100% of the state funds are required the best north dakota state puns are required to be deposited in the banks, and deposits are returned to the state. they did turn a profit in 2010 for the seventh straight year. they made a $61 million profit. i believe about half of that goes to the state general fund. they are a member of the minneapolis federal reserve bank, so the operate like neither bank would in north dakota, subject to the rules and regulations of the federal reserve. they're not ensured by the federal deposit insurance corporation, but instead the state provides the guarantee for the deposit and depository. that may have been a choice on their part so that they could have control of more funding, because otherwise there would be paying some sort of feet. supervisor avalos: with the fdic around when they got started? >> i do not know if it was. that may have been part of the

reason for it as well. what advocates of the bank of north dakota and public banking have pointed out is that the state of north dakota has a low unemployment rate, 3.2%, and they achieved budget surpluses during the last couple of years. the recession starting 2008. and then have been able to extend credits after 2008 when we saw the credit freeze on the part of private banks, affecting public agencies and many small businesses and other enterprises. finally, and last point, related initiatives. this gets to be rfp question. there was some discussion about it, including a requirement in the rfp being prepared by the treasurer and tax collector's office for banking services and whether or not the city could make a requirement or provide extra points in scoring bidders

if they're providing a higher level of investment for the local community. and there is some concern, and the city attorney has expressed an opinion on that it may not be allowed under state law. however, our conclusion, after talking to the city attorney, if it is a voluntary activity that the banks are asking simply to present that information, it is not a requirement for operating in the city or having some of the banking business. it might be a legally different interpretation, therefore could be something the cities would ask for. that is an issue that would have to be resolved with the city attorney. supervisor avalos: ask for an rfp? >> right, something that is not a determining factor of what they have to do, that can

possibly be a way of evaluating the extent to which they're doing it, but it would not be the primary criteria for the collection process. there is different interpretations on that. i am pointing at the the city attorney has raised some concerns about that, and i think it is still an issue to be researched further. supervisor avalos: separate from the rfp, there probably other ways we could apply at the city. i do not know what they are yet. >> but on this topic, and this is the last slide, legislation in the city of boston. a city council member there has introduced what is called invest in boston legislation, establishing municipal banking communities. the purpose of the commission is just this, to analyze financial institutions that want to do business with the city and to

evaluate them in terms of the extent to which they're providing community-oriented business and services, and these are the criteria that they are including. residential loan modifications made by the bank, small-business loans in the city, personal loans, a community reinvestment activity, and the average of their credit expanded. other proposals are being considered. we saw something in the last week or two, the city of los angeles reintroduce the notion of creating a public bank or exploring the option. i think it is in response to the occupy l.a. movement. they reintroduced legislation to look into that. the city of long beach in the city of davis in california and the city of mesa, arizona is exploring this option, as well

as i think about 12 states that have legislation pending or research under way on the topic. so it seems to be a subject that is increasingly of interest to public entities. katie, who works on this project with me, is here as well. we will be happy to answer any questions or respond to any comments. supervisor avalos: great, thank you. i really appreciate the report. also, it is ironic how it has come up with exterior demonstrations and protests going on around the world with the occupy movement. i think it is very interesting. there are a lot of other states and municipalities that are looking at these public banking models and ways of leveraging public dollars. there is a lot of suspicion or

frustration with the current financial institutions not doing enough at the local level, and i see that dramatically in my district where a lot of small businesses are suffering. it is actually all around san francisco. the goal really is to try to see where we can give greater investments at the local level. so this is a great step of the process. we are going to be having ongoing work and dialogue to make sure we're moving forward on something that could be beneficial. i think the models that exist elsewhere are going to be important. i know the north dakota is a very different in terms of san francisco, but there are certainly a lot of parallels that you could draw into how the processes worked. i appreciate your work on this. >> one note on bank of north dakota, i think the state's budget is comparable to the city

of san francisco. it is a much smaller state. so there was some similarity in skill, but obviously very different. it is not quite as intense either. supervisor avalos: we're getting more farmers in san francisco though. works well in a number of ways. we're probably going to get a lot of questions from public comment. that is something i can address to you afterwards or perhaps in the middle of public comment as well. thank you for your presentation and your work on this. we can go ahead and open up for public comment. i have a list of names that i wanted to read off. i have a couple courage here, too. the list of names are going to come -- because that was part of the presentation as well, for these folks to speak first.

