Im going to provide a summary of our report to supervisor fewer on options of community banking. At the moment though, the slides are not appearing. I wonder if i might get assistance. Do you have a printed copy . I do and actually here we go. We can do it the oldfashioned way. Here we go. Thank you. My apologies for the delay. This was the report that we issued in december to supervisor fewer. It was update to 2011 report we had prepared for supervisor avalos, it covered some of the same topics, but it is different that we tried to focus on specific steps needed to be taken to establish a public bank. What weve done is provided an outline of the steps. There is obviously many more questions that would be need to be resolved to pursue that. So ill just start briefly with options for the city. There are commercial banks, thats what were using now. Theyre for Profit Institutions and theyre organized to provide a return to their private investors. Thats their primarily goal to maximize their financial returns. Credit unions are largely not for profit cooperate i haves that are owned by the members and the board of directors. They are usually members of the credit union themselves and much more communityfocused than Large International commercial banks. Community Development Banks are Mission Driven private Financial Institutions and generally have as part of their mission serving underserved communities. Finally, the public bank option. That would be entity owned by the public, such as the city and county of San Francisco, but managed and operated independently. Because of that, it can have its own business strategy. The current citibanking polls and policies and arrangements, there are the state laws that dictate safety, liquidity and yield, which the treasurer and Tax Collector is always quick to point out. Thats theyre guiding principles, but they have social Investment Policies as well, but theyre subordinate to the core state requirements. Currently, the Previous Report also identified the demand deposit or the shortterm funds kept in bank accounts. This is the balance as of october 2017, the average daily balance of 137. 8 million and how its allocated by the three different banks. That was then the fees associated with those Services Provided by the banks are provided on the far right column of that table. And that is for fiscal year 1718. The portfolio has been mentioned over 9 billion. We had a report here from march 17 when it was 8. 3, so it has increased. And in december, it was over 9 billion. That money is not kept with a Custodian Bank, the Custodian Bank is citibank and their fees for this year is 187,000. Then finally there is Credit Unions and community Development Banks. Historically, theyve not been used much by the city and county in part because of the limited Insurance Protection and also because many of the smaller institutions cant meet the collateral requirement mentioned by the treasurer and Tax Collector office of having 110 of the deposits in securities. Also, just on that, were also aware of and include in our report the new program started in october by the treasurer and Tax Collector office that you were just discussing to invest up to 80 million in San Francisco based banks, Credit Unions and community Development Banks. Supervisor fewer, you mentioned earlier about the concentration of the industry. Heres is some of that information pertaining to banks in california and its pretty dramatic. This is between 2011 and 2016 and its broken out by the National Commercial banks. Those are the large kind of household institutions, wells fargo, citibank, theyve decreased in california 49 to 30. And the average asset size for the large banks is 8. 8 billion. That is an average that when we get into the large banks, the 10 large largest, the numbers jump into the trillions. They have assets in the trillions. Those are not national in scope. State chartered Credit Unions and federal Credit Unions. In all cases, the numbers have been decreasing and the asset size increasing per institution. But the most dramatic is with the commercial banksment you can see the increase in asset size by type of institution. The blue dotted line, which is jumping up the highest over time is the National Commercial banks. What that means for the city, were working now with much larger institutions. Their focus is certainly national, international really in all cases. While San Francisco is one of their markets, its certainly not the focal point or key to their mission and business objectives. So back to the options and some of the benefits and limitations of each. The commercial banks and the ones that the city has been using have Extensive Service capable. Theyre highly capitalized and collateralized. Its a charter for additional depository institution such as commercial bank or industrial bank, the banks are required by state law, to get federal deposit insurance. The city of San Francisco would be a shareholder in the bank. A Credit Union Charter is a charter for stated credit union which members share a common bond, under this option San Francisco would be a member of a credit union with other municipalities. An Important Note is Credit Unions are not required by state law to get federal deposit insurance, they can get private share insurance. The problem with both commercial bank and credit union