A bill to form a blue-ribbon commission to study the feasibility of a state-owned bank for California has suddenly and unexpectedly cleared both houses of the California legislature and now awaits Governor Jerry Brown’s signature. Californians need to contact the Governor and urge him to sign this, the first successful public banking initiative in nearly 100 years.
A state bank can allow states to pay ZERO interest on loans for state projects such as infrastructure. North Dakota’s state bank, established in 1919, has allowed the state of North Dakota to be the ONLY state to keep a budget surplus since the economic crisis began, North Dakota also has the lowest unemployment rate at 3.5%, the lowest credit card default rate and one of the lowest tax rates in the country.
While there have been other state bank models that have failed, primarily because they were structured in such a way as to allow the state government to pick and choose to whom loans would be given, the State Bank of North Dakota’s model does not do this. The government has absolutely no say with regards to who gets the loans; so, the government does not pick winners or losers. It is these failed models that have given state banking a bad rap over the past few decades. State banking does not have to be this way. The North Dakota model is the model to follow.