i have some partners like the california revisit coalition, ace, the environmental impact, responsible lending, the small business commission, lots of folks to participate. i want to acknowledge of the ideas the canfor were prior to this hearing. kevin, grace, michelle, david, karla, and tonya. >> thank you, supervisors. good morning. my name is kevin and i am with the california reinvestment coalition. we are a statewide advocacy group advocating for increased access to financial services and investment in low-income communities and communities of color throughout the state. we appreciate your efforts in being able to come and testify before you. i was a former member of the

city. the board appointed a fair lending working group a few years ago. i would note that a lot of the recommendations that came out of that board-appointed task force were not acted upon. discouragingly, it may be that financial institutions are less responsive to day in our communities than there were a few years ago. the main point i would want to convey today is that we believe that banks are really not setting up residence in communities in san francisco to succeed financially. we are very supportive of efforts to try to bring some responsiveness and accountability. for the city, i know a number of issues and ideas were floated. but the thrust of trying to leverage the city's resources to bring better resources and support for residents in the city, we fully support. in general, we believe that a

strong strategy, and one that we would urge you to continue to look at this, working with the treasurer's office, we consider a divestment or linked banking strategy with the city or county could tie its -- [bell rings] supervisor avalos: could you tell me more about divestment, please? >> yes, thank you. this most closely follows the invest in boston presentation that the analyst made. a number of communities in this state and throughout the country have tried to tie their banking business, be it deposits or contracts, to bank performance. we think that is a very positive model. in some sense of the treasure is right. [bell rings] it is in your conversation, but there have also been programs like this for many years. i got involved in these issues over a decade ago in an east

palo alto when they try to develop a similar strategy to attract a bank account. that was a strong effort in pulling together the city, the school district, the sanitary district, churches, local businesses, all kind of agreeing that they would move their money to the institution that was best serving the town. that is the general idea. supervisor avalos: your examples of other places that have had the divestment strategy, what institutions did they end up working with? >> i guess it depends. i think of it as kind of a land banking strategy with the locality will set up a process, so the rfp is a good example, and we know what the committee wants from the institution and see which institution can best meet those needs. again, within the parameters of safety, liquidity, and yield, which we do not think needs to be a major barrier. i guess this city of oakland

recently moved its funds, and the city of san jose recently, through the great work of the pico network, so there's a lot of stuff happening. different communities may disagree as to who is better to serve their -- better able to serve their needs, but the thing to do is to begin the process and to identify -- i had a list of things the city could look at. it was very much like the list that was on the fly -- on the slide four invest in boston. there's a lot of harm being imposed on people by financial institutions, with for closure being a strong example, but even fees that are being charged for people better low-income, because they're using their debit cards, because they have the audacity to want to have the bank account with the financial institution, and some of these harms of being opposed by the financial institutions that the city and county have relationships with. in terms of the general

suggestion, we would urge the city to be aggressive in outlining its needs and desires, that'd be as expensive as possible so that in every way in which money is earned by financial institutions at the hands of the city and county, that there be some thai so that you do not think too narrowly about what funds may be in play. the treasurer spoke of the different pots of money. but there are a variety of pots and a variety of institutions and a variety of fees that there are collected. the more expensive the cities can be, perhaps the more fun that play, the more effective policy can be. because this is about time to get some accountability. supervisor avalos: do you have a sense of what other municipalities around the state might be using for the transaction work for the institutions? in san francisco, bankamerica

primarily, wells fargo, union bank. >> the the largest institutions historically have been the institutions that have been the banks for municipalities. i think the recent efforts to rethink that are a result of frustration, a growing frustration that you and others have pointed out around issues like for closure. those happen to be the same institutions that are the biggest for closures. i think there is a move towards moving the money out of those institutions. then there reasonable question is, where would the money go? supervisor avalos: kenny talk briefly about your work with the fairland and working group? >> as no, that group was set up by the board, the treasurer, says a reporter, and supervisor maxwell urged the board to set up this working group, which comprised of representatives from banks, credit unions, mortgage brokers, realtors,

