently raising wages?
Speaker 2:
Well, you know, it's funny whenever I report on the inflation, I always ask the same question. Like, is it employer are going to read this article or listen to this radio program and say, oh dang, I got to raise all my rate. My, my wages right now, or my employees are going to be really hurting. And what I've kind of found, even though it might not be the case at whatever business you're at when you're reading this story or listening, but wages are significantly up in San Diego. So it might not be necessarily that employers see this inflation and say, yo, I need to really raise my wages. The fact is it's already happy. For instance, the latest data I have is for May, 2021, where the average wage in San Diego and keep in mind it's average. So it's going to be weighted to really high wages are going to change things. But the average wage was 34 point 95 cents an hour. That is an 18% increase in two years. So things are really up.
Speaker 1:
And even in normal circumstances, metropolitan areas in California have higher than average inflation rates than the rest of the nation. How has the added pandemic stress making that worse?
Speaker 2:
Well, gas prices is probably the biggest thing that moves the market one way or the other California gas prices are always higher. So if you see a big jump in gas prices, that's definitely gonna affect our inflation rate. One of the things in the past, just about uniformly across most coastal California markets is higher housing costs. So that that often pushes the needle for inflation. But in this case right now, what we're seeing, where the big surge is is these price for used cars and back to gas prices. That's really what's affecting right now. But in general, typically when you get these numbers, San Diego and Los Angeles and Riverside, we're usually up at the time.
Speaker 1:
What do these high inflation rates signify for consumers in the longterm?
Speaker 2:
Um, for right now, it's rough. If you're trying to do a few things, let me give you a scenario. So say you're sort of a low income worker and you've just reentered the economy. You got a new job, but you need a car to get there. And your last car broke down. Well, it's going to be a really hard to get a used car because they're super expensive right now. And new car prices earn up as much as used cars, but then again, that's a way bigger expense. So that's something you need to consider. There. Also food prices are way up, you know, but one of the things you can kind of see from the inflation data is where you could make a mistake. So for instance, for food and beverage costs, food prices are up 7.6%. But when we break that down a little bit, food prices at home are up 5.7%, but food costs at restaurants are up 10.1%. So you might want to looking at all this data, if you want to make an informed decision, maybe not eat out as much.
Speaker 1:
And now inflation is bad enough for consumers, but a less considered aspect of this is how a jump in prices can affect costs for businesses as well. What can you tell us about that,
Speaker 2:
Uh, businesses? This could have a long-term effect on the economy here in San Diego, because the cost for materials is going way up. And as we just spoke about the wages, you have to have wages higher to keep workers in San Diego right now. So all those costs are going to cut into the bottom line of businesses. I mean, there's a lot of evidence that business is good right now because there is, as we spoke about a lot more spending power, but it's kind of tough when you break it all down and we'll see sort of by the end of the year that the costs are really increasing for businesses, especially smaller ones. And it might be a question of whether or not they survive these next few months.
Speaker 1:
Is there a historical precedent for inflation numbers right now?
Speaker 2:
Sort of, except we haven't really seen much of a precedent in the last 20 years. If you go back 20 years, the average inflation rate jump has been around 2.6%, but we've had some really high points in San Diego history about 11% in 19 74, 13 0.5% in 1981. And it did get up to 6% in 1990, but that was sort of an outlier year. So what that means is that most millennials alive today have not yet experienced a high inflation environment. They haven't really lived through it. So it's funny. I talked to some economists, uh, yesterday and I would say, well, how are all these millennials? I'm a millennial, how are all these millennials going to deal with? You know, this, how are they going to weather this? And one of the economists I spoke to was like, well, I don't think they have a choice and he's right. So yeah, w we're all, a lot of us are living through this for the first time and it's sort of unique.

That’s it for the podcast today. Be sure to catch KPBS Midday Edition At Noon on KPBS radio, or check out the Midday podcast. You can also watch KPBS Evening Edition at 5 O’clock on KPBS Television, and as always you can find more San Diego news online at KPBS dot org. I’m Annica Colbert. Thanks for listening and have a wonderful weekend.