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 so back to the options and some of the limitations for each. The commercial banks that the city has been using have Service Capability and highly capitalized. Theres no question when the city makes deposits, they can cover the amounts consistent with state law. Limitations, largely this has been addressed i think, the mission of large bank and Business Practices are not consistent with social policy goals. Credit unions have missions that are more consistent and more Community Focused and social policy goals but smaller less capitalized, higher risk for the city funds. Community Development Banks, sort of the same pattern. Smaller institutions. Public banks offer something in that they can integrate a Business Plan and a mission thats consistent with city social policy goals and providing services to the underserved communities and that the primary goal of the city would not be maximizing profits although it would have to be profitable to continue to function, but the focus could be different. Risks or limitations associated with that, its heavy start up, there is no question and you already addressed that in the committee that this is not a minor thing to take on. And of course theres the risk of failure. But ill address some counterpoints to that a little later. And finally i want to point out, there are city funded Community Developments, i think supervisor stefani, you mentioned the county Clerk Program but there are other services in the city for Banking Services for first time home buyers, school teachers, Technical Assistance to small businesses, so there are services in place, its not a lot of money compared to what a bank could do. We have some of the details in here and the programs are laid out in the report. Theres 86 million in outstanding loans as of fiscal year 17 through the programs and funding of a little over 4 million for the different Services Provided. For some of the concerns of the industry and supervisor fewer, you mentioned the report we prepared last year, just a couple of slides on that. This is the 13 of the large banks, ones with assets going into the trial trillions and industries they have invested in between 2010 and 2017. You can see that firearms, tobacco, Nuclear Power companies, the Dakota Access pipeline and private Prison Industries have been invested in by one or more or all of the banks. You can see the count of how many banks for how Many Industries for each bank. And then you also mentioned supervisor fewer, the social responsibility measures and this is just a summary of that report and those measures we looked at composition of board of directors, percentage of loans to small businesses, home loans made to low income borrowers in low income neighborhoods and percentage of loan for Community Development purposes. Some of the banks were above the benchmarks we used. Largely we never got above half of them being above any of the benchmarks. So in general, the performance was not steller for the banks on these measures. Because they are so large, these banks do put money into affordable housing, its a lot of money, they have a lot to give but when you look at the scale of the operation, its often a small percentage of assets. Public bank efforts in the u. S. And yes, supervisor cohen, you mentioned this is uncharted ground, yes, that is true, there is one, the bank of north dakota, created in 1919. Its been successful, profitable for the last 13 years, they have assets of 7. 3 billion. Its a small largely rural state but they have a Good Business model, they do partner with local and regional banks and so they get the benefit of the skills and facilities provided by those banks to be credited out to some of the smaller communities that arent as well served without them. Their net income last year was 136. 01 thing i think is very interesting, their ceo was paid 300,000 last year. If you compare to some of the Large National banks, you know this is a completely different league. Many cities, states and other public jurisdictions have been considering public banks. Mostly its been being studied by legislatures in some of the jurisdictions listed here. I know oakland is in process of conducting their feesability study, partnering for a multi jurisdiction approach. Its still in process and should be released in the next couple of months. In our 2011 report, we stated that state law put was a major impetmeant because there is provision in state lawry stricting counties from providing aid to persons or corporations with county money but since then, the City Attorney has investigated it further and has concluded that that state law does not apply, would not prevent creation of a public bank in San Francisco and they have an opinion piece on that and these are the key points about it. One is that the public bank would serve a public service, the third point there and supported by case law. And importantly, it would be a separate legal entity. I want to really emphasize that point. I think sometimes theres confusion about who would run a public bank, a new city agency and absolutely the answer is no, it would not be. It would have to be a separate legal entity. Ill discuss that in a minute a little bit more. Some specific steps and this is where we try to be as concrete as possible, it starts with the goals and policies and hiring staff and consultants. There will have to be some investment made in terms of resources to actually do the work its like launching a startup and the city would be the investor in it. And appointing an independent board of directors would be extremely important. It would not be the board of supervisors, it would be a separate group that would operate as a separate entity but implementing what the board, the mayor, the treasurer, Tax Collector would establish as the founding principles and goals of the institution and they would need to run with it, get chartered, the regulation of banks as you probably know