community foundations, and a few nonprofits. there was a report that came out of it. a large number of recommendations were made. again, most of them were not implemented. there were a couple the kind of speak to the issues being raised by the hearing. the four broad categories of recommendations revolved around preserving homeownership, avoiding for closure, preventing predatory lending in the future crisis, protecting tenants during and after for closure, and for prioritizing affordable housing opportunities. one of the key specific demands was that banks be more accountable to the city with regard to for closure prevention, and more specifically there was interest in negotiating more loan modification, maybe like the invest in boston. supervisor avalos: but have used in any change based on this? >> there was an effort by the

city to reach out to institutions. my understanding, and cities that would be better able to answer, is that a letter was sent highlighting some of the concerns, and it was more less ignored by maybe all of the financial institutions. there may have been a non response the response by one. so generally, no. our office is a periodic survey of housing counselors from san francisco and throughout the state, asking which institutions are doing a good job helping people avoid foreclosure and which are not, and the results of these days are no better than the results two and a half years ago when we started doing this, and the institutions that the city has banking relationships with are among the most complained of and rate fairly poorly when it comes to helping people with for closure. supervisor avalos: thank you. we can talk later so i can get a copy of that report. we will see what we can enact in

the coming months. >> great, thank you very much. >> the next speaker, please. grace, then the shell, david, carla, and tonya. >> good afternoon couldn't i have a copy of the report to. my name is a great speaker i am an organizer with ace peter i am is speaking on the report that we released earlier last month with crc about the impact of foreclosures in our local city. at this point, at the end of the year we will see 2.1 million for closures in california, and one- third of all the homes in california are under water. in san francisco, we have lost

an estimated $42 million in city funding because of the erosion of the property tax base and the impact of services. the for closure cost to local governments, typically for every for closure, it costs about $20,000 because of the extra needed services and police do to blighted property, and it has shown that it has increased crime in our neighborhood. this cost is estimated to be about $73.4 million. supervisor avalos: is that simply by multiplying 20,000 by the number of foreclosures? >> exactly peter i am about to go into that. can we have the overhead? supervisor avalos: can we have the overhead, please? we will extend your time. >> this is the breakdown by zip

code of all foreclosures since 2008. these are houses that have already been foreclosed on. and those in default will probably lose their homes by the end of the year. the total number in san francisco is 12,410 homes. half of those are in district 10 and 11. just to show a map and probably show the supervisors this before i show everyone else -- [bell rings] this is an example of 94124. there are about 15 foreclosures in this district, the second- highest by zip coe. 94112 has about 2,000, that is district 11. for every foreclosed home and how this impacts other homeowners in the city, it

brings the property value down by 0.9%. so we are urging that we need to leverage a real -- really leverage these banks and compel them to do the right thing and keep our families in our homes. supervisor avalos: thank you very much. next speaker, please. >> hello, it is an honor to be here today. i am michele chan, and i direct economic policy programs that friends of the year. we have about 15 years experience in sustainable banking. many of my colleagues today are going to talk about the impacts of this on an immigrant tenants in san francisco but also talk about the environmental impacts. i will talk about two examples involving the financial institutions. first example, wells fargo. since 2003, wells fargo has provided over $5 million to companies that develop the oil

sands, the tar sands. for those who do not know it, tarzan's is a high carbon type of fuel that is stripped mind from underneath canada's royal forests, which is one of our last untouched ecosystems in the planet. for tarzans to be extracted, they destroy the land. it takes so much energy to extract tar sands that it has a carbon footprint of about three times that of conventional oil. tar sand extraction's use about four hundred million gallons of water per day from a river, and most of it ends up as toxic waste. it is contaminated with carcinogens such as cyanide. so the indigenous populations in other communities living downstream from these talks the ponds have high rates of rare cancers, lupus, renal failure,

and hyperthyroidism. and wells fargo has refused to pull out of the tar sands. the next example is union bank, which is owned by bank of tokyo mitsubishi. a few years ago, they and other banks provided almost $1 billion to build a coal-fired power plant in south africa. [bell rings] it would spew out over 36 million tons of greenhouse gases every year. in doing so, it would become one of the world's largest single- point sources of carbon pollution in the world. to make matters worse, it would mostly provide electricity to multinational corporations, who would get it and is subsidized rates. people who pay for the subsidies would be the rest of the south african ratepayers. this plan worsens energy access rather than making it better. supervisor avalos: thank you. next speaker, please. >> thank you so much for having us here. my name is david taylor with the

