The Los Angeles Public Bank will use the city’s existing deposits as its primary source of funding. Currently, the City of Los Angeles holds billions of dollars in checking and short-term investment accounts at commercial banks, which earn very little interest and cost the city fees to manage. By housing these deposits in a public bank instead, the city can put them to work for its residents and save money on interest and banking fees, which currently total $1.35 billion and $340 million per year, respectively.

The start-up funds for a municipal public bank can come from a variety of sources, including appropriations from the local government budget, earnings from investment pools directed toward the public bank, bonds issued with the approval of citizens, grants from the federal government, and voluntary contributions from supporters of public banking. Each municipality will need to determine which sources are most appropriate for the size and scope of its bank.

Once the Los Angeles Public Bank receives a California State Public Bank Charter, as authorized under the California Public Banking Act, it will be able to accept deposits from municipal departments and neighboring municipalities. Additionally, it will be able to accept funds from pension funds, socially responsible mutual fund investment vehicles, and other institutional investors, or it may choose to work in partnership with a local financial institution.