is extremely complicated and they would have to work with a federal agency or state agency or both to get a charter to actually operate. And then this group would need to develop a multi year Business Plan, this is really getting into the nitty gritty then of the money, how would the bank be capitalized. Would it be city funds and there would need to be definitely city funds invested in the majority of the initial funding from the city to make sure the city is the owner. Private investors could be invited to participate. Other public agencies could be invited to participate. Theres many options to look at. The city would need to at least own half of the shares so its a public bank and the Business Strategy and goals and objectives remain true to what the city has established in the first place. Method for obtaining profitability would need to be part of the plan. Theres a lot of worthy causes, it would have to be a business minded organization that could take more risk than your average large Commercial National Bank wants to but would have to earn a return and keep going as a viable business. Theres certainly room there between the highest risk kind of loans and investments and things that the big banks wont touch and we know theres a lot of underserved communities with the current system. Finally, you know, theres got to be staffing and facilities that will have to be a Computer System and lawyers, all the things that banks need to have to operate. They again, i mentioned they can apply and get a charter from the federal or state government. Theres pros and cons to each. Mostly i think you wouldnt bother with the federal government unless youre planning to be a National Bank from what i hear the interest in for this, it would be local or state. Probably the state department of business oversight who charters banks in california would be the likely place to go. They have a pretty arduous process. While theres a risk in starting an entity like this because of the oversight and regulation the banks get, they wont be allowed they couldnt open the door unless they have passed with the oversight agencies and they have to have a strong Business Plan and show how theyre going to function for multiple years and have office and directors with Banking Experience and have the credibility and knowledge to operate this kind of institution. And just to go into a few more of the details of the requirements and criteria that the department of oversight uses, i circled the points about the officers, stock holders and directors. When the group is assembled they have to show character, financial responsibility, Banking Experience, business experience, all those things have to be filtered through the entire organization and the individuals that would be comprising the staff and oversight board. And then the banking facilities as mentioned would need to be adequate, the plan for maintaining profitability. In short, all the things where a bank could go wrong, the oversight agencies are going to look for that before they can even open and beyond that, they keep coming back. All banks are checked on every two years by regulatory agencies. Theres a lot of protection in that, thats the purpose of the regulation, so consumers and business deposits in banks are not at risk. That could really work in favor of a Municipal Bank as well. The cannibis industry, one of the questions asked for this report too was the potential for serving the cannibis industry. This has been an interesting topic, its been changing since we completed our work on this in the fall. Theres been a lot of dramatic changes up through this week. So where we ended and what we put in our report is that there were problems with this because of the inconsistency between federal and state law. But the department of justice had issued an opinion in 2013 that allowed banks to serve the cannibis industry if they could guarantee that the businesses that they were serving werent doing anything illegal such as selling marijuana to minors. There was a lot of burden put on the banks to monitor the activities of the dispensaries or producers or whatever cannibis businesses they were serving, so most banks chose not to serve them. They had to report regularly to the u. S. Treasury department on the activities or anything suspicious they detected with their customers. So another hurdle that had occurred by the time we produced our report was Federal Reserve bank impetmeants. There was a credit union in colorado trying to open and would be serving entirely the cannibis industry. That was their primary business objective. The Federal Reserve bank denied them a master account, which is what banks used to transfer money back and forth between different institutions. It is almost impossible to function as a bank or credit union without a master account. That was a severe blow for that organization how did they respond from the blow . They sued and there was a ruling that gave them some leeway, but still provided some risks and i dont know if they have in fact managed to open and operate that business or not. Which state is that in . Colorado. But on the brighter side, theres a Different Organization and they are serving the cannibis industry and they have a very sharp ceo who has designed a whole system of screening the businesses that so far has passed muster with the regulators and with the developments in january where the u. S. Department of justice rescinded the call memo, they are still serving the industry. Theres at least one institution and i think others come and go and then run into problems and challenges from the regulator and decide they cant serve those businesses anymore. One more thing maybe i missed it. Senate bill 930. Just getting to that. Okay. My last two points is what is going on at the state now. Senate bill 930, a proposal as we understand it to create a state bank to serve the cannibis industry and then the state treasurer and attorney general who have made announceme