Public Banking in a Time of Crisis: How to Rebuild Los Angeles

On the night of January 7th, as the Palisades Fire surged to 2,000 acres to the west and the Eaton Fire exploded to 1,000 to the east, I joined thousands fleeing hurricane-force winds that hurled embers for miles. But while I evacuated out of precaution, across Los Angeles, many Angelenos were not as fortunate. Like so many here, I spent those first sleepless nights glued to wall-to-wall news coverage, tracking the fires’ paths. But while flames dominated headlines, a slower crisis burns, one that Los Angeles has yet to confront.

Caught in a cycle of destruction and recovery that grows more urgent every year, fire season is no longer a season—it’s a year-round threat. Entire neighborhoods in Altadena have lost more than homes—they’ve watched their generational wealth turn to rubble. In Pacific Palisades, emergency teams scrambled to stabilize hillsides before landslides erased what remained. With wildfire losses now climbing past $250 billion, one question echoes through the city: Who pays to rebuild? And how can we do it faster, smarter, without sinking deeper into debt?

Los Angeles isn’t the first to face this reckoning. Back in 1997, Grand Forks, North Dakota, suffered a catastrophic flood. Their city was left in ruins, but they had something most cities don’t: the Bank of North Dakota (BND), America’s only state-owned public bank. Within two weeks, the BND funneled around $70 million in credit for emergency operations and rebuilding. While FEMA took months to distribute aid, the BND’s local presence and public mandate allowed it to act with precision. ND mortgage holders got six-month payment pauses. Show me one Wall Street bank that’s offered that kind of breathing room.

Caught in a cycle of destruction and recovery that grows more urgent every year, fire season is no longer a season—it’s a year-round threat.

This is the power of public banking: swift, people-focused, and designed for crisis response. Unlike profit-driven institutions, a public bank—owned by a city or state—would reinvest public deposits into local resilience rather than shareholder dividends. Imagine transforming tax dollars into a renewable resource: funding fire-resistant infrastructure, upgrading aging power grids, and keeping families housed during disasters.

Look around Los Angeles today. Insurers flee high-risk areas, leaving families stranded. Meanwhile, we’re sending more than $1.4 billion a year in debt service fees to Wall Street—this staggering sum, outlined in the City’s 2024/25 Adopted Budget (Page R-71), is money that could fortify hillsides or retrofit homes. Governor Newsom’s $2.5 billion wildfire package helps clear debris, but it doesn’t address the bigger question: How do we fund tomorrow’s disasters without predatory loans that bleed the city dry?

A public bank is the answer. Picture the Bank of North Dakota model scaled for a metropolis. Need emergency credit after the next natural disaster? Done. Low-interest loans for small businesses distributing supplies mid-crisis? No delays. By partnering with local lenders, a public bank could bridge the gap for families waiting months or years for insurance payouts.

This is the power of public banking: swift, people-focused, and designed for crisis response.

This isn’t fantasy. A national public banking movement is rising. In 2019, California passed the Public Banking Act, clearing the legal path for cities like Los Angeles to establish their own public banks. New York City plans a public bank to fund affordable housing and support minority communities. Florida eyes the model for local control of state resources. From San Francisco to New Jersey, cities and states recognize that megabanks can’t meet the scale of today’s economic and environmental challenges. Public institutions keep dollars local, funding fire-resilient housing, green energy projects, and businesses that anchor communities during crises.

During COVID-19, the Bank of North Dakota proved this again. While Wall Street prioritized corporations, the BND partnered with community banks to quickly deliver relief to small businesses and frontline workers. Los Angeles deserves that same agility. A public bank could centralize disaster funds, slash bureaucratic delays, and ensure every dollar stays local—rebuilding neighborhoods instead of enriching distant shareholders.

Housing offers another critical test. Today, financing affordable projects takes years as developers navigate a maze of private lenders. A public bank could create a housing fast-track fund, offering below-market loans for shovel-ready developments. Interest payments would recycle into future projects, not Wall Street bonuses. Streamlined funding means lower costs, faster construction, and more Angelenos housed before the next disaster strikes.

The fight isn’t about resources—it’s about control. A public bank keeps investments local, ensuring funds flow to priorities like firebreaks and microgrids rather than stock buybacks.

Critics argue public banks risk politicization. But the BND’s 105-year track record in a solidly red state disproves this: it's rated A+ by S&P with an 18.2% return on equity in 2023. It’s safer than most big banks and exceptionally stable as a public institution. By law, California’s public banks won’t compete with local community banks, instead, they will partner with them, expanding access to credit in underserved communities.

The money to capitalize a public bank exists. We’ve already raised billions for disaster recovery. The fight isn’t about resources—it’s about control. A public bank keeps investments local, ensuring funds flow to priorities like firebreaks and microgrids rather than stock buybacks.

From LA’s wildfires to Asheville’s floods, disasters are intensifying and demand resilience. Public banking offers a blueprint for recovery: leverage public dollars to cut long-term costs, create jobs, and rebuild smarter.

Los Angeles can lead this revolution. By creating the nation’s first major urban public bank, we’ll pioneer a model for cities nationwide. When the next disaster strikes, we won’t be at the mercy of for-profit banks, we’ll have the tools to rebuild ourselves—faster, fairer, and permanently stronger. The alternative is unthinkable: another decade of rubble, debt, and avoidable loss.