Reply #12: Report on the state bank, Oct 11, 2010

[eridani]

Cindy and I met with Rep. Bob Hasegawa on October 6th about a state bank. He has been contacting many legislators including the Speaker of the House and State Senators, stakeholders like community bankers as well as the president of the Bank of North Dakota. We were impressed with his dedication to this project. He now sees the state bank as a longer-term project that can only produce results after several years of operation. It will need to be capitalized with bonds to start and it will take several years to become fully functional.

The Bank of North Dakota could not change the low prices the farmer’s faced in the 1920’s nor could it prevent the effects of the Great Depression in North Dakota. It did not, however, evict farmers from foreclosed farms. People stayed in their homes and were able to buy back their farms from the bank when good economic times came again. In the present, the bank has been able to help the North Dakota economy through the current crisis. Unemployment is low there relative to most of the country, state government is in the black and not one of their community banks has failed. The Bank of North Dakota helped community banks there with their portfolios as the current crisis was developing.

Bob has been able to educate the staff at the Washington State Legislature so they are now more up-to-speed on the concept of a state bank. They did not seem to understand the North Dakota model and it showed in the bill they wrote last year. Also, his vision for a bill this year will accomplish several things. It will set up the basic concept of a bank’s governance: a Board of 3 to 5 state-wide elected officials with an Advisory Board made up of banking experts and community representatives. The banks constitutionality is assumed. The bill will also outline the clear intent of the legislature in setting up a state bank as a bank to promote commerce, business and agriculture for the benefit of the health and welfare of the citizens of the state. In the balance between protecting the tax payer’s money and developing the state’s economy, protecting the taxpayer’s money must come first.

A basic outline of the structure of the bank will be included in the bill; however, the new bill will set up a blue ribbon commission to hammer out the details of the state bank within a certain deadline. Washington State is very different than North Dakota and the bank, although using the North Dakota model, is to be tailored to the needs of our state. Bob was very pleased to learn that retired officials of the Bank of North Dakota seem willing to help such a commission. He also expressed a need to find local banking experts who can help with the details of establishing a bank of Washington State. Finally, he said he was ready to hold community forums with the purpose of talking to the community about the concept as well as getting feedback from the community. So, we should start contacting people who can organize forums.

John Repp