Today at the Renton Library, State Representative Bob Hasegawa gave a presentation and talk about the efforts to establish a Washington state bank.
Hasegawa began by saying that there’s really no downside to creating a state bank. It’s a no-brainer. (Sigh, that means most Republicans will oppose it.) Currently, sales taxes and other general funds are deposited in an account at Bank of America. Why shouldn’t Washington follow the example of North Dakota and keep the funds locally? The funds would likely have lower management fees, and could be more easily invested locally. We’d reduce or eliminate debt service costs. Washington citizens could earn interest on any funds held unspent in the account. (Hasegawa said that nowadays, revenue can’t keep up with expenditures, so fund turnaound time is fast.)
Hasegawa is working to keep the state bank issue non-partisan. The state bank would work alongside local banks. It wouldn’t compete with them directly. It would provide extra liquidity for the local banks. Its managers would be salaried and wouldn’t receive bonuses. You couldn’t buy shares in the state bank, though you could choose to deposit your money there.
Someone in the audience called it the “public option” for banking. Nice description!
Hasegawa said that many conservatives will denounce the idea as being “socialist.” Though some individual Republican lawmakers have told Hasegawa that they personally like the idea of a state bank, it’s likely that the Republican caucus will oppose it on ideological grounds. (They don’t want government to work for the people.)
North Dakota has had a state bank since 1919, and it has the lowest unemployment rate in the country, as well as one of the healthiest banking systems in the U.S. North Dakota State Bank did not invest in risky subprime loans or derivatives. North Dakota had no bank failures during the recent banking crisis. North Dakota is the only state with a budget surplus ($1.1 billion). In addition, North Dakota has no debt service to pay. In contrast, Washington State pays $2 billion on debt servicing (interest) every biennium.
But isn’t North Dakota’s prosperity due to its oil and gas revenues? Apparently not. Alaska, Wyoming and several other states benefit from oil and gas revenues but fared poorly in the recent downturn.This issue is addressed more thoroughly in North Dakota’s Economic “Miracle”—It’s Not Oil .
Conservatives just hate it when government works for the people! It can, if it’s not corrupted and mismanaged.
Hasegawa showed part of a video, available at PrairiePublic.org, about North Dakota State Bank. Promoters of the state bank cited Seattle as an example of why North Dakota should support one. At that time Washington State had supported successful public grain elevators. At first conservatives opposed the bank all the way to the Supreme Court. But nowadays even the North Dakota Republican governor and treasurer support the bank.
It’s not socialist. It’s just smart use of taxpayer’s money. Even Washington State Republicans should agree to that, but they probably won’t, because they want government to fail.
“It doesn’t matter if it’s socialism or capitalism. What matters is what works best.” I think that quote is a gem. I wish I recalled who said it: either Rep. Hasegawa or someone from the audience, or maybe it was from a video. If a reader knows who said it, please let me know, by adding a comment below.
Hasegawa said that other states considering state banks are Oregon, Hawaii, Arizona, California, Maine, New Mexico, Idaho, Virginia, Maryland, Massachusetts, Illinois, Florida, Michigan, and Tennessee. California has recently made progress in pushing its bill through the legislature.
More States May Create Public Banks. California’s state bank bill is based on Washington’s, according to Hasegawa.
The official name of the state bank would be Washington Investment Trust. Why that name and not “Washington State Bank”? Because of marketing. Nowadays lots of people distrust the state, and they surely distrust the banks, so calling it the Washington State Bank might not be a smart move.
There may be a constitutional issue about establishing a state bank. Washington’s state constitution prohibits the use of government funds for private gain. Hasegawa said that voters may be asked to amend the state constitution to permit the bank to go ahead. But the constitutional issue is unclear. Already the state puts $100,000,000 into an infrastructure fund and lends money. A bank would be able to leverage fractional reserves and turn $100,000,000 into $1 billion.
In 2010 Democratic lawmakers sumitted HB 3162 on the state bank idea. The aim was to introduce the idea to the legislature. They didn’t expect the bill to pass. The bill had a good public hearing but did not advance.
In 2011 HR1320 and SB 5238 had hearings in the House and Senate, but they couldn’t get it out of committee. Later in the session a separate bill (HB 1915 or 2040) emerged from a different committee, the Capital Budget Committee and to the House floor calendar. Speaker Frank Chopp supported it. But it never came to a vote.
Hasegawa said that the state as a whole is lacking leadership. There’s no vision. We’ve lost a sense of the commons. (Aren’t the People allowed to cooperate on public endeavors anymore?)
A few minutes into Hasegawa’s speech a group of people entered wearing orange shirts. I was worried they might be Tea Partiers, but they weren’t. They were ethnically diverse and they were supporters of a state bank. Their shirts said “This is OUR Washington: Organization United for Reform Washington.” (I would have edited that name.)
As you can probably see in the photo, Rep. Hasegawa has a kind, boyish look. He’s really an unpretentious nice guy.
Unfortunately, due to redistricting, Hasegawa may lose his seat in 2012.
Someone asked: isn’t the Federal Reserve a national bank? No, it’s a consortium of private banks.
I asked: who is it important for us to support? Hasegawa said: contact your legislators. I wanted to ask: who’s standing in the way and needs to be opposed? But knowing that Haseagawa couldn’t answer that directly, due to discretion, I asked others. I was told: the state treasurer. This article supports this claim: “Assistant State Treasurer Wolfgang Opitz said he and Treasurer James McIntire opposed the idea.”
An angry, emotional Asian woman denounced the “criminal” banks and complained of losing her and her mother’s homes to foreclosures. “I’m so fed up with the goddamn banks.” I felt embarrassed for her, since I too often have to control my anger, which I know can be easily misdirected. She also directed her anger at the Democrats, saying that they, and Obama, are as bad as the Republicans. Others disagreed, saying that not all Democrats are bad. Several people, including King County Democratic Chair Steve Zemke, defended Obama.
Rep. Hasegawa said that his number one priority is to promote progressive taxation. The voters have been voting against their own self-interest, and we must educate them about progressive tax reform. The poorest people in Washington State pay 17% of their income in state taxes. The richest 1% pay closer to 1%. Yep.
Meeting organizer Brian Gunn had introduced Rep. Hasegawa, explaining that the South Seattle area lawmaker was chosen as the Washington State Labor Council’s legislator of the year, as well as having received a 100% rating from the Washington Conservation Voters and an A rating from the Alliance for a Just Society.