is these entities are like quote, putting a square peg in a round hole in that they would force the city to retrofit their public Bank Business model into a regulatory system that was designed for private shareholders or credit union members. Therefore the memo ultimately recommends a public bank charter and this would require special, special statutory authority. Meaning we would need to pass a state law authorizing a state or municipal level public bank. The new public bank charter would be the ideal solution because it would fix many current limitations of the state law. Federal deposit insurance. The memo draws distinction between banks like the one in north dakota. It will likely not be able to get federal deposit insurance. This would rule out the commercial bank charter but would leave open the possibility of a credit union or a new public bank charter that doesnt require federal deposit insurance. Second is federal repayment system, referred to as master account number. A traditional public bank should be able to get a account number with the federal system but a bank with cannabis would likely not. This was the result in Colorado Credit Union case just mentioned, it was denied the master account number. That lawsuit is still pending. But the bank of north dakota is a traditional public bank, doesnt have federal insurance because its backed by state of north dakota and it has received a master account number from the federal system. I can speak more because some of your earlier questions highlighted their practices. Recommendations are passing a state law that would enable a charter to be developed as either a state level bank or similar to what supervisor chang is proposing or one like california. Such would not need federal deposit insurance and it could model after San Francisco. In the absence of passing this law, the memo recommends requesting a written opinion from the department of business oversight on the likelihood of their approval by application for commercial bank or Credit Union Charter by the city of San Francisco. Thank you for your time and i look forward to discussing these recommendations on the task force. Thank you very much, colleagues . Yes, thank you mr. Patel for your dedication on the project and want to thank you for working so closely with my office. So colleagues, the authors of this legal memo, along with myself and mr. Patel presented these findings to jan lynn owens with the state department of business and oversight. My take away from that meeting was the d. B. O. Was open to discussion on either credit union but wanted more information before giving detailed advice. Mr. Patel, can you speak about what you took away from the call, legally speaking in order to establish a public banking charter. Yeah, i very much agree with you that commissioner owen was highly supportive of our efforts. We had asked her about if she would support legislation at the state level and she seemed open to that. She also was open to the idea of using an existing Credit Union Charter or commercial charter but she would not commit to anything. She said we would need to request a written opinion before submitting our application. Okay. So, high level. What type of questions do you believe the task force should be focusing on finding answers to . I think the task force should focus on whether we want to start a bank right away using the existing entity choice options i analyzed or whether we want to push for changing state law. Short of changing creating a specific public bank charter, there are elements of state law we could change. For example, the requirement that commercial banks could only use federal deposit insurance. If we could change that and use private share insurance. Okay, thank you. Supervisor fewer, i dont have any other questions. Yeah, so one of my questions is, so we heard that the main goal of commercial banks is really to have maximized financial returns. So is that, and we know a public quite frankly, that wouldnt be the first goal we have with our public bank. So if we go the commercial bank route, would it be required on our application actually to show in our Business Plan how we would maximize financial returns . Thats a good question. I have to pull up you were correct saying we cant maximize financial returns as the purpose of the bank, the primary purpose is to serve a purpose. One reason to submit this written request to the department, if this proposed bank has a primary purpose of a municipal purpose rather than maximizing shareholder returns would it qualify in california. Right, i guess the question is, we have two options now currently they offer. Commercial bank or a credit union. And then it seems from what you are telling me and the previous presenter, to align everything we want to do, it seems as though a public bank charter would be necessary quite frankly. It would cover everything that we would want to do, including the use that Marijuana Industries could also bank with. But it also includes that we could actually set our own values around how it serves the municipality. Instead of the commercial bank that actually, the main goal is to make money for their stakeholders, is that correct . I think the best option would be passing a state law authorizing, a level of constitutional authorization so cities can create their own public banks. But short