WA State Bank Campaign

2013 Legislation to establish The Washington Investment Trust

The Legislation and status of the bill can be viewed here: 

 http://apps.leg.wa.gov/billinfo/summary.aspx?bill=5029

Statement in favor

Washington State has had huge revenue shortfalls since the economic collapse of 2007-2008.  This has posed very challenging and sometimes heart wrenching decisions legislators during the past few years.  The state has had to cut vital services, issue bonds, consider selling off public assets and/or increase taxes.  A public infrastructure bank such as the Washington Investment Trust would give the state more options.

Presently, when the state or a school district wishes to make a capital improvement or infrastructure project, the amount of money paid in interest to the financiers often exceeds the amount of money paid to those who supply the materials and do the labor on the project!  By having its own infrastructure bank, the state could fund its own infrastructure projects and thereby cut debt servicing costs.  For municipal or county projects the interest on loans from the WIT comes back to the state.  The Washington Investment Trust will help school districts, water districts, cities and towns lower their borrowing costs.  With the special privileges of a bank, the Washington Investment Trust could help grow the tax base by funding public infrastructure projects that hire businesses that then create jobs.  Senate Bill 5029  is well written with security for tax dollars.  It contains oversight and accountability.  Its mission is to serve the people of Washington State.  It is not a solution to all the state’s financial woes, but if begun now it will help our state to prosper in the future.

Below is the summary from the Legislative Task Force that wrote the current bill:

There are significant public infrastructure and higher education needs of the state that are unmet, and the level of unmet need has been exacerbated by the economic downturn. But there are opportunities to use the state's depository assets to generate additional benefit for the people and the economy of the state, which can be achieved by creating the Washington Investment Trust as a legacy institution that amasses sufficient capital reserves to address opportunities now and in the future.

The Washington Investment Trust may:

(a) Facilitate investment in, and financing of, public infrastructure systems that will increase public health, safety and quality of life, improve environmental conditions, and promote community vitality and economic growth;

(b) Assist students who are in need of additional low-cost student loans in order to finance the cost of higher education; and

(c) Leverage Washington's financial capital and resources, and work in partnership with financial institutions, community-based organizations, economic development organizations, guaranty agencies, and other stakeholder groups.

The mission of the trust is to utilize Washington's depository assets in ways that afford most efficient use of taxpayer revenues and public resources for the benefit of the people and economy of the state.


WHY WASHINGTON STATE NEEDS A PUBLIC BANK

A public bank in Washington state would start making Washingtons money work for us. Washington State does not have its own bank. Currently our tax dollars and fees are deposited in the Bank of America. After the state pays its bills, the State Treasurer invests in short-term paper, much of it with the U.S. Treasury and banks headquartered out-of-state. A public bank in Washington state, like the Bank of North Dakota, would instead be the depository of our tax revenue and fees. Using that money as reserves, the bank would loan money to productive Washington farmers and businesses so they can survive, grow and create new jobs. It would be a “banker’s bank” and partner with Washington community banks and credit unions not compete with them.

Watch this two minute video about why a WA State bank: WA State bank:

1. A bank of WA would be modeled after the bank of North Dakota. The Bank of North Dakota (BND) has helped north Dakota prosper even during these recession times. The bank is conservative and did not participate in risky behavior. North Dakota is the only state in the Union that is not suffering a deficit budget and they have very low unemployment. http://www.banknd.com/
2. Washington State is running huge deficits that cause public programs to be cut, negatively impacting Washington’s citizens. We need more available state funds.
3. The Office of the State Treasury uses tax monies now for short term investments in big banks, Federal treasury bonds, Fanny Mae etc. Instead the monies would be invested in long term loans to business here in WA State. Currently, despite record low interest rates, Commercial banks are lending even less.
4. Our plan is to introduce a bill in the Washington State Legislature to charter a Public Bank, the Bank of Washington State. This is a Public, not for profit bank.
5. A Bank of Washington State would have the ability to self-fund capital projects, keep money local, make small business loans and provide new credit sources.
6. The Mission of the bank will be written into the law establishing the bank: Develop agriculture, industry and commerce in Washington State.
7. By using the deposits of the bank to make long term loans to small business and helping small farmers, jobs will be created; this in turn will increase the revenue tax base of the state.
8. There is a great deal of public outrage over bailouts and banker bonuses. And banks on the national level have not been adequately regulated to prevent future risky lending and investments.
9. All tax moneys and fees of Washington will be deposited in the bank. The bank would be a member of the Federal Reserve so that it could have access to the cheapest money available through the Federal Reserve Discount Window.
10. The chartering of a public state bank will not solve all the problems of the recession. However, there is a credit problem in Washington State at the present time and the bank will get credit flowing to where it is needed.
11. Like the BND the bank of Washington State would partner with community banks and credit unions in their loan practices. The BND is well thought of by banks in that state and acts as a “mini-Fed” where banks can go for low cost loans.
12. Profit from the Bank of WA state, like the BND, could be redirected back into the state budget to meet our urgent shortfall.

