Endorsement: Charter Amendment B is one of the most ill-conceived, half-baked ballot measures in years. Vote no

Since credit markets froze and Wall Street banks collapsed a decade ago, sending much of the global economy into a tailspin, progressive activists have pushed cities and states to take their money out of Wall Street’s hands and put it into publicly owned banks. Anger over the Wells Fargo fraudulent account scandal and frustration over the lack of banking services for marijuana businesses have added to the momentum for change.

Government leaders in Massachusetts, Maine, San Francisco, Oakland and Santa Fe, among other places, have all considered or are still considering creating public banks. Now some Los Angeles officials want to do it, too.

The City Council has put a measure on the November ballot — Charter Amendment B — that would amend the City Charter to allow for the creation of a Bank of Los Angeles. What exactly would this bank do? We don’t know. How much would it cost to start a public bank? We have no idea. Why is this measure even on the ballot? Good question.

Charter Amendment B is one of the most ill-conceived, half-baked ballot measures to come out of City Hall in years, and that’s saying something. There’s been no formal study, no plan, nothing of substance completed to determine whether a Bank of Los Angeles is even feasible, much less a good idea. Voters are being asked to approve a vague concept and put their trust — and their money — in City Hall to figure it all out.

Even Council President Herb Wesson, who is leading the push for the public bank, admits there are a lot of unanswered questions. To Wesson, this is an opportunity to have a “citywide dialogue” about the issue. Fine. But why not have a dialogue and answer those questions before putting the bank on the ballot?

Wesson said he intends to bring the bank proposal back to the ballot again after the idea has been fleshed out so voters can approve the final concept. But his final term in office ends in 2020, and whether a second vote is actually necessary depends on what responsibilities the bank would take on. So maybe there would be another vote before the bank opened, maybe there wouldn’t.

Of the many cities and states that have recently proposed creating a public bank, not one has actually done it yet. In fact, there is only one established public bank in the United States: the Bank of North Dakota, which was formed a century ago to help farmers there get credit. (American Samoa, the tiny U.S. territory in the South Pacific, was cleared to create a public bank in April after the last major bank left the island.)

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The reason so few localities have moved ahead with the public bank idea is that they soon discover it’s a really expensive, complicated and risky business, particularly when it involves taxpayer dollars. Setting up a bank requires a huge up-front investment — a study for the proposed Massachusetts state bank estimated it would take $3.6 billion just to provide the bank enough capital to get started. It also would take changes to state and federal law, along with changes to the City Charter, just to get permission to start a public bank.

Even if all those legal and financial hurdles could be cleared, there is good reason to question whether a Bank of L.A. would be a good deal for taxpayers. A public bank runs the risk of political interference, as elected officials might put pressure on the bank to make risky loans to and investments in favored individuals, causes and communities.

The Los Angeles Community Development Bank, a quasi-public bank created after the 1992 riots to stimulate economic development in low-income communities, went insolvent after less than a decade. One of the reasons, according to an evaluation, was that the bank made high-risk loans to well-connected borrowers. Supporters of the Charter Amendment B say that wouldn’t happen because the city-owned bank would be overseen by an independent board of governors. But again, with the ballot measure utterly lacking in detail, voters would have to trust city leaders to somehow design an incorruptible public bank. Good luck with that!

Banking is a serious business. So is managing the public treasury. Charter Amendment B is not a serious ballot measure. Voters should say “no” to its airy promises.

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