of passing that law, i think its possible to create, to use the commercial bank or Credit Union Bank structure, i wouldnt give up on those options because i think if we could describe individual plans to the department of business oversight we could potentially get it chartered. So i dont think its impossible, is what im saying. Im just thinking, supervisor cohen, for this task force, maybe part of the conversation should be where we really want to go with this. If we are looking long term about public banking and we are looking at our other partners within the region, berkeley, oakland, richmond, going to a public bank agenda such as ours, does it make sense for us to first try to expedite it. I mean, what are the pros and cons i think for our longrange planning . So if we have some immediate needs but then i think as our economy goes, as we look at this Marijuana Industry growing, as we look at the need to invest in our own communities, i think that some of the conversation should be about, do we want to do this very quickly, or to meet our long term goals should we work simultaneously around a public bank but while working on a state level to actually promote a public bank charter . Does that make sense . Yes, it makes sense. Its one of the stated goals and intentions of the task force, is to try to figure out what the direction we would go in. So it is formalizing conversations we have had for the last year with different stakeholders, with each other, facebook messages, tweets, you name it, many people have different types of opinions. So the task force is charged with the duty of kind of synthesizing and helping us figure out what is the best direction for the city and county to go in. With that said, im going to need to keep moving. Thank you for your presentation. To ladies and gentlemen in the public, i am going to go to Public Comment. But first i need to take up an item that relates to item 8. So madam clerk, i need to make a motion to rescind item 8. Can i take that without objection . Thank you, without objection, the motion to rescind passes unanimously. And what i would like to do is send item 8 to the full board, as amended, with a positive recommendation. And we could take that again without objection. Thank you. Okay, thank you, the members of the public for allowing me an opportunity. Supervisor stephanie has to leave to get to rules committee which starts at 2 00, and i wanted her to be on the record for item 8 since she sat through hearing about item 8. Now we will be opening up for Public Comment, if you are here for Public Comment come up and get in line. I have a few cards here and as a courtesy to those who filled out cards we will call them first. I have john something, i cant read it, xavier maybe . We will have to work on that penmanship. Then susan harman, patrik laine, mari eliza and mark rhoades. Did you fill out a card . I thought the cards were for people who couldnt stay. No. Nope. What we will do again, as i said, you are welcome to go next after the folks who have spoken. I filed mine with the aid. Okay. John, youre up. Good afternoon, supervisors. Im here today with the San Francisco chapter of the democratic socialists of america who recently just this week voted overwhelmingly to support public banking in San Francisco as a major part of our legislative goals. And i know a lot of other people are going to argue about what the advantages of a public bank would be. But i wanted to just quickly kind of address what the main sort of, i think, argument against would be. And thats that a private bank is the only entity that is large enough and sophisticated enough to safeguard public funds. And i think in 2008 we learned what safety means, it means safety for banks and bankers, not for their clients. The entire Banking System almost melted down. Billions were lost. And it was only public funds that saved the banks. And in some cases the reason that happened the private banks had an option to maximize profits and they couldnt do that without going into risky areas such as shadow banking and risky derivatives. A public bank is different. A public bank serves the community that it is built to serve as its main objective. And that is always going to be safer than a bank that has to choose between profits and community because such a bank, a private bank will choose profits every time. Thank you. Next speaker. Good afternoon. Im susan harman, im representing the friends of the public bank of oakland. You have mentioned us several times. Im really just here to support this effort, although ive chauvinistic about oakland and i want us to be first, any progress, anywhere, helps progress everywhere. So we are totally in support of the public bank of San Francisco. You havent mentioned Student Loans as one of the things the bank could help with. The bank of north dakota has been very constructive with student, offering refinancing and lower interest on Student Loans and bank of San Francisco could certainly do that. I want to caution you about making it an Infrastructure Bank because that is really a Revolving Loan fund and thats not what we want to do. You already mentioned collateralization, that solves that problem. There will always be attention between mission and profitability of a business. We know that and we just have to construct a board that is aware of that and