“Ethical Markets highly recommends this good news on the two US states: California and Washington and their progress toward setting up their own state banks! We honor all the brilliant work, analyses and leadership of lawyer Ellen Brown, and her colleagues at the Public Banking Institute. We are proud that Ellen is on our global Advisory Board.
~Hazel Henderson, Editor”
Posted on April 18, 2019 by Ellen Brown
As public banking gains momentum across the country, policymakers in California and Washington state are vying to form the nation’s second state-owned bank, following in the footsteps of the highly successful Bank of North Dakota, founded in 1919. The race is close, with state bank bills now passing their first round of hearings in both states’ senates.
In California, the story begins in 2011, when then-Assemblyman Ben Hueso filed his first bill to explore the creation of a state bank. The bill, which was for a blue-ribbon committee to do a feasibility study, sailed through both legislative houses and seemed to be a go. That is, until Gov. Jerry Brown vetoed it, not on grounds that he disapproved of the concept, but because he said we did not need another blue-ribbon committee. The state had a banking committee that could review the matter in-house. Needless to say, nothing was heard of the proposal after that.
So when now-Sen. Hueso filed SB 528 earlier this year, he went straight for setting up a state bank. The details could be worked out during the two to three years it would take to get a master account from the Federal Reserve, by a commission drawn from in-house staff that had access to the data and understood the issues.
Sen. Hueso also went for the low hanging fruit—a proposal to turn an existing state institution, the California Infrastructure and Development Bank (or “IBank”), into a depository bank that could leverage its capital into multiple loans. By turning the $400 million IBank currently has for loans into bank capital, it could lend $4 billion, backed by demand deposits from the local governments that are its clients. The IBank has a 15-year record of success; experienced staff and detailed procedures already in place; low-risk customers, consisting solely of government entities; and low-interest loans for infrastructure and development that are in such high demand that requests are 30 times current capacity. The time is also right for bringing the bill, as a growing public banking movement is picking up momentum across the U.S. Over 25 public bank bills are currently active, and dozens of groups are promoting the idea. Advocates include a highly motivated generation of young millennials, who are only too aware that the old system is not working for them and a new direction is needed.