You might not have felt it, but an earthquake in Sacramento rattled the financial world on Friday the 13th — and Wall Street is shook. On Sept. 13, the California Legislature approved AB857.

If signed by Gov. Gavin Newsom, this bill would allow municipalities throughout California to establish publicly owned banks to invest in local communities — rather than rely on extractive Wall Street titans.

To understand how important public banking could be, one must first understand how our municipal financial system operates today with reckless abandon.

Currently, virtually every government agency in California is required to hold its financial assets in major banks. All of our tax dollars, the revenues generated through public enterprises, the investment funds managed by city treasurers and a myriad of financial operations, including home and small business lending, are spread among several major financial institutions such as Citibank, Bank of America, Morgan Stanley and more. Here in San Francisco, that’s more than $12.3 billion in taxpayer dollars, plus the city’s investment funds.

All of this taxpayer money has been used to underwrite Wall Street’s investments in enterprises including private prisons, immigrant detention facilities, fossil fuel infrastructure, weapon manufacturing and predatory lending. This is why a network of environmental and economic justice organizations throughout the state coalesced into the California Public Banking Alliance — to craft a safer, more sustainable financial alternative.

AB857 got through the state legislative process thanks to broad support for public banking from a majority of California lawmakers, environmental justice groups, labor unions and the Democratic Party. But the banking lobby is still trying to keep the governor’s signature off the bill. The California Bankers Association has argued that public banking is “misguided,” “will bankrupt cities” and that the private banking industry is already meeting the financial needs of our communities.

Public banking is a tried and true financial alternative for municipalities. The Bank of North Dakota was founded 100 years ago to help farmers get a leg up in the agricultural industry. Thanks to its partnerships with local financial institutions and its investments in safer, local industries, North Dakota today has the largest number of credit unions and community banks per capita. This is one of the reasons why the state was able to weather the 2008 global economic crisis without major losses. It’s time we learned the same lesson.

Public banking means that local communities, not bank shareholders, will play a role in shaping the priorities and investment portfolios of public tax dollars.

Just like Wall Street banks, a public bank in California will need FDIC insurance, Federal Reserve membership and a license from the Department of Business Oversight. But unlike these banks, publicly owned financial institutions can work with mission-guided principles of promoting economic, racial and environmental justice.

A San Francisco public bank, for example, could partner with credit unions and community banks to provide lower rates of interest for financing deeply affordable housing development. It would be allowed to do so because AB857 requires public banks to have not-for-profit status.

Many San Franciscans also struggle with student debts, inaccessibility to access fresh and organic food and an exodus of small businesses from their neighborhoods. A public bank could alleviate these crises by working in partnership with local financial institutions to provide low-cost loans for students, sustainable and organic farmers, small business owners, renewable energy installers and public works.

One eventual sector that some public banking advocates would like to see is service for the cannabis industry. However, federal law currently classifies cannabis as a Schedule 1 drug, prohibiting public banks from working with these businesses. Until federal laws change, public banks will not be able to serve the cannabis industry.

John Chiang, then California’s state Treasurer, cut many of the state’s ties with Wells Fargo in the wake of its 2016 fake accounts scandal. But most local activists’ efforts to push for divestment from other banks have ended in frustration, because of state regulations that choke-hold our cities into keeping our public deposits in these companies. It’s time for cities to build an alternative: financial institutions that place the public good at the forefront.

What’s riskier than starting a public bank is staying in the lion’s den. With the passage of AB857, California is only one signature away from implementing the boldest, most transformative economic policy since the New Deal.

Julian LaRosa is the communications coordinator of the California Public Banking Alliance.