takes that into account. In oakland we are working hard on a governance plan and as soon as thats finished, we will share that with you, with the task force. I think thats all i wanted to say, except we are available ive been working on public banking for six years now. I used to work with Public Banking Institute. Im in touch with people around the country. And im here to offer any help. Thank you. Jason lane . Followed by patrick mele. Thank you, madam chair, members of the committee, im jason lane with the california bankers association. Just a couple points i wanted to make to followup on the previous presenters, i think its vastly more complex, with all due respect to the previous presenters, than what has been presented to you, relative to cannabis banking. I think a couple things were mentioned starting a public bank with a new charter seems to be at least what ive heard today, one of the presenters gravitated towards that. I would just say, no matter what the charter is, or the public bank, be it a commercial bank or credit union, if that institution is formed, it will need insurance. And if it is insured by the federal government, it will not be able to engage in cannabis banking operations. If it wants to access the payroll systems, if it wants to wire money, make ach transactions, have a routing number, has to access the Federal Reserve system, therefore, until marijuana is no longer a schedule 1 drug, it wont be able to do that. So irrespective of what you do with the state charter, or with state legislation to create a new public entity, those things have to be satisfied. And i would also point out a little bit attention has been made to north dakota and i wish to remind the Committee North dakota has been around since the 1919, it routes through local community banks, it doesnt compete directly with banks. Thank you for your time. Thank you. Next speaker, patrick . Hi, my name is patrick mele, and im here to give a voice of support for creation of a public bank, i think this is a good idea and something i studied in grad school. I will echo a lot of what has been said already but being able to use the 9. 6 billion in funds for things we need in a community into a commercial bank looking for what the shareholders need, moves money out of the community, which as mentioned earlier, as executive compensation of 22 million or more, 800,000 in fees that were being charged to use our own money, and a public bank could get us out of the trap of using bonds and loans for every type of funding that we need. So a lot of things i was going to say have already been said, i want to talk about safety. Paramount importance, the county keeping our money safe and i dont think right now keeping money in commercial banks is safe. We saw after 2008 with b. Of a. Citigroup and u. S. Bank all needing to be bailed out. Bank of north dakota, not bailed out. And what we are starting to see now, in europe, obviously, with portugal and greece, we are seeing instead of bail outs, we are seeing bailins where the deposits are being taken to recapitalize the baixgs. Banks. We are seeing similar movements in puerto rico and places like flint. For safety we need to get our money out of commercial banks and into public banks and ill leave it at that. Thank you, next speaker, mali alisa. Mary eliza here, thank you, supervisors. A lot of what i was going to say has been said. I actually got involved with studying public banking with browns group before there was a group, so ive been looking at this for a very long time, the Public Banking Institute is a very good source for information. This is an international situation. Theres a lot of banks that are civil banks in other countries. So dont limit yourself to the u. S. To look into how they are operating and how they work. So the gentleman before me is correct. Our current banking situation is not very secure anyway. So its a good idea to continue to study this. Im probably one of the bigger supporters for public banks. I just want to mention, avoiding such risky policy decisions and investing in them, as was done with the taxi medallions that practically are putting the Credit Unions that finance them for the m. T. A. s purposes out of business and theres currently lawsuits over that. So we need to be really careful with risky investments and with risky projects and the insurance, of course, is going to determine an awful lot about how you move forward. Thank you. Your opportunities for insurance outside the Federal Reserve situation. Thank you, next speaker, please. Hello. Im mark roost with serie battery inc and volunteer with 350 and friends of the public bank of oakland. Use of deposited funds from renewable energy, battery and electric Vehicle Industries are entering explosive growth. Uses of those funds, incubator and startup formations for each sector of the economy. One example is a system of shops that convert gas or diesel vehicles to batteryelectric and i know a company that is capable of creating a system for that that could be a National International system with efficiency. Housing that could reduce costs and increase long term quality of each building. Design and implementation of integrative service and recovery system based on the mormon system of Salt Lake City utah, i knew a pharmacist who recovered from a break down in such a system and told me all about