America's Credit and Housing Crisis: New State Bank Bills
by Ellen Brown
Global Research Canada, February 27, 2012
Seventeen states have now introduced bills for state-owned banks, and others are in the works. Hawaii’s innovative state bank bill addresses the foreclosure mess. County-owned banks are being proposed that would tackle the housing crisis by exercising the right of eminent domain on abandoned and foreclosed properties.
The long-awaited settlement between 49 state Attorneys General and the big five robo-signing banks is proving to be a major disappointment before it has even been signed, sealed and court approved. Critics maintain that the bankers responsible for the housing crisis and the jobs crisis will again be buying their way out of jail, and the curtain will again drop on the scene of the crime.
We may not be able to beat the banks, but we don’t have to play their game. We can take our marbles and go home. The Move Your Money campaign has already prompted more than 600,000 consumers to move their funds out of Wall Street banks into local banks, and there are much larger pools that could be pulled out in the form of state revenues. States generally deposit their revenues and invest their capital with large Wall Street banks, which use those hefty sums to speculate, invest abroad, and buy up the local banks that service our communities and local economies. The states receive a modest interest, and Wall Street lends the money back at much higher interest.
According to a December Treasury report, only 10 percent of
’s short-term investments reside in truly local in-state banks, namely Washington Trust and BankRI. Meanwhile, 40 percent of these investments were placed with foreign-owned banks, including a British-government owned bank under investigation by the European Union. Rhode Island
Further, millions have been invested by
in a fund created by a global buyout firm . . . . From 2008 to mid-2010, the fund lost 10 percent of its value — more than $2 million. . . . Three of four of Rhode Island ’s representatives in Rhode Island , count [this fund] amongst their top 25 political campaign donors . . . . Washington, D.C.
"Are Rhode Islanders and the state economy being served well here? Is it not time for the state to more fully invest directly in
, either through local banks more deeply rooted in the community or through the creation of a new state-owned bank?" Rhode Island
Hence observes that state-owned banks are “[o]ne emerging solution being widely considered nationwide . . . . Since the onset of the economic collapse about five years ago, 16 states have studied or explored creating state-owned banks, according to a recent Associated Press report.”
2012 Additions to the Public Bank Movement
Make that 17 states, including three joining the list of states introducing state bank bills in 2012: Idaho (a bill for a feasibility study), New Hampshire (a bill for a bank), and Vermont (introducing THREE bills—one for a state bank study, one for a state currency, and one for a state voucher/warrant system). With North Dakota, which has had its own bank for nearly a century, that makes 18 states that have introduced bills in one form or another—36% of U.S. states. For states and text of bills, see here.
Other recent state bank developments were in
, Virginia , Hawaii , and Washington State , all of which have upgraded from bills to study the feasibility of a state-owned bank to bills to actually establish a bank. The most recent, California’s new bill, was introduced on Friday, February 24th. California
All of these bills point to the Bank of North Dakota as their model. Kyle Hence notes that
has maintained a thriving economy throughout the current recession: North Dakota
One of the reasons, some say, is the Bank of North Dakota, which was formed in 1919 and is the only state-owned or public bank in the
. All state revenues flow into the Bank of North Dakota and back out into the state in the form of loans. United States
Since 2008, while servicing student, agricultural and energy— including wind — sector loans within North Dakota, every dollar of profit by the bank, which has added up to tens of millions, flows back into state coffers and directly supports the needs of the state in ways private banks do not.
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