SF Eyes Nation's First Municipal Bank

San Francisco is taking another formal step toward creating a city-owned bank, an idea local officials and advocates have pursued for years and now say could support affordable housing, small businesses and climate-related projects. A charter amendment introduced on May 20 by District 11 Supervisor Chyanne Chen would create the legal structure for a Municipal Financial Corporation and a future San Francisco Public Bank. The measure does not itself fund the bank, but it would establish how the entity would be governed if voters approve it. Supporters say San Francisco could become the first U.S. city to operate a municipal public bank, though the proposal still faces legislative, political and financing hurdles. ### What exactly did Chen introduce on May 20? Bay City News reported on May 20 that Chen introduced legislation to create the structure and governing rules for a Municipal Financial Corporation and San Francisco Public Bank, with backing from four other supervisors. The proposal would set up the city-owned entity before any bank begins lending or takes deposits. (sfgate.com) Chen said in a statement that “San Franciscans need and deserve bold solutions to address our most pressing challenges.” Bay City News reported that the amendment would create the entity but would not identify a funding source or capitalization plan. ### Why is the proposal built around a Municipal Financial Corporation first? San Francisco’s own Reinvestment Working Group said the city was tasked with planning for a non-depository lending corporation wholly owned by the city as an initial step, and then a separate path for that entity to become a state-licensed public bank. (sfgate.com) The city’s public materials describe the Municipal Financial Corporation, or MFC, as the first stage in a two-step structure. A 2023 business and governance study prepared for San Francisco said capitalization and funding plans for the proposed public bank had not been endorsed or approved by the Board of Supervisors. That study was prepared by HR&A Advisors and submitted through the Reinvestment Working Group process. ### What would the bank be allowed to do? Bay City News reported that, once established, the bank would provide low-interest loans for projects such as affordable housing, small businesses and climate sustainability. (sf.gov) Supporters have described the institution as a way to direct public financing toward local priorities rather than relying only on large private lenders. (sf.gov) The May 20 report also said the charter amendment would bar loans outside San Francisco and would restrict lending to businesses tied to fossil fuels, private prisons and detention centers, weapons manufacturing, tobacco products, and labor or human-rights violations. ### Why are supporters saying this could be the first of its kind? (sfgate.com) California’s AB 857, signed in 2019, created a pathway for local governments to charter public banks. KALW reported in February that the law was the first in the nation to allow cities and municipalities to create public banks, while requiring them to obtain a charter from the California Department of Financial Protection and Innovation and meet standards similar to commercial banks. (sfgate.com) KALW also reported that the only public bank currently operating in the United States is the Bank of North Dakota, founded in 1919. Supporters in San Francisco have therefore framed the effort as a bid to create the first municipal public bank in the country rather than the first public bank of any kind. ### Where would the money come from? (kalw.org) Jackie Fielder, a District 9 supervisor and co-founder of the San Francisco Public Bank Coalition, introduced a separate ballot measure in February that would tax certain financial institutions to help create a public bank, according to KALW. That proposal, rather than Chen’s charter amendment, addressed a possible source of initial capital. (kalw.org) Mission Local reported in February that Fielder’s proposal would tax financial institutions to fund what supporters called the first municipal public bank in the country. KQED reported in October 2025 that organizers were also exploring a ballot measure after polling showed 67% support among likely San Francisco voters, but said specifics on seed funding remained unclear. (kalw.org) ### What happens next before San Francisco gets a bank? San Francisco’s Board of Supervisors must first move Chen’s charter amendment through the legislative process, and a charter amendment would then go to voters if it qualifies for the ballot. KALW reported that a related public-bank measure would need support from at least three other supervisors to reach the ballot and, if placed before voters, would need two-thirds approval in November. (missionlocal.org) The next concrete milestone is the November 2026 election, when San Francisco voters could be asked to approve one or more public-bank-related measures. Any operating bank would still need capitalization and, if it moves beyond the MFC stage, a state charter under California’s public banking law. (kalw.org)