it. Its something really worth looking into. The 110 collateralization issue could be an obstacle for formative start ups in most economic sectors ending in environmental economic and social sustainable and funded or underwritten by deposits by the disruption of the industry that will support extremely rapid growth by them and strong profitability for them. I would rather see fractional reserve lending authorities so they could compete headtohead with large private banks. But i do support Small Community banks and community Development Banks as well as Credit Unions. Thank you, next speaker, please. Thank you. Honorable supervisors, my brothers and sisters, i just want to adjust a few points to the vision part of this. While we have been very carefully looking at the mission nuts and bolts, im not hearing, for example, impact investing. Im hearing about social responsible investing which is what we dont want to invest in. And impact, how could we make a positive impact with our money . Which is a topic thats been very much seeded in San Francisco, which is why i think a public bank of San Francisco would be very apt. Im referring to the past ten years where theres been an annual social capital conference at fort mason. Internationally attended. We also have in the east bay, the Community Capital conference every year. This may we are having the regenerative economic sup mitt. We are very much thought leaders in new ways of doing economy and i just want to make a few more points about that and im done. I havent heard anything about investing in our indigenous people. And we have the cultural conservancy here in San Francisco, which can route money to indigenous investments. Im not clear whether we will be able to have investments by citizens, venture capitalists, etc. , but i think that would be we have a wonderful opportunity because of our healthy economy. Last, but not least, here is my takeaway. Its sort of a game changer. Normally we think of economics as existing within the ecosphere. Its the other way around. Your time is up. You only had two minutes. You can finish your sentence. Isnt a subset of our economies, its the other way around. The health of our economies is the subset of the health of the San Francisco bay bio region. Thank you very much. Youre welcome. Thank you. Next speaker, please. Good afternoon, supervisors my name is christine johnson. I have held a number of roles but i also have 14 years of municipal financial and social impact finance experience. And ive also been an evangelist for public banking for years and im very excited we are having this conversation today. We talked about a lot of reasons why we want to have a social bank, a public bank, a lot of people talk about that behind me. But i want to focus on a few things. The city is experiencing unprecedented challenges that will require massive amounts of patient longterm capital that shouldnt be subject to political process of our budget or city ballot measures. We also have a population of people that are locked out of our current Financial System to debilitating effect, even with the programs we currently have. And a public bank can really solve all of that. We have an entire industry growing around us in cannabis that is locked out of the existing Banking System and theres a gentleman here who spoke about why it might be challenging to serve that industry but be have another industry that we have been locked out as a city, financial tech. Services such as paypal, square, other crowd sourcing, have worked into the national Banking System because we dont have a public option and we should be a part of that success as well. And then public efforts such as Property Assessed Clean Energy bonds have been stymied by the limitations that commercial banks have. So federal tax reform is going to get rid of the Community Investment act. And there goes tax credits and nonprofits and Banking Services for low income communities. A public bank could solve some of those issues for us. Im excited we are here today. I look forward to seeing the task force and their findings and im hoping we move forward. Thank you. Thank you. Next speaker. Hello, supervisors my name is claire [inaudible] im cochair of San Francisco [inaudible] i want to express frustration with the board process, having been here for four hours, this very important item heard at the end of the agenda and Public Comment at the end, it doesnt allow for much democratic input. Most people dont have the luxury to sit in these chambers for four hours i would normally be teaching in a classroom of first and second graders. That being said, the San FranciscoBernie Kraatz has been meeting with a coalition of groups about the issue of public banking and at the creation of San Francisco public bank. Part of this coalition includes sf [inaudible] rising, democratic socialists of america, california, faculty association, ace, among other groups. We really urge the board of supervisors to move swiftly, work closely with the task force and the office of the treasurer to create a San Francisco municipal bank. We would like to see the banks charter be grounded in principles of equity, social, racial and economic and environmental justice. San francisco has a 10 billion budget but currently apart from all the reasons why we shouldnt be investing in large commercial banks, we also are