WHY SEND WASHINGTON STATE MONEY TO WALL STREET?

We want to establish a Public Bank in Washington State because the big Wall Street banks are not lending to local small business, despite their ad campaigns. Demos, a non-partisan public policy research and advocacy group, has just published a report that makes a solid case for public banks. State legislators need information like this in their hands. http://www.demos.org/pubs/Demos_State_Bank_Paper.pdf
Citizens need to educate themselves and then talk to our state legislators, who are listening to bankers and economists, not their constituents. The idea of Federal Deposit Insurance (FDIC) was opposed by bankers, economists and Franklin Delano Roosevelt. The people’s demands were met when Congress passed legislation in June 1933.

THE BANK OF NORTH DAKOTA MODEL

The Bank of North Dakota is our model. There are several videos to view about the interesting history of BND. One is 26.5 minutes: http://www.youtube.com/watch?v=L75oinBuY1g and another is 4:45: http://www.youtube.com/watch?v=r0rJWnRFUJA

For an hour long show on a local tv station with two JUSE members: Cindy Cole and John Repp talking about why to have a State Bank. http://www.blip.tv/file/4716452

Since the financial crisis of 2008, North Dakota has had the lowest unemployment in the country, no failed banks, and no budget crisis. The Center for State Innovation report on the impact of a state bank in Washington state concludes that the banking system in North Dakota is stronger than comparable states like South Dakota, Wyoming and Montana and would help Washington State after a few years.
http://www.stateinnovation.org/Home/CSI-Washington-State-Bank-Analysis-020411.aspx
How The Nations only State owned Bank became the Envy of Wall Street.
Read the Mother Jones article here.
Ellen Brown in her book the Web of Debt and in Yes Magazine has provoked a national movement to create state banks.  The movement has grown in response to the failure of our banking system to support local economies.  Keep informed of this movement at the Public Banking Institute website.

http://publicbankinginstitute.org/

The Washington Public Banking web site designed by the Keep Our Money in Washington folks is:  www.wapublicbankproject.org

Read Ellen Brown's article entitled " Escape From Pottersville The North Dakota Model For Capitalizing Community Banks" analyzing the Move Your Bank Movement vs. the state bank idea.

Read this summary by Ellen Brown of the growing movement in 7 states to have a State Bank.

 Report of WA State Legislature. The Washington State legislature ended the special session on May 25, 2011. HB1320 (companion SB5238) did not make it out of committee. This bill would have set up a task force to study how to start a state bank in Washington and set some deadlines to do that. The hearing room was packed with supporters. Only the large bank lobby, the community bank lobby and the office of the Treasurer spoke against it. The credit unions did not speak. The Treasurer’s opposition had a lot of clout with legislators. Embedded in the Treasurer’s opposition paper was a proposal for an infrastructure “bank”. We put quotes around bank because it was a revolving fund where the state sells bonds and loans money to cities and counties for infrastructure projects. It would not have the fractional reserve power and would not be a depository of state taxes and fees. So Rep. Hasegawa wrote a bill HB 2040 that took the Treasurer’s idea and put it together with setting up a task force to study how the state can best use its money, a way to look at the state bank idea. Rep. Dunshee was the prime sponsor since HB 2040 was to go through the capital projects committee where he is the chair. At the hearing only the bank lobbyists spoke against it. The Treasurer’s office did not. So the bill passed out of committee. It has now been referred to the Rules committee. Needless to say, it did not get to the floor. This means another try next year and the summer and fall to build momentum.

Constitutionality of Bank of Washington?
Regarding the question of constitutionality of a state bank for washington, read the following thoughts.