rainforest action network. i want to talk about the environmental impacts of making portfolios. on behalf of rainforest action network, and want to talk about the crimes that bank of america is committing against public health and our climate through its financial support of the coal industry. at every stage of its life, cold as serious damage, the number one contributor to climate change and the leading cause of mercury pollution. coal-fired power plants connected to defects in over 300,000 infants because of the mother's exposure to toxic mercury pollution. and communities are exposed by particulates of these calls, with one in a tent children now suffering from asthma. there's also a threat to our economic security. harvard published the report with the life cycle of coal from waste stream generated sources are costing the u.s. public at third to one-half of a trillion

dollars annually. if you get any part of the life cycle of coal, you'll find that bank of america has a significant interest. it is involved in removal mining, using old dirty plants, and shipping coal overseas. despite extended commitments to be low carbon economy, bank of america is the largest underwriter of the coal industry in the u.s., contributing $3.9 billion to the call secretary in 2010. more than any other bank, bank of america is continuing to prop up a 19th century energy system at the exact time when the opportunities and job creation and the transition to a green economy are paramount concern. [bell rings] i herridge the city of san francisco to cut ties with bank of america and consider the environmental exposure of bank of america and other banks' investment portfolios in the upcoming rfp.

the city and state prides itself on being green leaders, and this is an opportunity for the city to take a step away from the carbon in 107 polluting industries supported by bank of america and some of our finance not propping up the pollution. thank you. supervisor avalos: thank you very much. next speaker, please. >> good morning, supervisors. my name is reverend carl alexander, and this is my wife. i am a leader and the san francisco organizing project, an affiliate with a much broader network called the national network for people improving communities through organizing, which is working on a national bank and accountability campaign. i also served on the committee that has been appointed to oversee the hunters point shipyard community fund which can be leveraged into creating a financial institution which creates responsible lending and strategic investment

opportunities. in general, -- let me move back up. tickets -- it is now essential the financial institutions that hold city assets developed a responsibility report back to the city there banking practices as it relates to local residents. community leaders are in the process of creating a think tank which includes major stakeholders or subject matter experts in the financial arena to bring about financial literacy and social investment. social irresponsible investment or ethical investing describes the strategy which seeks to maximize both financial return and social good. in general, social responsibility investors favor corporate practices that promote environmental stewardship, a consumer protection, human rights, and diversity. finally, as an example of what pico was doing throughout the state, our affiliate organization in san jose, one of

the san francisco sister organizations, has led a movement of churches and individuals or divesting their resources from bank of america. [bell rings] more than $3 million thus far has been removed from the bank for damaging our communities. we are saying that the city is going to have a relationship with these institutions, there needs to be some sort of social responsibility investment. supervisor avalos: thank you very much. next speaker. william, mary, mark, cynthia, josh. >> good afternoon, supervisors. my name is william peter i am is san francisco native and small business owner. in 2008, the financial crisis forced me to start my own business. like many people in the country, i was going through a loan modification. so when i reached out to major financial institutions, they

denied my small loan. bankamerica, included, which is mine loan holder. i reached out to a community organization in my neighborhood enter non-traditional financing, i was able to start my business, which no employees 40 families in san francisco and currently has two sfmta garages, which generate over $2 million in gross revenue. in the funds get deposited into bank of america. even then, big of america will not give me access to credit to expand my business, which you know what, we're used to, so no worries on that, but i am still working with them to modify my house loan. as i sit in loan modification purgatory, i see with this upcoming -- i think with this upcoming rfp, which in mandate the banks to set clear matrix's on how they're helping non- traditional people access loans,

for closures, you know -- our they help us? let's hold them accountable. we can send matrix's fedor quantifiable of the want to be responsive to this at the very least. thank you. supervisor avalos: how long have you been in loan modification limbo? >> it is guinta b five years now. supervisor avalos:oh! >> 5? >> it is update -- ok. where we come from, we help each other. they cannot kick us out of san francisco. supervisor avalos: we will not allow them. thank you. next speaker, please. mary, mark, cynthia, josh, francisco de koster, charlie -- francisco da costa, charlie, and fred. >> i am mary. ike