Although I never wrote about it, I remember thinking at the time that nationalizing the banks was being discussed that it would not be a bad idea to have a permanent national bank of some sort to keep the private banks honest, much like the late lamented health care public option might have kept the insurance companies honest.
Well, it looks like the idea is coming up on the state level:
At least eight U.S. states are considering proposals to start state-run banks in the wake of an economic crisis where many private banks ceased or greatly decreased their lending, literally shrinking the money pool available in state economies.
One state has a pubic option in banking already, and guess what:
North Dakota is the only one out of the 50 U.S. states that is still operating with a fiscal surplus, and some economists argue it is in part due to the state-owned Bank of North Dakota – the only bank of its kind in the U.S. – which has been able to pump money into its own economy by making loans to farmers, small businesses and families.
I would suggest that a bank of this sort makes sense in every state. I’d love to see states get away from tax “incentives” to businesses, and just get into the business of investing in promising businesses the way the private economy does it-through direct investment or lending. A bank like this could be a useful device for economic development. Tax breaks are lose-probably lose propositions for states and towns. They lose the tax revenues and get no return on that investment except future tax revenues once the breaks expire-revenues they should have been getting all along. If they loaned money or took a stake, then they would get a return when the businesses succeed.
Of course, the devil’s in the details, and you’d have to make sure you didn’t hand the bank over to corrupt operators-imagine Rowland with his hand in that cookie jar.
I’d be interested to know what our gubernatorial candidates think about this, and the next time I talk to either of them I’ll try to find out.
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