A bank may seem an unlikely hero to the Occupy Wall Street movement, but then, Bank of North Dakota is an unlikely bank. Founded in 1919 in the midst of a populist uprising, Bank of North Dakota is the only state-owned bank in the nation, which many credit with insulating North Dakota’s economy from the global financial crisis.
Now Washington State could copy that template if state representative Bob Hasegawa (D-11) has his way in the legislature in the next several months.
“We control our money, we make money off our money, we decide how to use it,” says Hasegawa. “It’s a time-proven model.”
Following North Dakota’s lead, our public bank would be the sole depository for all state government monies. Every penny of state tax collections and fees would make its way through the state-owned bank. That’s opposed to the banks in which Washington State currently holds its money (mostly in Bank of America). That means the state could both profit from its own interest and direct its investments locally.
It’s “win-win” declares Hasegawa, and given the current climate, he’s hoping a politically winnable issue.
Leveraging a state cash flow of about $35 billion a year, our bank would largely function as an economic development engine, mostly by providing guarantees, subsidized interest rates, and additional liquidity to private financial institutions on loans deemed to stimulate economic development within the state. Rather than competing with local banks, our bank would work with them, like Bank of North Dakota.
But it’s hardly an easy sell. Hasegawa has introduced a similar measure in Olympia twice over the past two years. He’s hoping that now—when reinvesting in local economies and scolding Wall Street have become more popular political platforms—he may get more traction.
According to an analysis conducted in December 2010 by progressive think tank Center for State Innovation, a Bank of Washington could start paying dividends back to taxpayers by its third year, with profits quickly ramping up thereafter. Within a decade, the bank could return $40 million in cumulative dividends per $100 million in start-up capital, by year 20, $132 million, and by year 40, a staggering $743 million. And that’s on top of the community investment the bank would help finance and the jobs that would create.
“Even some Republicans have come up to me to say that it’s a good idea,” says Hasegawa, though whether they’ll buck their leadership is another question. 
Good. We need state banks in each state, and democratic control of the investments those banks make.
@1: Agreed. Bob Hasegawa has a good idea!
Sad, though, isn’t it, Goldy, how Republicans who appear to agree with common-sense, grass roots ideas, quickly shy away and revert back to party politics as usual when the chips are down?
The big flaw in this one is that it’s not a state bank that insulated North Dakota, it’s the fact that there is an oil boom up there AND that they weren’t that dependent on the housing boom in the first place.
A state owned bank isn’t a panacea for systemic economic issues some place else.
Ditto for say the regular exodus from large banks to small ones, as if many small ones didn’t make the same mistakes, profit from the same mal-regulations.
Better yet, a loan is a product a banks sells to make money, we are in a mess because the banks were loaning money to anyone with a pulse. If Banks are denying people now then they believe that the potential lenders won’t pay them back, a smaller or state owned bank (which can’t take as many risks) will do the same.
The solution to this crisis isn’t a better bank, it’s job creation for people in the say bottom 60% AKA average non college educated blue collar workers.
Everything being made in China is MUCH bigger issue than banks, we could just ignore it when the housing boom was inflating the economy like someone using their credit cards as income.
Just what we need.
Another well-intentioned but unneeded solution to a non-problem.
Which will just lead, in years to come, to a major and expensive referendum campaign to get the state out of a business it never should have gotten into in the first place.
Or, we could just let private enterprise do what it’s supposed to do, with proper supervision, and let government do what it’s supposed to do.
Commenter 3 & 4 your points are valid but if you go and study the Bank of North Dakota and it’s history you’ll see it’s been a huge success! The state has made billions from the bank and done so by investing in small businesses and farmers. And yes the State Bank has been a big part of what has insulated North Dakota from the financial issues the rest of the country has seen, it is not just the oil and natural gas boom by any stretch.
Think about it, why let a large corporate bank make money off of the 35 Billion a year you control when you can easily do it yourself and direct the loans towards local economic investment which further supports growth and local tax revenue.
Big banks have spent a long time and a lot of money convincing us we need a middle man.
Not any more.
if you go and study the Bank of North Dakota and it’s history you’ll see it’s been a huge success! The state has made billions from the bank and done so by investing in small businesses and farmers. And yes the State Bank has been a big part of what has insulated North Dakota from the financial issues the rest of the country has seen, it is not just the oil and natural gas boom by any stretch
If it was done here, the new “state bank” would be making crack loans to Occupy Seattle.